Thank you, Samara, and good morning to everyone on this call. Thank you for joining us, and we welcome you to this HEICO First Quarter Fiscal 2026 Earnings Announcement Teleconference.

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

We received many nice comments about Victor's extemporaneous remarks as he opened our last conference call to discuss HEICO's 2025 fourth quarter results, we thought our listeners would appreciate a little insight into HEICO before we discuss HEICO's 2026 first quarter results. Obviously, HEICO's 2026 first quarter results reflect continued growth, and we are very proud of them, especially considering that only 36 years ago, HEICO had only $25 million in revenue, $2 million in earnings, and 200 team members.

Our dad, Victor, and I would often question ourselves, how is our 36-year 23% compound annual growth rate in share price possible, especially when we were rarely leveraged at more than two times EBITDA? First, we have to thank God for these results.

Second, we realized that Dad always had a saying, "Do the right thing," which was our mantra 24/7/365 for the past 36 years. It wasn't just a saying.

It was embedded in every single decision, every part sold or repaired, every company acquired, and simply everything we did. Obedience to the unenforceable became our DNA from the time Victor and I were small children to now, when we are 60 and 58 years old.

Doing the right thing means making honorable choices when nobody's looking. It means spending tens of millions of dollars on quality systems, not because our customers or regulators require them, but because we know it's a good investment that protects our brand.

It means properly reserving for obsolete or excess inventory, not because our auditors require it, but because we know it's needed, and mistakes must be recognized, learned from, and never repeated, not swept under the rug in order to protect reported earnings. These are just two of the many things that HEICO has done routinely over decades, and why we've never had a one-time unusual charge to earnings whereby the economic earnings of the upcycle are largely erased following a black swan event, and investors don't realize much of the earnings never existed in the first place.

Considering our terrific results, we're even more proud of them, given the added cost that many people don't appreciate, but everyone benefits from in the long run. HEICO was built for long-term and sustainable cash generation, which permits our earnings and cash flow to compound decade after decade, not just year after year.

We are not into programs of the year, buzzwords, or comparing ourselves to others, hoping to get a higher multiple on our shares. We're designed for long-term, challenging, but sustainable earnings increases.

I hope this provided a little insight into HEICO's secret sauce as you listen to our first quarter results. Before reviewing our operating results in detail, I want to take a moment to thank and recognize all of the people who made our excellent performance possible.

HEICO's sustained growth and consistent profitability result directly from our team members' talent, dedication, and hard work. Our team members drive our success and differentiate us from other companies.

Thank you all for all of your continued commitment and for contributing to another strong, outstanding quarter. We are very proud of the first quarter results, which reflect consolidated margin expansion, record net income, and strong increases in operating income and net sales.

We remain very bullish and optimistic about HEICO's ability to win new opportunities in fiscal 2026 and continue our growth, profitability, and strong cash generation legacy. To summarize the highlights of our first quarter of fiscal 2026 record results: Consolidated net income increased 13% to a record $190.2 million, or $1.35 per diluted share, in the first quarter of fiscal 2026, up from $168 million, or $1.20 per diluted share, in the first quarter of fiscal 2025.

Consolidated operating income and net sales in the first quarter of fiscal 2026 improved by 15% and 14%, respectively, as compared to the first quarter of fiscal 2025. Net income attributable to HEICO in the first quarter of fiscal 2026 and 2025 were both favorably impacted by a discrete income tax benefit from stock option exercises.

The benefit in the first quarter of fiscal 2026, net of non-controlling interests, was $21.8 million, or 15 cents per diluted share, as compared to $26.5 million, or 19 cents per diluted share, in the first quarter of fiscal 2025. By the way, that means we got a higher benefit from the discrete income tax benefit from stock options last year as compared to this year.

The Flight Support Group delivered strong results in operating income and net sales, achieving quarterly increases of 21% and 15%, respectively, as compared to the first quarter of fiscal 2025. The increases principally reflect strong organic growth of 12%, driven by increased demand across all of Flight Support Group's product lines, as well as the contributions from our fiscal 2025 acquisitions.

The Electronic Technologies Group net sales improved 12% as compared to the first quarter of fiscal 2025. The increase principally reflects strong organic growth of 6%, driven by increased demand across most of our products, as well as contributions from our fiscal 2025 and 2026 acquisitions.

Cash flow provided by operating activities was $178.6 million in the first quarter of fiscal 2026. Operating cash flow for the quarter was negatively impacted by distributions of approximately $22.7 million to a long-term team member over 40 years and participant in the HEICO Leadership Compensation Plan, the LCP.

The LCP is fully funded, and all sources of cash for these distributions are derived from investments in corporate-owned life insurance policies, which are considered investing cash inflows within our statement of cash flows. As a result, the LCP distributions are not an actual use of cash.

We will have another large LCP distribution during the remainder of fiscal 2026 of approximately $73 million, which will negatively impact operating cash flows. However, since the LCP, as I said, is fully funded, the distribution will continue to be net cash neutral to HEICO.

Consolidated EBITDA increased 14% to $312 million in the first quarter of fiscal 2026, up from $273.9 million in the first quarter of fiscal 2025. Our net debt-to-EBITDA ratio was 1.79 times as of January 31, 2026, as compared to 1.6 times as of October 31, 2025.

The increase in our leverage ratio is a direct result of the successful completion of an acquisition during the first quarter. Acquisition activity in both operating segments remains very strong, with a very healthy pipeline of opportunities.

We continue to target complementary businesses that align strategically and financially, focusing on disciplined, accretive transactions that enhance HEICO's long-term value. In January 2026, we paid our regular semiannual cash dividend of 12 cents per share.

