Executive Summary

HEICO delivered record Q3 FY2025 results: net sales $1.15B (+16% YoY), operating income $265.0M (+22% YoY), net income $177.3M (+30% YoY), and diluted EPS $1.26 (+30% YoY). Consolidated operating margin expanded to 23.1% (from 21.8%) .
Results exceeded Wall Street consensus: EPS beat by $0.12 ($1.26 vs $1.14*) and revenue beat by ~$32.6M ($1,147.6M vs $1,115.1M*); EBITDA also beat ($316.4M vs $300.4M*) .
Flight Support Group (FSG) posted record quarter: net sales $802.7M (+18% YoY), operating income $198.3M (+29% YoY); operating margin rose to 24.7% (EBITA ~27.3% before amortization) .
Management reiterated confidence in net sales growth in both segments and highlighted strong cash generation (Q3 operating cash flow $231.2M; net debt/EBITDA down to 1.90x) and ongoing M&A momentum (Gables acquisition; accretive expected within a year) .

What Went Well and What Went Wrong

What Went Well

Robust organic growth: Double-digit consolidated organic net sales growth drove records in net sales and operating income; FSG organic growth was 13% with strength across parts, repair & overhaul, and specialty products .
Margin expansion: FSG operating margin rose to 24.7% (EBITA ~27.3%); ETG delivered record net sales with operating margin of 22.8%, reflecting strong demand in other electronics and space products .
Strategic M&A execution: ETG acquired Gables Engineering (third-largest HEICO acquisition), expected to be accretive within a year; management cited strong pipeline and liquidity to fund further deals .

Management quotes:

“Our record third quarter results reflect robust double digit organic growth in our core businesses, further enhanced by the momentum from our disciplined acquisition strategy.”
“Gables is the third largest acquisition in HEICO's history, and we expect Gables to be accretive to earnings within the year.”
“Cash flow provided by operating activities increased 8% to $231.2 million… net debt to EBITDA ratio was 1.9x as of 07/31/2025.”

What Went Wrong

ETG margin modestly lower YoY: ETG operating margin was 22.8% vs 23.5% last year, mainly due to higher SG&A from performance-based comp; EBITA margin before amortization was 26.6% .
Ongoing supply constraints: Management noted continued shortages and backlog impacts, with sales constrained by supplier deliveries despite improvements vs prior years .
Intangible amortization headwind: ETG amortization tied to acquisitions (including Gables) dampened reported operating margins; CFO indicated ~$1M/month amortization from Gables initially .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Net Sales ($USD Millions)	$992.2	$1,097.8	$1,147.6
Operating Income ($USD Millions)	$216.4	$248.2	$265.0
Operating Margin %	21.8%	22.6%	23.1%
Net Income Attributable to HEICO ($USD Millions)	$136.6	$156.8	$177.3
Diluted EPS ($USD)	$0.97	$1.12	$1.26
EBITDA ($USD Millions)	$261.4	$297.7	$316.4
Cash Flow from Operations ($USD Millions)	$214.0	$204.7	$231.2

Segment performance

Segment Metric	Q3 2024	Q2 2025	Q3 2025
FSG Net Sales ($USD Millions)	$681.6	$767.1	$802.7
FSG Operating Income ($USD Millions)	$153.6	$185.0	$198.3
FSG Operating Margin %	22.5%	24.1%	24.7%
ETG Net Sales ($USD Millions)	$322.1	$342.2	$355.9
ETG Operating Income ($USD Millions)	$75.8	$77.9	$81.0
ETG Operating Margin %	23.5%	22.8%	22.8%

Key balance sheet and leverage KPIs

KPI	Oct 31, 2024	Jul 31, 2025
Cash & Equivalents ($USD Millions)	$162.1	$261.9
Total Debt ($USD Millions)	$2,229.4	$2,447.6
Net Debt ($USD Millions)	$2,067.3	$2,185.7
Net Debt / EBITDA (TTM)	2.06x	1.90x

Estimate comparison (S&P Global)

Metric	Consensus (Q3 2025)	Actual (Q3 2025)	Surprise
Primary EPS ($USD)	$1.14*	$1.26	+$0.12
Revenue ($USD Millions)	$1,115.1*	$1,147.6	+$32.6M
EBITDA ($USD Millions)	$300.4*	$316.4	+$16.0M
# EPS Estimates	14*	—	—
# Revenue Estimates	15*	—	—

