Short answer
Heico Corp (HEI) filed its fiscal 2010 10-K annual report with the SEC on Dec 22, 2010.
- Top risk flagged: FAA certification risk: revoked or suspended authorizations could halt aircraft-parts repair and overhaul operations
Heico Corp FY2010 10-K analysis
AI summary of each section, grounded in the filing text
Business Overview
- Core model: FAA-approved aerospace replacement parts, repair services and niche electronic components across two operating segments
- Electronic Technologies Group expanded to 33% of net sales from 27%, driven partly by a fiscal 2010 acquired business
- Strategic emphasis: niche, mission-critical electronic subcomponents for defense, space, medical and commercial avionics markets
- Backlog reached $142.5 million, up from $104.5 million, with substantially all expected delivery in fiscal 2011
- R&D increased to $22.7 million combined, including $10.9 million in Electronic Technologies and $11.8 million in Flight Support
Management Discussion & Analysis
- Revenue $617.0M, up 14.6% YoY from $538.3M, led by ETG sales of $205.6M, up 43.4%
- Operating margin 17.7% vs 16.4%, gross margin 36.0% vs 33.6%, net income $54.9M vs $44.6M
- Best segment ETG: operating income $56.1M, up 40.4%; FSG: sales $412.3M, up 4.3%
- Operating cash flow $101.7M; acquisitions $39.1M; three-year capex $32.6M, dividends $9.3M, buybacks $8.1M
- Fiscal 2011 target: higher sales and net income; risks include weaker airline demand and defense spending reductions
Risk Factors
- FAA certification risk: revoked or suspended authorizations could halt aircraft-parts repair and overhaul operations
- Defense-spending exposure: 57% of Electronic Technologies Group sales tied to defense, satellite, spacecraft and homeland-security products
- Foreign-market exposure: 31% of fiscal 2010 consolidated net sales derived from customers outside the U.S.
- OEM competition: Pratt & Whitney and General Electric compete directly in replacement aircraft parts
- Key-person dependency: senior management led by Laurans A. Mendelson and Eric A. Mendelson
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