This represented our 95th consecutive semiannual cash dividend since 1979. Now, I'd like to take a moment to discuss our recent acquisition activity.

In January, our Electronic Technologies Group acquired 100% of Axon' Aerospace's fuel containment business, which was renamed Rockmount Fuel Containment. Rockmount designs and manufactures advanced fuel containment solutions, primarily for military fixed and rotary wing aircraft.

The purchase price of this acquisition was paid in cash using proceeds from our revolving credit facility, and we are very excited that Rockmount has joined the HEICO family, and we are very excited about their future contribution to HEICO's earnings. Earlier this month, the Flight Support Group acquired 100% of EthosEnergy Group Limited.

Ethos provides repair solutions for engine components and accessories for various industrial gas turbine, aeroderivative gas turbine, aerospace, and defense engine platforms. I'm sure everyone on this call is keenly aware of the tremendous increase in demand for power caused by the exponential demand in AI, or artificial intelligence, and LLMs, or large language model adoption.

This power is largely expected to be created through the use of industrial gas turbines and aeroderivative gas turbines. HEICO is obviously excited to enter this market and bring our technical capability and OEM relationships to serve this growing power demand.

We believe HEICO's acquisition of Ethos provides us with the perfect platform to sell our high-quality repair solutions to satisfy these rapidly growing needs. The purchase price of this acquisition was paid with a combination of cash using proceeds from our revolving credit facility and shares of HEICO Class A common stock.

This week, the Flight Support Group entered into an agreement to acquire 80% of the stock of a company that provides a range of services for commercial aviation and defense component platforms. Closing is subject to governmental approval and standard closing conditions and is expected to occur in the second quarter of fiscal 2026.

The remaining 20% will continue to be owned by certain members of the seller's management team. We expect these acquisitions to be accretive to our earnings within the year following the acquisition.

I now turn the call over to Victor Mendelson, HEICO's other Co-Chairman and Co-CEO, to discuss the first quarter results of our Flight Support and Electronic Technologies Groups in further detail.

Eric, thank you very much. Before we get into the details, I echo what Eric mentioned at the outset of the call and thank our team members, the HEICO team members.

The results we're discussing today are a direct reflection of their talent, their discipline, and commitment to execution. Their collaboration and focus on excellence in all they do and all we do is truly inspiring.

The Flight Support Group's net sales increased 15% to $820 million in the first quarter of fiscal 2026, up from $713.2 million in the first quarter of fiscal 2025. The net sales increase in the first quarter of fiscal 2026 stems from strong organic growth of 12% and the impact from our fiscal 2025 acquisitions.

The organic net sales growth reflects increased demand across all of our product lines. The Flight Support Group's operating income increased 21% to $200.7 million in the first quarter of fiscal 2026, up from $166.1 million in the first quarter of fiscal 2025.

The operating income increase in the first quarter of fiscal 2026 was principally driven by the previously mentioned net sales growth, SG&A expense efficiencies realized from the net sales growth, and an improved gross profit margin. That improved gross profit margin principally resulted from the previously mentioned higher net sales and a more favorable product mix within our repair and overhaul parts and services product lines.

The Flight Support Group's operating margin improved to 24.5% in the first quarter, very impressive, in the first quarter of fiscal 2026, up from 23.3% in the first quarter of fiscal 2025. The increased operating margin in the first quarter of fiscal 2026 principally reflects a decrease in SG&A expenses as a percent of net sales, mainly reflecting the previously mentioned SG&A expense efficiencies and improved gross margin.

Acquisition-related intangibles amortization expense consumed 260 basis points, approximately 260 basis points of our operating income in the first quarter of fiscal 2026. The FSG's cash margin before amortization, or EBITA, as we call it, was approximately 27.1%, which is excellent and has been consistently excellent and is 110 basis points higher than the comparable FSG cash margin of 26% in the first quarter of 2025.

Obviously, we are very, very happy with the continued operational excellence and improving cash generation demonstrated by the businesses in the FSG. Now turning to the first quarter results for the Electronic Technologies Group: The group's net sales increased 12% to $370.7 million in the first quarter of fiscal 2026, up from $330.3 million in the first quarter of fiscal 2025.

The net sales increase was occasioned by strong 6% organic growth and the impact from our fiscal 2025 and '26 acquisitions. The organic net sales growth is mainly attributable to increased sales of our aerospace and defense and other electronics products, partially offset by a decrease in space product sales.

The Electronic Technologies Group's operating income was $73.2 million in the first quarter of fiscal 2026, as compared to $76.5 million in the first quarter of fiscal 2025. That operating income decrease principally reflects a decrease in gross profit margin, partially offset by the previously mentioned net sales growth.

The decrease in gross profit margin, and this is important, resulted from a less favorable product mix of defense products and the previously mentioned decrease in net sales of space products, partially offset by the previously mentioned increase in net sales of our aerospace products. As quarterly margin variability in our ETG is consistent with the group's history, and there are periods in which shipments of lower, though not low, margin products are a greater proportion of our sales than in other quarters, which is predominantly based on shipment schedules.

Based on our backlogs and our shipment plans, we expect the ETG margins to improve as the year progresses, particularly in the second half of the year. The Electronic Technologies Group's operating margin was 19.8% in the first quarter of fiscal 2026, as compared to 23.1% in the first quarter of fiscal 2025.

The decreased operating margin principally reflects the previously mentioned lower gross profit. You may recall that we experience similar unfavorable mixes from time to time, including the first quarter of fiscal 2024, and the rest of the year was quite healthy for us, and we're expecting the same kind of thing this year.

Importantly, before acquisition-related intangibles amortization expense, our operating margin was approximately 24%, as intangibles amortization consumes over 410 basis points of our margin. That is, as how we judge our businesses, and it most closely correlates to cash.

