Short answer
Heico Corp (HEI) filed its fiscal 2009 10-K annual report with the SEC on Dec 23, 2009.
- Top risk flagged: FAA certification or authorization revocation, threatening aircraft-parts sales and repair operations
Heico Corp FY2009 10-K analysis
AI summary of each section, grounded in the filing text
Business Overview
- Core model: Two-segment aerospace and defense electronics manufacturer, combining lower-cost FAA-approved parts with niche mission-critical electronics
- ETG sales mix rose to 27% from 25%, with fiscal 2009 acquisitions and increased homeland-security orders lifting backlog to $71.6 million
- Strategic emphasis: Defense, space and homeland-security niches alongside aviation aftermarket expansion, reducing reliance on airline demand
- R&D investment reached $19.7 million, including $11.5 million in FSG and $8.2 million in ETG
- Airline downturn reduced FSG backlog to $32.9 million from $49.0 million, while total backlog declined to $104.5 million from $107.1 million
Management Discussion & Analysis
- Revenue $538.3M, down 7.6% YoY from $582.3M amid global recession and weaker customer demand
- Operating margin 16.4% vs 18.2%; gross margin 33.6% vs 36.1%; net income $44.6M vs $48.5M
- Best segment ETG: sales $143.4M, operating income $40.0M, margin 27.9%; worst FSG: sales $395.4M, operating income $60.0M, margin 15.2%
- Operating cash flow $75.8M; acquisitions $71.1M; three-year capex $36.6M, buybacks $8.1M, dividends $7.8M
- Fiscal 2010 target: growth in sales, earnings and operating cash flow; risks include recession, airline demand, defense spending and acquisition execution
Risk Factors
- FAA certification or authorization revocation, threatening aircraft-parts sales and repair operations
- Defense exposure: 46% of Electronic Technologies Group sales tied to U.S. and foreign military customers in fiscal 2009
- Aftermarket competition from Pratt & Whitney and General Electric, with OEMs potentially bundling products and services
- Uninsured aircraft-component liability claims potentially exceeding aviation insurance policy limits
- Key-person dependency on Chairman and CEO Laurans A. Mendelson and Co-Presidents Eric and Victor H. Mendelson
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