HEICO Corporation Delivers Record Q1 2026 Earnings: Net Income Soars 13%, Robust Sales and Margin Expansion

Key Highlights from the Q1 2026 Report

• Record Net Income: HEICO Corporation achieved a 13% increase in net income, reaching an all-time high of \$190.2 million, or \$1.35 per diluted share, for the first quarter of fiscal 2026. This compares to \$168.0 million, or \$1.20 per diluted share, for the same quarter last year.
• Surge in Net Sales: Net sales climbed 14% to \$1,178.6 million, up from \$1,030.2 million in Q1 2025, reflecting strong organic growth and contributions from recent acquisitions.
• Operating Income and Margin Expansion: Operating income rose 15% to \$259.9 million, with the consolidated operating margin improving to 22.1%, up slightly from 22.0% a year ago.
• EBITDA Growth: EBITDA increased 14% year-over-year, amounting to \$312.0 million versus \$273.9 million in the prior period.
• Tax Benefits: Net income was favorably impacted by discrete income tax benefits from stock option exercises. The benefit was \$21.8 million (or \$0.15 per diluted share) in Q1 2026, compared to \$26.5 million (or \$0.19 per diluted share) in Q1 2025.

Segment Performance

Flight Support Group

• Net sales increased 15% to \$820.0 million, driven by strong 12% organic growth and the positive effects of fiscal 2025 acquisitions.
• Operating income surged 21% to \$200.7 million, supported by increased demand across all product lines, SG&A expense efficiencies, and an improved gross profit margin, especially in repair and overhaul parts/services.
• Operating margin for the group improved significantly to 24.5%, up from 23.3%, primarily due to better expense management and favorable product mix.

Electronic Technologies Group

• Net sales rose 12% to \$370.7 million, with 6% organic growth supplemented by acquisitions. Growth was led by aerospace and defense electronics, partially offset by softer demand for space products.
• Operating income was \$73.2 million, down from \$76.5 million, primarily due to a lower gross profit margin caused by an unfavorable product mix and decreased space product sales.
• Operating margin declined to 19.8% from 23.1% year-over-year, reflecting the margin compression in the segment.

Cash Flow and Balance Sheet Strength

• Operating cash flow remained robust at \$178.6 million, though lower than \$203.0 million last year, due to a significant distribution under the Leadership Compensation Plan and higher performance-based compensation payments.
• HEICO completed an acquisition during the quarter, which contributed to increases in both total and net debt. The total debt to net income ratio rose to 3.52x (from 3.14x), and the net debt to EBITDA ratio increased to 1.79x (from 1.60x).
• Net cash used in investing activities was \$447.0 million, primarily for acquisitions, compared to \$288.0 million in the prior year. Net cash provided by financing activities was \$309.6 million, up from \$90.7 million, reflecting increased borrowings to support M&A activity.

Strategic Outlook and Forward Guidance

HEICO’s management expressed confidence in continued sales momentum across both business segments in the remainder of fiscal 2026, underpinned by strong organic demand and the positive impact of recent acquisitions. The company remains focused on selective M&A aligned with its growth strategy, while maintaining disciplined financial management to enhance long-term shareholder value.

Shareholder Information & Share Structure

• HEICO has two classes of common stock, both economically identical but differing in voting rights. As of the report date, approximately 84.4 million Class A Common shares (HEI.A) and 55.1 million Common shares (HEI) are outstanding.

The company will host a conference call on February 26, 2026, to discuss results. Investors can find replay details on HEICO’s investor website.

What Investors Need To Know — Price Sensitive Information

• Double-Digit Growth: The company’s continued double-digit growth in both sales and net income, coupled with record quarterly results, is a clear indicator of operational strength and could positively impact share value.
• Accretive Acquisitions: The recent acquisition in Q1 2026 has increased leverage ratios, but also contributed to sales and EBITDA growth, signaling management’s ongoing strategy to expand through selective M&A.
• Tax Benefits: Income was boosted by significant tax benefits from stock option exercises, though this was less than the prior year’s benefit. Investors should consider the sustainability of such tax benefits in future quarters.
• Segment Margins: While the Flight Support Group saw expanding margins, the Electronic Technologies Group experienced margin compression due to product mix and softness in space products, which could impact future profitability if the trend continues.
• Strong Balance Sheet: Despite higher debt from acquisitions, HEICO maintains healthy cash flows and significant liquidity, supporting ongoing growth initiatives.

Condensed Financial Data

• Net Sales (Q1 2026): \$1.18 billion
• Net Income (Q1 2026): \$190.2 million
• EBITDA (Q1 2026): \$312.0 million
• Operating Cash Flow (Q1 2026): \$178.6 million
• Net Debt to EBITDA: 1.79x (up from 1.60x at FY2025 end)
• Total Assets (Jan 31, 2026): \$9.04 billion

Risks & Forward-Looking Statements

Management identified several forward-looking risks, including:

• Potential impacts from public health threats
• Variability in commercial air travel demand and related airline decisions
• Product development, regulatory changes, and cost control challenges
• Cybersecurity risks and IT system disruptions
• Macroeconomic factors such as inflation, interest rates, and currency fluctuations

HEICO cautions investors that actual results may differ materially from forward-looking statements, and encourages a review of all SEC filings for a comprehensive understanding of these risks.

Conclusion

HEICO’s record-setting Q1 2026 results, driven by strong organic and acquisition-related growth, improved margins in the Flight Support Group, and disciplined financial execution, are likely to be viewed positively by investors. However, margin pressures in the Electronic Technologies Group and increased leverage from acquisitions warrant close attention going forward. The company’s continued focus on growth through both organic initiatives and strategic acquisitions positions it well, but ongoing monitoring of segment performance, cash flows, and leverage ratios is advised.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review HEICO Corporation’s filings with the SEC and consult with their financial advisors before making investment decisions. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially.

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