On a true operating basis, these are still excellent margins, even though we would not be satisfied with them on a full-year basis. The ETG's strong margins resulted in another record backlog, demonstrating both strong demand for our products and robust end markets.

Our shipments and shipment mix are typically uneven during the course of the year. We experienced some of that unevenness in our shipment mix this quarter, which was not a surprise and is a pattern we've often discussed on these calls and elsewhere.

We're pleased with the quarter's organic growth and are particularly excited about the opportunities in defense, commercial aerospace, and space for the remainder of fiscal 2026. I should add that this optimism is supported by the record backlog and increasing order volumes we've experienced.

Thank you, and I turn the call back over to Eric.

Thank you, Victor. Our team is filled with optimism as we look at the remainder of fiscal 2026.

We expect continued sales momentum in both Flight Support and the Electronic Technologies Group, supported by organic demand for our products together with the impact of recent acquisitions. The current pro-business agenda in the United States continues to align well with our long-term goals, providing key markets like defense, space, and commercial aviation with a very strong tailwind in funding.

We remain focused on pursuing selective acquisition opportunities that align with our growth strategy. Our disciplined focus to financial management continues to emphasize long-term shareholder value through a combination of strategic acquisitions and organic growth while preserving financial strength and flexibility.

Acquisition activity remains extremely robust across both business segments, supported by an outstanding pipeline of potential opportunities currently under evaluation. Our acquisitions teams are busier than ever, working on these potential transactions, as one of HEICO's core strengths is identifying high-quality businesses that complement and reinforce our strategic positioning.

We believe HEICO is the preferred buyer for sellers seeking a great home for their businesses. Consistent with our longstanding acquisition philosophy, we will only pursue opportunities that meet our strict financial and strategic criteria, are accretive, and have the potential to generate durable, long-term value for our shareholders.

We thank you for listening to this call, and now, Samara, if you'd like to open up the floor for questions, we're happy to answer them. Thank you.

Great. Thanks.

Good morning, everybody. I guess first question for Victor.

Just I think maybe the ETG putting a little pressure on the shares this morning. I know you referenced Q1 '24, it sounds like the mix issue is completely temporary.

It was a pretty significant sequential drop, but any more color on that? I guess the mix doesn't sound like you have any trepidation and you could bounce right back to that low-to-mid 20s range for the year?

Is that fair to say?

I think that's absolutely right. That's our expectation, and based on the shipment schedules and what we have, that's what we're expecting.

It isn't unusual for us to move around. It may be lower than the average, but sometimes we get the perfect storm of good shipment schedules, and sometimes we get the perfect storm of unfortunate shipment schedules.

That's why we really guide people to look at the full year on the ETG, particularly as it moves on throughout the quarters. The experience we had on this was in multiple different products and subsidiaries.

As I said, sort of the perfect storm on the downside, if you will, on margins, very heavily mix-related, extremely heavily mix-related. Right now, what we have scheduled for shipments and what our subsidiaries are showing as the year wears on is pretty exciting.

Of course, we'll have to see. There are no guarantees, I always say, in life,

but

right now, I'm feeling good about what our companies are telling us, feeling very good about what our companies are telling us.

Right. It feels like a great environment for a lot of your companies, right, in defense and space, for sure.

So... If you look at our orders and you look at our backlog in the group and how it's been growing, it's very exciting.

The mix of what's been growing is a nice mix overall. Feeling good about it, and nothing's ever easy, but feeling good about it.

Sure. While I got you, Victor, a pretty nice-sized acquisition on the Exxelia or, I guess, renamed Rockmount Fuel.

I think it's your third-largest ever in HEICO history. Any more color on this?

Is this your usual sort of type multiple and accretion we should expect over time?

It's a very nice business. It's a supplier and has done a lot of business with one of our other subsidiaries, Robertson Fuel Systems.

They will be operating separately, but there's a lot that they can do for each other in terms of production, smoothing out production, as well as new designs and being pretty innovative for our customers. That is reporting to the Robertson business

to keep things very

streamlined and easy. It has been growing.

We expect it to continue to grow. There's a big aftermarket, if you will, cycle to it, replacement cycle that appears to be growing.

We appear to be in the early innings of that. We're pretty happy with it.

As we said, we expect it to be accretive to earnings in the first year of ownership. We've only owned it for about a month, so far so good.

I won't declare victory or anything else based on 1 month,

but

right now feeling pretty good about it.

Great. If I could just put one quickie for Eric.

Just the organic growth still very strong, 12%, and on a difficult comp. Just curious, historically, Q1, you usually have seen some seasonal slowdown.

We haven't in the last couple of years since the recovery and growth on the aerospace side. Just curious, any thoughts on are we maybe just getting into a little more normal seasonality where Q1 sort of drops a little bit from Q4, which we hadn't seen the last couple of years, but we used to see if you go back?

Thanks.

Hi, Larry. Thank you very much for your question.

You're absolutely correct. In general, if you look last year, Q1 was the lightest organic growth, likewise in 2024 as well.

I'm particularly proud of these results given the high comps that we had in the prior years. We had very high comps basically for the last four years, and to post 12% organic growth on top of them, I think, is really outstanding.

If you will, we didn't stuff the channel. There's a whole bunch of inventory that could have gone out, which didn't go out for various reasons, but we're very careful to make sure that we do what the customers want.

I'm very happy with these numbers. I think they reflect very well on the group.

Great. Congrats.

I appreciate that. Thank you.

Thanks.

Hey, good morning, Eric, Victor, Carlos. Best results as usual.

Thanks. Hey,

Victor, maybe we could just drill in a little bit to try to understand the space kind of mix. I know in the past, it's been a nice margin contributor for ETG.

