Short answer
Heico Corp (HEI) filed its fiscal 2011 10-K annual report with the SEC on Dec 22, 2011.
- Top risk flagged: FAA certification and airworthiness rules: revocation or suspension of material authorizations could halt regulated operations
Heico Corp FY2011 10-K analysis
AI summary of each section, grounded in the filing text
Business Overview
- Core model: Two-segment aerospace and defense manufacturer, combining FAA-approved aftermarket parts and mission-critical electronic components
- New offerings from 3D Plus acquisition: Three-dimensional microelectronics, stacked memory, POL voltage converters and System-in-Package solutions
- New offerings from Switchcraft acquisition: Harsh-environment connectors, cables, patch panels and switches
- Strategic emphasis: Increased stand-off warfare exposure and niche mission-critical subsystems through Electronic Technologies expansion
- Backlog reached $224 million, up from $142 million, including a new five-year, approximately $50 million electronic-products contract
Management Discussion & Analysis
- Revenue $764.9M, up 24% YoY, led by FSG $539.6M, up 31%, and ETG $227.8M, up 11%
- Operating margin 18.1% vs 17.7%, gross margin 35.9% vs 36.0%, net income $72.8M vs $54.9M
- Best segment FSG: operating income $95.0M, up 40%, margin 17.6% vs 16.5%; ETG margin 26.1% vs 27.3%
- Operating cash flow $125.5M; acquisitions $94.7M and capital expenditures $28.6M over three years
- Outlook: fiscal 2012 sales and net income growth targeted, with commercial aviation uncertainty and defense-spending reductions as risks
Risk Factors
- FAA certification and airworthiness rules: revocation or suspension of material authorizations could halt regulated operations
- Defense and homeland-security exposure: 56% of Electronic Technologies Group sales tied to defense, satellite, spacecraft and homeland-security products
- Foreign-market exposure: 34% of fiscal 2011 consolidated net sales from customers in approximately 95 countries
- Supply-chain vulnerability: long-lead components and raw materials subject to disruption, with supplier changes requiring part recertification
- OEM competition: jet-engine and aircraft-component manufacturers may bundle products and services or underprice HEICO parts
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