Values marked with * retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Trend	FY2025	Growth expected (qualitative)	Growth expected (qualitative)	Maintained
FSG Operating Margin	Near-term	23–24% range expectation	Around 24% modeled; let a few quarters confirm before moving higher	Maintained/Refined
ETG Operating Margin	Near-term	22–24% expected range	22–24% expected range; sequentially consistent	Maintained
Effective Tax Rate	FY2025	18–19% expectation	~19–20% going forward; Q3 ~18.9%	Slightly Raised
Dividend	Semiannual	$0.11 (Jan 2025)	$0.12 (Jul 2025; +9%)	Raised
Leverage Target	Policy	Net debt/EBITDA ~2x after acquisitions	Net debt/EBITDA 1.90x achieved; ample capacity for M&A	Improved
M&A Activity	Ongoing	Active pipeline	Strong pipeline; Gables acquired; accretive expected within a year	Reinforced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Defense/Missile Defense	Record ETG backlog; strong defense & space demand ; FSG defense orders/backlog robust	Missile defense growth in both FSG and ETG; substantial backlog and allied demand	Strengthening
Supply Chain	Improving but still mixed; SPS fire disruption discussed	Shortages persist; sales constrained by supplier deliveries despite improvements	Gradual Improvement with constraints
Pricing Discipline	Passing cost increases; restrained pricing despite OEM hikes	PMA discounts range ~20–70%; average ~30–40% vs OEM; long-term contracts limit net pricing	Disciplined/Customer-friendly
PMA & Repair Strategy	Broadening product line; combined OEM/alternative offering via repair	Repair and overhaul up mid-teens; PMA-friendly repairs boosted margins	Positive Mix Effect
Europe Exposure	ETG European defense growth via Exxelia; distribution presence	Europe doing well; new UK and Paris facilities; strong distribution network	Expanding
Inventory & Working Capital	Turns improving; investment moderating in 2H	ETG inventory management strong; FSG investment commensurate with growth	Improving
Seasonality	FSG typically strongest in Q4	Q4 expected strongest; normal cadence	Consistent
Tax Rate	FY2025 effective 18–19%	~19–20% annual; Q3 ~18.9% (credits)	Slightly Higher Baseline
M&A & Integration	Wencor: cooperation without consolidation; synergies described	Gables acquired; accretive outlook; amortization headwind acknowledged	Active

Management Commentary

Prepared remarks highlights:

“Record quarterly net income, operating income and net sales, mainly reflecting robust double-digit consolidated organic net sales growth.”
“FSG: net sales increased 18%… operating income increased 29%… improved gross margin and SG&A efficiencies.”
“ETG: net sales increased 10%… operating income increased 7%… strong organic growth in other electronics, defense, and space.”
“Operating cash flow $231.2M; net debt/EBITDA 1.90x; confident in net sales growth across both segments.”

Important quotes:

“Our disciplined acquisition strategy… Gables… expected to be accretive to earnings within the year.”
“FSG cash margin before amortization (EBITA) ~27.3%… continued expansion of our cash margin.”
“Dividend: 94th consecutive semiannual cash dividend at $0.12 per share, +9% vs January.”

Q&A Highlights

Margin sustainability: CFO cautioned not to extrapolate near-25% FSG OI margin; models around ~24% near term, with potential 20–30 bps annual leverage longer term .
Tax rate: Q3 effective ~18.9% (credits); forward ~19–20% annual effective rate .
Gables acquisition: third-largest by purchase price; ~$1M/month amortization; expected accretive; growth-focused thesis .
PMA pricing gap: discounts ~20–70% vs OEM; average around 30–40%; long-term contracts (CPI/flat) temper net pricing uplift .
Supply chain/capacity: capacity adequate with some expansions; persistent shortages still constrain sales; decentralized purchasing seen as competitive advantage .
Seasonality: FSG typically strongest in Q4; sequential build-through the year .
Destocking: pockets on non-engine side offset by shortages elsewhere; net demand remains strong .

Estimates Context

Q3 FY2025 vs consensus: EPS $1.26 beat by $0.12 (consensus $1.14*); revenue $1,147.6M beat by ~$32.6M (consensus $1,115.1M*); EBITDA $316.4M beat by ~$16.0M (consensus $300.4M*) .
Estimate breadth: 14 EPS estimates*; 15 revenue estimates*.
Implications: Beats were driven by FSG mix (repair & overhaul and defense specialty products), SG&A leverage, and sustained double-digit organic growth; near-term estimate revisions should reflect stronger margins at FSG and continued net sales momentum.
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

FSG strength and margin quality are the primary stock drivers; mix benefits and SG&A leverage suggest upside risk to near-term profitability, even as management guides conservatively around ~24% OI margin .
ETG is stabilizing with record sales and improving order trends in defense/space/other electronics; reported margins reflect amortization—cash EBITA remains strong .
Cash generation remains robust (Q3 OCF $231.2M) and leverage has declined (net debt/EBITDA 1.90x), supporting continued accretive M&A and deleveraging—positive for equity optionality .
The Gables acquisition adds avionics depth and growth vectors; initial amortization headwind is manageable and accretive earnings are expected within a year .
PMA and repair strategies continue to underpin market share gains with customer-friendly pricing discipline; long-term contracts provide revenue stability and limit outsized near-term price-ups .
Supply chain constraints persist but are improving; decentralized procurement remains a competitive edge, though occasional sales constraints may create quarterly lumpiness .
Near-term trading: Strong Q3 beat, margin expansion, and Q4 seasonality in FSG offer positive setup; watch ETG SG&A and amortization for reported margin volatility and any defense/space mix changes .

Additional Notes

Other Q3 press releases (HEI Civil ranking, VPT product expansion) were not directly related to consolidated financial guidance and did not alter the earnings outlook .
Dividend: July semiannual dividend of $0.12 per share (+9%) underscores confidence in cash generation .

Cross-references: All quantitative and qualitative assertions are sourced to HEICO’s Q3 FY2025 8-K press release and financial tables, Q3 earnings call transcript, and prior quarter filings/transcripts as cited above.

HEICO CORP (HEI)·Q3 2025 Earnings Summary