Could you describe a little bit, I think you were a little more GEO-oriented versus the LEO market. Is that still true just given the overall mix and just how you see the overall kind of setup for HEICO given all the demand for the LEO market?

It's a very good question. Originally, the business was more heavily GEO, and over time, I would say now we're more heavily LEO.

The businesses that were GEO originally, shifting to LEO isn't cheap, right? Margins are less.

There's a lot of different product design and R&D that goes into that. I think we're getting through, if you will, sort of the other side of that over the course of this year.

We still have a pretty good offering for GEO, but we go where the customers are, and that's really the LEO market. We have some great businesses with very strong margins in LEO, too, by the way.

Actually, I think now, some really strong margins there. That, as you may recall, too, has been a very uneven, very, very uneven business from quarter to quarter.

We like space, but we're not going to be too much of a space company for that reason, and you've probably noticed that. We've been careful how we've grown in space for that reason.

Got it. I appreciate the color there.

Then, Eric, just wondering if you could give a little commentary there, a competitor bought a PMA business, and, obviously, you guys still, I think, are kind of the leader in PMAs. Is this a deal that had overlap on you or how should we view that?

Thanks.

Thanks, Peter, for your question. How the old saying goes, imitation is the highest form of flattery.

For years, when we started doing this, people thought we were crazy to be in the PMA business, and then they thought we were crazy to be in the repair business and distribution and all the things we did. Those people who were smart enough to invest in HEICO did extremely well.

We think this is a sign that the PMA market is incredibly strong, and there are a tremendous number of PMA candidates out there. People have asked me, what does this mean for HEICO's competitive positioning?

We feel very strongly about HEICO's competitive positioning. We've been running this company for 36 years, and we've always focused on the customer and always focused on generating value for the customer.

I would venture to guess we probably have the best customer relationships in the entire industry, and I don't anticipate that to change. That's because we add value, we do what we say we're going to do, and people know when they work with HEICO, they're getting a top-quality product.

We still have a tremendous presence in that market. We are totally committed to it, and I think it shows that others are recognizing the value of the PMA business.

Appreciate all the details. Thanks, guys.

Thanks.

Hi. Good morning.

Thank you.

Hey,

Ken.

Thanks, Ken.

Yeah. Eric, maybe just wanted to follow up on your just comments there.

I think that there's a belief that PMA represents one of the real secular growing markets coming out of the pandemic as the industry continues to face a lot of service challenges. Can you just maybe comment from an industry perspective what kind of growth you're seeing in PMA and where maybe you see specific opportunities for HEICO, either in markets you typically haven't been in or maybe with customer sets or any other way you look at the market to help us better frame how PMA is actually really doing broadly and for you, obviously, here as we continue to see the recovery?

Ken. I would be happy to answer that.

I really recognize you as you were one of the analysts who, very early on, figured out that what HEICO was doing in the PMA space was going to be very successful both to the airlines as well as for our shareholders and team members, and those who followed your advice have profited handsomely. We are very committed and have never been more excited about the PMA business than we are today.

We've got roughly 20,000 different parts. It is a huge catalog and a huge competitive advantage, because when we want to develop a new part, and there's very little stuff in this world which is truly, truly new to us.

We've got this catalog. We're able to go back and reference the drawings, the specifications, the vendors, the manufacturing processes, and the barrier to entry is tremendous in doing that.

What we really need is greater acceptance at the airlines. We've spoken about this for many years, why don't the airlines buy even more, and why don't they push us to buy even more?

We're very happy with what we've done, but why isn't it even more? I do think, to your point, that coming out of COVID, they recognize what we've said all along that PMA isn't only about price, it's about turnaround time and making sure that you've got an alternate vendor and you have the part on the shelf.

I have got tremendous respect for all of our competitors who supply parts to the industry. It's a very hard thing to forecast the demand for a particular part.

You never know what it's going to be, and it depends on so many things, including the type of build that was done by either the airline or the repair station at the prior shop visit for the engine or the component. If times were good, and they had plenty of money, and then they put a lot of new parts in, then when the component comes back, you're not going to need a lot of parts.

If times weren't good, and they did the minimum, then you're going to need a lot of parts. The problem is, for all of the vendors, it becomes extremely difficult to forecast in that situation.

What we've always said is that HEICO provides not only top quality and outstanding value and cost savings, but we also provide availability. This is something that has become front and center since COVID.

We're happy about that. When you look at the US, specifically the products that we're doing, our sales in the PMA business are roughly 3/4 non-engine, which would be components, airframe, interior, and about 25% engine.

Our engine business is at a record level. We are doing extremely well.

We are developing more engine parts. The airlines want us to develop more engine parts.

I think you've written about the cost of engine overhaul, and the cost to overhaul some of these new engines is significantly higher than the cost to overhaul some of the existing engines. We think that there's going to be tremendous opportunity for us throughout the entire value chain.

I don't want to pick on just engines, but on components as well. The newer components are extraordinarily expensive.

They are off-the-charts nuts on the prices that they are charging. I think that HEICO is going to do extraordinarily well in our PMA and repair businesses as we help airlines reduce their costs and keep them somewhat manageable and provide an alternate source of supply.

I can't get into specific product types or manufacturer types for competitive reasons. We'd rather just go do our thing and satisfy the airlines.

Yeah. Appreciate all the color, Eric.

Just to put a finer point on that.

Ken.

Yes.

I might just add to what Eric just said just to maybe put a few leaves on the tree, if you would. Our aftermarket business, which is our parts and repair business, was up organically in the teens, and specialty products was in the high single digits.

To echo what Eric said, our end markets in aerospace are very robust, and our guys are executing. I just thought you might find that nugget helpful.

