Aug 26, 2026 earnings call — Record quarter with strong organic growth
HEICO reported record consolidated net sales of $1,413.1 million in Q3 fiscal '26, up 23% year-over-year.
Revenue $1.4B (est $1.4B) · EPS $1.67 (est $1.52)
Key quotes
"And this quarter, I'm proud to announce there was $345 million of it; $345 million of cash generated from operations, which is almost 150% of our net income."
"We had a record backlog again, both organically and with acquisitions in the ETG, just very strong backlog, extremely strong orders, particularly in that kind of industrial tech space."
"During the third quarter, we issued $1.2 billion of senior unsecured notes, further strengthening our balance sheet and used the proceeds to repay outstanding borrowings under our revolving credit facility."
Analyst Q&A 16
Which markets drove the growth
Q (Lawrence Solow · CJS): Analyst asked whether one category (like defense) drove the strong organic growth and for color on bookings behind those categories.
A: Management said growth was broad-based across verticals. They highlighted especially industrial technology, defense and commercial aviation. Bookings are very strong with a record backlog and many customers asking to expedite orders.
"We had a record backlog again, both organically and with acquisitions in the ETG, just very strong backlog, extremely strong orders, particularly in that kind of industrial tech space." — Victor Mendelson (CEO·CHAIR)
Are higher ETG margins sustainable
Q (Noah Poponak · Goldman Sachs): Analyst asked if recent ETG margins above guidance are mix only and whether SG&A or overhead absorption helps. Also asked about M&A cadence and future deal sizes.
A: Management said ETG is mix sensitive and they do not want to change public expectations after only a few quarters. They said they reworked capital structure and have near $3 billion capacity to deploy, and their M&A pipeline is full across small, medium and large deals.
"As you know, we've worked very hard to be the buyer of choice." — Eric Mendelson (CEO·CHAIR)
Demand and Right to Repair impact
Q (Peter Arment · Baird): Analyst asked about demand from Europe and specifically Exxelia, and separately about Right to Repair/Section 349 and its potential impact.
A: Management said Europe demand is very strong both for exports and local sales, and Exxelia is doing extremely well. On Right to Repair, they said HEICO businesses are watching closely and see potential opportunities but will wait for final outcomes.
"Europe has been very strong for us. Both here in the U.S. shipping to Europe, by the way, and from within the European market itself." — Victor Mendelson (CEO·CHAIR)
FSG growth mix and PMA adoption
Q (Sheila Kahyaoglu · Jefferies): Analyst asked for details on FSG growth by parts, repair and specialty products, and whether PMA penetration and component repair help specialty products.
A: Management said 12% organic revenue growth but about 20% organic operating income growth. Parts/distribution grew about 15%, specialty products 14%, and component repair 5%. They said PMA and HEICO proprietary DER adoption is strong where customers want alternatives, and specialty products growth is largely defense driven.
"the 12% organic growth, which we're very happy with on revenue, pales in comparison compared to approximately 20% organic operating income growth." — Eric Mendelson (CEO·CHAIR)
New defense and tech markets
Q (John Godyn · Citi): Analyst asked how HEICO is exposed to fast-growing themes outside aerospace aftermarket like missiles, space, drones, IGT and whether those are moving the needle.
A: Management said HEICO has long served drones, missiles, space and industrial tech across ETG and FSG with electronics and structural components. They reported instances of customers asking to 2x–10x production on some programs and said defense-related growth is strong and ongoing.
"We've continued to evolve with that in both sides, both the ETG and the FSG and with both electronic components, electro-optical components as well as structural components like composites and others." — Victor Mendelson (CEO·CHAIR)
Venture investing plans
Q (Ronald Epstein · BofA): Analyst asked whether HEICO is considering corporate venture capital or venture-style investments in aerospace/DefenseTech.
A: Management said they do not plan to set up a venture fund or tech arm. They will continue to make selective strategic venture investments when it fits their business needs, not as a broad VC strategy.
"I don't see us setting up a venture fund, having a kind of a venture tech arm as other companies do because we don't see that being in our remit broadly at this point." — Victor Mendelson (CEO·CHAIR)
Wencor impact on margins
Q (Sebastian Rivera · Stifel): Analyst asked how much Wencor has driven the FSG margin step-up and what inning they are in for PMA replacement opportunity.
A: Management said the Wencor combination has been excellent and there are synergies, with more to realize as the businesses work together. They described the combination as phenomenal and expressed excitement about the future.