No, I appreciate that, Carlos. Maybe just to put a finer point on it, historically, the argument was the lessors and maybe some of the emerging market airlines didn't use PMA a lot.

Are you seeing any shift in customer types and adoptions? Thank you.

Yes, we are seeing shifts in customer types and adoptions. The airlines recognize they need this.

I'm aware of all sorts of activity and initiatives, which I'd rather not call out on this call for competitive reasons, but we think that they are going to benefit HEICO tremendously. Great.

Thank you very much. Thank you.

Good morning, guys, and thank you so much. Maybe my first question, I just wanted to clarify something.

I joined later on the call. With Ethos, was it paid through A-class shares?

Eric, how do we think about those distributions happening, because I think you were mentioning it? Why was it A-class versus the common stock?

I'd be happy to answer. Most of the consideration was cash.

Carlos knows the exact percentage, but I think it was over 80% in cash, if I'm not mistaken. Carlos, is that correct?

That's correct. It was a small quantity of A shares, and they wanted to feel like owners.

It was their request.

Look, sometimes we do this because people are very happy to own the HEICO stock. The request was for A shares, so that is why we granted the A shares.

That was the concept there. We're very excited about that acquisition.

Okay. Got it.

No, it certainly seems like the right end market to be in. Then maybe, Victor, one for you.

As we think about ETG profitability going forward, I know it ebbs and flows. Is there any way you could bridge us on the margins in the quarter and how to look forward?

Look, we continue to expect 22% to 24% GAAP margins in the business, which is 26% to 28% over the course of the year. You're going to have quarters that are above and below that amount, which is, again, historically the case.

There's nothing new to this. I try to remind people this as often as possible that the will be variability in the margins and the growth rate of the ETG.

There's nothing that's changed. There's nothing that's fundamentally changed in the business.

Got it. Thank you.

Thank you, Sheila.

By the way, Sheila, just to expand on what I said about Ethos, the sellers recognized that this market was really a tremendously growing market. For them to part with one of the foremost repair and overhaul shops focusing on industrial gas turbines and aeroderivative gas turbines, they really wanted to be compensated.

The request for HEICO A shares was in order to help reward them. We're very excited.

Everybody is very knowledgeable about what's going on in the power generation space. Ethos has incredible capabilities in developing and executing on parts repairs, component repairs, and the access to that market.

They've got three different facilities in Connecticut, South Carolina, and Aberdeen, Scotland. They've got great access to the market, great people, great technology.

By putting it with HEICO, I think that it's going to provide HEICO with the ability to access what is, as a tremendously growing market. The A shares were just a component, if you will, a sweetener, because if they're going to part with what we think is an incredible asset, they wanted something additional.

The other thing which is important, it's very easy to buy companies, but to buy companies at prices where it's accretive is using cash is extremely difficult. We were able to get this deal done at a reasonable price, and the A shares were part of that enticement.

Understood. Thank you so much.

Thank you.

Hey, good morning. Victor, there's some elevated inflation right now in certain parts of the microelectronics supply chain, particularly for memory.

I was wondering if you could speak to what ETG is seeing there

and

if you expect to see any margin pressure there, either now or in the future?

Thank you, Scott. It's a good question.

We're definitely experiencing that elevated inflation rate in some of the components. We typically are able to pass those on to our customers.

I think they accept that. They understand that.

There is a lag effect, and that does take some time. You've got to work off the POs and items that are in the backlog.

It is what I would consider a headwind, but more in the noise level and not particularly notable. By the way, it varies business by business, but overall, on a consolidated basis, more in the noise level.

Okay. Are you generally able to get all the product that you need?

Is the supply chain itself a limiter, or is it just a cost issue?

I would say it's essentially normal, what it's been outside of that supply chain crunch, which is to say that there's always something. There's always a hot list item that's late and kind of holding things up somewhere in the system.

For the most part, everything is running normal. It's kind of like airline schedules on a typical day.

There are a certain number of delays, and that's kind of how it's running now.

Okay. Then for Eric, do you see any opportunity for AI to help accelerate any of the maybe reverse engineering analysis for PMA in the speed at which new products can be brought to market?

Or alternatively, do you think AI could help yourself or your airline customers better query parts catalogs and identify new maybe previously unexplored PMA opportunities, just trying to better understand how HEICO can use AI to sustain or even accelerate growth? Thank you.

Yeah.

That question has a lot of insight, and I think the answer is definitely, with regard to both developing new parts, streamlining processes. I was just up at one of our subsidiaries last week, and they showed me there was a certain process in our quality acceptance area where we had multiple documents and multiple forms had to be filled out, and they were able through AI to come up with a revised process, which is significantly more efficient than what we were doing before.

We're already using it in the operations at HEICO. As far as the engineering, I think there is a lot of opportunity there, and it is as well being used over in the engineering process.

I agree with you, for customers to be able to figure out what they need to buy and look at the HEICO performance rate or quality rate or quality rating, how happy everybody is with us, I think that it would be a continued tailwind for HEICO. There's no reason why customers aren't buying more of our product line, and I think AI will accelerate our growth.

Great. Thank you.

Thank you.

Hey. Good morning, guys.

Hope you're doing well.

Good morning. Good

morning. Just to follow on here.

If you look at some of the evolving contract structures that are going on with some of the big defense primes, and in particular these seven-year framework agreements, so far, we've seen a handful with Lockheed, a bigger handful with RTX. What kind of impact do you expect that to have on you guys, if at all, where potentially you could get visibility on contracts out maybe seven years, and how that impact your business, and how are you thinking about it?

Yeah. Ron, good question.

We think it's a net positive. We have a number of companies that supply a lot of those programs.

It's something that gives us nice visibility into the future, helps us plan better, and on capacity, we've got really good capacity availability. It's usually a question of hiring people and bringing more people in and figuring way to do that in different shifts.

Overall, I think that's a net positive for us.

Also, just to add to that, in the Flight Support Group Specialty Products division, we think that that's going to have a very good impact, because we produce a lot of these different components, and having the advanced visibility into what's coming down the road is going to be extremely helpful. That's been a good tailwind for that business as well with record backlogs for missile defense products.

Got it. Then we've talked about some supply chain stuff.

Have you had any impact from critical minerals or magnets or whatever else, and how have you been managing that in places where you do?

It's very, very, very minimal. It has not been a significant issue for us.

Far, we do not expect that it will become one. In fact, there could be opportunities for us as a result of that when some of the new supply comes online in the US vis-à-vis acquisitions and things of that nature, but that's further down the road.

Got it. Then maybe one more if I can, to bother you guys.

What are you seeing broadly in the acquisition market around valuation and so on and so forth? As you both know, no doubt, the sector's gotten pretty hot.

How's that impacting how you're looking at valuations and how you can do M&A going forward where it's accretive in the framework of timing that you guys like?

Yeah. Ron, it's definitely pushed multiples up over a long period of time.

It isn't anything new, maybe a little bit more than historically. For us, certainly, that's why we're working so hard to make sure that we do as well as we've done in the past.

One of the important factors with us, I think, is the seller. Is the seller someone who's looking for something unique, particularly a good home for the business, someone who's going to retain the legacy and the operations in a similar capacity as it's operated in the past?

That gives us a really big advantage, we've discovered historically. It doesn't mean we're going to buy everything we want, but it means there's a very nice pipeline.

We have to count on a little more future growth, I think, and believe in the growth stories a little more than we used to. We're spending more time doing that to ensure that we think we're going to get the growth out of the businesses that that's estimated.

Then

also just to add to that for a moment, Ron, as we mentioned, our acquisition teams are busier than ever. Their pipelines are full.

I would expect additional acquisition activity this year. I think our shareholders, my guess is they're going to be very happy about what we're doing.

The other key thing is that, as Victor said, by differentiating ourselves and providing the best home for the seller, that has tremendous value. It's very easy to go out and pay high prices and win an acquisition.

It's another thing to make it work financially. HEICO has very rigorous cash flow requirements, and we model each deal on its own where it's got to support its own debt service, its own working capital needs, etc.

That's how we've been able to compound. You don't compound by going out and paying crazy prices for something.

You compound by buying something that can stand on its own and is very reasonable. When you look at some of the prices of, switching topics for a moment, some of what I believe are the defense tech businesses, I think they're extremely exaggerated.

We look for businesses that generate cash now and in the future, and paying extremely high multiples for something that really doesn't generate cash is just not what HEICO is about, and not what we plan on doing.

Got it. Cool.

Thank you.

Morning, Eric and Victor.

Good morning.

Good morning.

I was just curious, do you have a sense of how inventory levels are at your airline customers, because you mentioned that you didn't want to stuff inventory into the channel. Then I was also curious, within your distribution businesses, have there been any noticeable changes over the past several quarters in how fast they are moving inventory as the pace picked up as airlines prep for the summer travel season?

I would say the inventory levels are very consistent to what we've seen in the past. There are certain parts where they can be overstocked on, other parts where they're understocked on, but in general, there hasn't been a big change.

As far as our distribution businesses, we've done extremely well. They are extremely busy supporting the demands of the aftermarket, but I really sort of see it very much as business as usual and not much of a change for HEICO there.

Okay. Then thinking back a year ago, a lot of us were asking about DOGE and how that could benefit your business.

We're now one year into the current administration. Have you started to see the Pentagon get the ball rolling on acquiring more alternative parts to both reduce maintenance costs and improve readiness rates for military aircraft?

Are they at least doing it on derivatives like the P-8s and KC-46s?

We've seen some movement there, yes. We always said that this would be a medium-term project.

It's very hard to get things fully moving at the speed that we would like, but we are seeing good progress there, and we do anticipate further progress to come. We feel very good.

You look at the president's defense budget, and something's got to be a bill payer for these tremendous increases. This is very logical, and I think what the Secretary of War is doing makes a lot of sense, and they just can't keep on paying these high prices.

I'm still very optimistic in that regard.

Got it. Thank you.

Thank you.

Hey, thanks a lot for squeezing me in here. Eric, I wanted to follow up on the energy business and Ethos and what you're doing there.

You offered a number of data points and breadcrumbs. We see different companies across A&D attacking this in different ways.

I just wanted to talk about a big picture, but the types of questions on my mind are, did you kind of go down this path based on reverse inquiries from customers? What types of components do you expect to supply?

Is it based on your existing SKUs, or do you think that you're going to develop new SKUs? There are so many questions here.

I can't go through all of them, but I just wanted to give you a chance to kind of talk through this a bit more.

Sure. Thank you.

I think that's a great area which frankly hasn't been focused on by a lot of people. We thought that this would be a great market.

We've been working on Ethos now for approximately a year. We started that project a year ago, and we saw what was going on in the industrial gas turbine space and, to a lesser extent, the aeroderivative, and we thought that this would be a very strong area.

We went out very aggressively to work with the seller and come up with a deal that made sense. I think we also developed a very good relationship with the operating folks at the businesses, and we were definitely the preferred buyer.

As far as the aeroderivative connection, that makes a lot of sense. Everybody is very familiar with what HEICO does and really what we can bring to some of the aeroderivative parts, should customers want that, as well on the industrial gas turbine parts.