"But it's been a phenomenal combination, and I'm very excited about the future for the combined company." — Eric Mendelson (CEO·CHAIR)
Levers to drive FSG commercial growth
Q (Peter Skibitski · Alembic Global): Analyst asked what levers remain to drive organic growth in FSG commercial given a possible flattening in global air traffic — e.g., market share, new products, pricing, Asia presence.
A: Management said there is a lot of unsold potential and customers are excited by HEICO's independent and OEM-aligned offerings. They said they already have deep Asia relationships and operations, including sales offices, and will consider opportunities as appropriate.
"Frankly, our customers are very excited about what we are offering, both on the independent as well as the OEM aligned side." — Eric Mendelson (CEO·CHAIR)
CapEx to meet expedited orders
Q (Scott Mikus · Melius): Analyst asked if customers asking to expedite shipments and backlog growth will change HEICO's CapEx plans.
A: Management said it is not causing a material change in CapEx; most needs are incremental equipment purchases. They expect CapEx around 1.5% of sales and said even 2% would be manageable, while they will invest where they have high confidence of demand.
"So as a general rule of thumb, this is not leading to a material change in our CapEx." — Victor Mendelson (CEO·CHAIR)
Margins of recent acquisitions
Q (Joshua Korn · Wells Fargo): Analyst asked what margins look like on revenues from recent acquisitions.
A: Management said they do not disclose margins at the subsidiary sublevel. They said their gating expectation for acquisitions is that most deals should have EBITDA margins of 20% or greater.
"I will tell you that when we make acquisitions, our expectations are that most of the deals we close, the EBITDA margin needs to be 20% or greater." — Carlos Macau (CFO)
Long-term shareholder comment
Q (Rene Plessner): Investor commented on HEICO's long-term returns and longevity; not a financial question.
A: Management thanked the longtime shareholder and said HEICO focuses on serving customers and building a long-term industrial company. They expressed gratitude and pride in their team and shareholders and noted customers generally want to buy more from HEICO.
"And Rene, this is Eric. I add my thanks and gratitude as well for your support and confidence and friendship over many, many decades." — Eric Mendelson (CEO·CHAIR)
Component repair supply issues
Q (Gavin Parsons · UBS): Analyst asked if repair growth is still slower due to supply chain bottlenecks and if that is improving.
A: Management said the inability to get a final part prevents shipments and that shortage remains a major headache. They said some areas improved versus a year ago, but new issues have emerged so the situation is generally consistent, not materially better.
"When you've got a component and you could have 99 parts, but you're waiting for the final part, you can't ship." — Eric Mendelson (CEO·CHAIR)
If lower RPKs would hit commercial sales
Q (Shaina Zuber · Morgan Stanley): Analyst asked whether falling RPKs (air traffic) would flow through to lower commercial aftermarket demand.
A: Management said they have not yet seen that impact. They noted slower RPKs typically push airlines to seek cost savings, which can mitigate demand declines, and HEICO believes it can better mitigate such effects than many peers.
"And the other thing is when RPKs do slow down, airlines get even more serious about cost savings." — Eric Mendelson (CEO·CHAIR)
DoD engagement on Right to Repair
Q (William Barrett Taylor · TD Cowen): Analyst asked if the DoD has approached HEICO on Right to Repair and Build-to-Print and how involved industry participants are.
A: Management said they are aware of the discussions and see good opportunities for HEICO, but they would not discuss specifics of any conversations. They prefer to leave details private.
"I wouldn't want to get into any specific conversations. But again, we do think that there's very good opportunity for HEICO in this area." — Eric Mendelson (CEO·CHAIR)
Working capital trend and cash flow
Q (Matthew Akers · BNP Paribas): Analyst asked if working capital will remain a drag or if there are efficiency opportunities as HEICO grows, and about cash flow.
A: Management said working capital will grow with organic growth and they strategically hold inventory to meet backlog, so Q4 should be similar to this quarter. Carlos also said a payment to an estate will reduce operating cash flow by about $70 million to $75 million in Q4.
"The working capital at HEICO is going to grow commensurate with our organic growth." — Carlos Macau (CFO)
Interest expense increase this quarter
Q (Louis Raffetto · Wolfe): Analyst asked whether the quarter's interest expense included incremental costs from recent debt issuance.
A: Management confirmed interest expense included debt issuance costs and amortization of line-of-credit related costs, and those items went through interest this quarter.
"It did. For the -- with the debt issuance costs and then the amortization of the costs related to the line of credit, that all went through interest this quarter." — Carlos Macau (CFO)