Both on the IGT and the aeroderivative, Ethos has very strong OEM relationships, and they're approved by various OEMs to support those products, and they've been doing so for a very long time. We are going to continue to support those channels and not offer an alternative if there is an OEM relationship there.

Where there aren't OEM relationships, we'll try to form them with different companies, and if not, we think that there's very good opportunity to continue penetrating the markets there. There's just a huge demand.

You see what's going on with all the power companies, and Ethos has an extremely wide array of products that it services. It does blades, vanes, all sorts of various static parts, rotating parts, components, and we think that their technology lines up perfectly with ours, and we are super excited to have made this acquisition.

We think that it's going to be extremely successful and a great entrée for HEICO. If HEICO were to try to enter the industrial gas turbine or the aeroderivative market on its own, it would be extremely difficult.

We didn't have much of a relationship with those customers, and here, Ethos has been an incredible supplier for decades with these companies. Actually, Ethos, the genesis of it, is it used to be the Wood Group Aero Accessories and Components Group.

They have decades of working with the energy companies and the turbine suppliers. We think we've got a great platform to leverage and move forward.

This is such a big market. This is a very big-picture question, but do you see this as something that could become so large for HEICO over in the fullness of time, that symbolically, we might even have an IGT segment, a third segment for the first time or something like that?

Could it be that big?

That would be very aspirational. I don't want to get over my skis here and promise that, but we do have very high expectations for the business.

I would say it's in early innings right now. The company's got great capability, great people, three locations, and I hope what you're saying is correct.

I'm sure that our team members at Ethos and at Wencor are listening to this call, and they are inspired by your question and outlook for it.

Appreciate it. Thanks, guys.

Thank you.

Yeah. Hey, good morning, guys.

Thanks for fitting me in. Most of mine have been asked already, but I wanted to just touch on the balance sheet and just how you feel.

1.8 times leverage obviously has come down quite a bit since Wencor, but I think historically you've been a little bit lower. Just how you feel, are you comfortable at this level?

Would you prefer to be lower? Sounds like there's a lot of potential M&A deals in the pipeline.

Just how to kind of think about the balance sheet here?

I'm happy to take that question. Our leverage right now is under two times, I'm very comfortable at this leverage point.

I expect that what we've done in the past will continue in the future. We'll continue to use a line of credit as a primary vehicle for funding acquisitions, which then affords us the opportunity to quickly pay that down and reload for the next deals.

We'll still use that type of a structure. Right now, our permanent debt or the bonds that we have are running less than one turn of EBITDA, I think our capital structure is quite flexible, and we're not capital constrained.

From a balance sheet perspective, we could go higher on leverage. I think if we did that, it would be very opportunistic, and there'd have to be a pathway to generate significant cash to bring us back down into the two times, 2.5 times leverage ratio.

I would think that that's something that's doable for us. I don't think HEICO is going to be a seven times leveraged business.

That's not in the cards for us. I'm not going to rule out, for an incredibly good acquisition, if we went to that level and had a pathway to get back down into the twos over a reasonable period of time, we would certainly consider that and execute on it if it was good for our shareholders.

Got it. That's really helpful.

Then I guess just one on ETG. I guess was the government shutdown at all related to any of the mix impact that you guys discussed in the quarter or is that not the driver?

That wasn't the driver. It did have some impact, a little bit, stuff shifting out.

We'll pick up the benefit of that later on in the year, but I wouldn't call it a material impact.

Great. Thank you very much, and have a good day, guys.

Thank you.

Thanks.

Good morning. You have Max Miller on for Gavin.

Good morning. Good morning, Max.

How's it going? It's pretty clear that a lot of the tightness in the aftermarket and some of the OEM pricing, obviously, actually increases the value proposition of a HEICO alternative.

If we hypothetically flip that script, what are the implications for HEICO in a world where maybe some new aircraft come online, some of the older platforms come out of the fleet, and aftermarket, or at least the fleet age, begins to normalize a little bit? Does that change the math for PMA utilization?

Where would you see HEICO thriving?

We don't think so. Our business has always been impacted by, first and foremost, the growth in fleet hours or available seat miles.

Then the subcomponents of that are you look at the age of the aircraft. You've got this 20-something thousand aircraft fleet, which is aging one year per year.

The OEMs do a really good job of making sure that they escalate prices very aggressively to take advantage of that. Then when you look at the fleet retirement, that typically hasn't been a big part of the equation, but it is something that we continue to look at.

I think there's a very big opportunity for all of these new aircraft that have been delivered roughly over the last 10 years, the price of the spares on those aircraft is significantly higher than on the spares on the aircraft that they replace. If you look line for line, the same line-replaceable LRU on an older aircraft versus a newer aircraft, the newer ones are significantly more expensive.

All of this is to say, I think I agree with you, I think our value proposition increases substantially, and I think that we're going to be in a very good place. We're already taking advantage of the opportunity in a lot of these markets, and I think that will continue.

Great. Thank you.

I'll leave it at one.

Thank you.

Hey, morning, guys. Thanks for getting me on here and sticking around.

Good morning.

Maybe quickly, Eric, just to go back to John's energy line of questioning, and I don't know if this is a quick one or a bigger conversation for another time, but the CFM56 and its potential use in the power generation market, you've obviously got a lot of content on some of those legacy platforms. Should we expect that, assuming it gains traction in the energy marketplace, can that be a significant tailwind in terms of those platforms generating a materially more amount of parts, thinking that they've got life after or additional life, besides kind of in the traditional aircraft market?

Yes, I think definitely. When you look at the aeroderivative market, there is tremendous life in repurposing those engines.

There are many companies doing that, whether it's on some of the old CF6s or the CFM56s. The use of the HEICO parts in those repairs and overhauls is, I expect, going to be substantial.

I think that there's a very good tailwind for us there.

Okay. I'll keep it at that since we're running long anyway.

Thanks, guys.

Thank you. Thanks, Mike.

Good morning. Thanks for fitting me in, and congratulations on the quarter.

Thank you. Thank you for joining.

Real quick,

just one for Carlos. Just looking back at space organic growth in ETG in the Q last year, it was exceptional, $13.5 million year-over-year.

You're going to give us how much it was down this quarter, in this Q. Can you preview what that decline is?

I could give you some color on that. The decline in space organically was in the high single digits for the quarter compared to Q1 of '25.

As Victor mentioned earlier, Jonathan, it's not a result of order volume kicking down or backlog melting. It's really just a function of shipments, always is with space.

I wouldn't read too much into that, to be candid with you. I think you'll see some of that recover in the subsequent quarters as we catch those shipments going forward.

Is that helpful?

That helps. That shows it has to do with a really strong comp last year.

The other question I've heard folks ask us is you have exceptional positioning with the legacy space and defense hardware providers. How is your penetration with new customers in this area?

Are you guys able to maintain a position with these new people in space and defense? Thank you, guys.

Thank you, Jonathan. It's a good question.

The answer to that is yes. We picked up a number of new space and defense tech customers along the way, and so far, we're holding on to them.

The way we generally look at it is that we are going to supply the customer base. They need our parts, our products, regardless of who they are, and for the most part, that seems to be holding true.

Thanks for the question.

Thank you.

Good morning, gentlemen. Great job.

Mine obviously is revolving around the defense budget. You saw the proposed potentially $1.5 trillion budget.

Even if that doesn't come to fruition over a number of years, it's still a big number. Just directionally, how do you see that impacting your business, just broad strokes on that?

Then, obviously, all the announcements earlier this year from the Department of War on the programs, drone dominance, Arsenal of Freedom, you name it, what have you been told? Have you spoken to the Department of War, and just maybe an overall view on those dynamics?

First, Tony, thank you very much for joining us and for your comments. We very much appreciate them.

In terms of the outlook for us, the impact on us, first question that you asked, the impact on us of the increased defense budgets and some of these orders that definitely is beneficial. Obviously, the devil will be in the details ultimately where that falls over the years.

From what we've seen and heard, and we talked a little bit earlier about some of these multiyear buys that the government is doing on programs. We're on both sides of the business.

This applies to both the Electronic Technologies and Flight Support Groups. There's there's definitely an impact and a benefit, and maybe we're even seeing some of that in our backlogs now.

That's a that's a good thing. In terms of the Golden Dome possibilities, it's not that completely defined publicly.

From what we know and what we see, it consists of a lot of existing programs, particularly obviously missile defense programs. Again, we're on both on both sides of the business, Flight Support and Electronic Technologies, we're on a lot of those programs.

There appear to be some newer tracking and reconnaissance parts of that system. We are, from what we're told, some of the things we're selling on, I can't go on obviously specifics, but we're told that they are for Golden Dome.

There's no Golden Dome department, you're not going to get a letterhead that says Golden Dome, this is officially Golden Dome. There was this list of of companies they put out as primary vendors.

Remember, we're we're down a layer in the supplier base. Then, of course, as I'd answered earlier and mentioned, the defense tech guys are participating there, it appears, in a variety of ways.

We're we're picking that up as well. Overall, both are positives for us, and and we feel good about them on, again, both sides of the business.

Thanks so much. Great job.

Thank you very much.

Hey, good morning, guys.

Good morning, Louis.

Maybe one for Carlos. Just the stock comp expense was pretty high in the quarter.

I know it was sort of called out in the press release as well. Just curious, is that level continue throughout the year or does it step down or does it ramp up?

It's a good question, Louis. You may remember last year we talked a little bit about the performance feature that were attached to our options in '25.

What winds up happening is normally our options historically have always just been time-based, they vest over five years. Now we added a performance feature last year for growth in the business, and what winds up happening is the amortization of that expense actually accelerates as a result of that.

It's part of the accounting rules that drive us crazy sometimes, but nonetheless. What'll happen is we'll probably catch a little bit more of that elevated expense the front half of this year, and then it'll taper off towards the end of the year.

In fact, as we get into the following fiscal year, it should taper down probably on par or lower than what it had been historically because we would have amortized a lot of those '25 grants in fiscal '26. Does that help?

I appreciate it, Carlos. I know how much you love all the accounting on that.

Right.

Maybe one for Victor and Eric, just kind of, again, big picture here. Obviously, you guys have grown a ton over your 36 years.

You're kind of in the $5 billion neighborhood. Just how do you guys think about the scale of the business, the sheer number of underlying businesses that are operating?

At some point, do you see some other potential portfolio actions, makes sense?

Yeah. Listen, we've been able to adjust and grow with the business and morph, if you will, the organization as we've gone.

There was a point in time where everything reported either to Eric or to me, this is Victor speaking, reported to one of us. Over time, we've gone to more of a bit of a working supervisor model, if you will.

We have really extraordinary and talented people who've shown an ability to handle multiple companies at one time and acquisitions as well, multisite situations, for example. They are leading groups, and we've been breaking this down into groups on both sides of the business.

That's going to continue, and you probably noticed the acquisitions we've made have generally been into those groups or into or under reporting to another subsidiary. We want to keep that talent doing it that way, and we think that's very scalable.

Great. Appreciate that, Victor.

Thank you very much.

Thank you very much, everyone, for participating in our call and for those who asked questions. We are always available, that's Eric, Victor, or Carlos, for any of your additional questions that you may want to ask offline.

We look forward to speaking with you again on our second quarter fiscal 2026 conference call at the end of May. Thank you very much, and this concludes our call.