HEICO Corp Q3 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Robert Spingarn - Melius Research - Analyst : Well, good morning and very nice quarter. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Thank you very much, Rob. Good morning to you.

Question: Robert Spingarn - Melius Research - Analyst : Okay. And then notwithstanding the strong growth, there have been some airlines out there talking about overcapacity that's been a bit of a theme. Here, are you seeing any evidence of that in the order patterns so far? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group No, we really don't, actually. And as a matter of fact, the number of airlines have sort of trimmed back their purchases. They, if you will, in hindsight, I think over-ordered a bit in 2023, took more than they needed in 2023. So we do have anecdotal evidence of certain customers cutting back this year. But that was really offset by strength at other customers. So I think we continue to do very well. And that really -- that gets to the sort of the beauty of the HEICO model. And that we've got all these individual business units who have -- who control their own destiny. And if they are short in one area, they figure out how to make it up in another area, and this doesn't roll up to my desk after the fact and instead they are doing this real time. So in summary, no, the market for us remains quite strong.

Question: Robert Spingarn - Melius Research - Analyst : Okay. And then here is a question, Larry I thought I would ask you this question, but anybody please jump in. You continue to be acquisitive. You just did another deal. How would you characterize the M&A pipeline as it stands today maybe relative to the prior year or so? And is there any change in behavior from private equity folks who are out there with properties to sell? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Rob, this is Eric. I'll take that just for a moment. Of course, a year ago, we were largely focused on Wencor is our largest deal in the history of the company, over $2 billion. And that consumed a tremendous amount of capital as well as effort. But I can tell you that our pipeline today remains incredibly robust. We have a lot of projects in the work. Our acquisitions teams are nonstop running around the country. I think we worked very hard to differentiate ourselves as the buyer of choice. And we'll keep our fingers crossed that some of these will come to fruition. But there is no question that in conversations -- and I don't want to call out individual businesses because they have their own respective sellers and reasons for having dealt with us. But I can tell you that on all of our recent acquisitions I think HEICO's reputation has been key to getting all of those deals done and has made us a particularly attractive counterparty for our sellers and partners. And the pipeline remains very, very strong.

Question: Robert Spingarn - Melius Research - Analyst : Got it. And just quickly, Carlos, if I could ask you what the blended organic growth rate was in the quarter. Thank you.

Question: Robert Spingarn - Melius Research - Analyst : Yeah. So when you factor all in, yeah. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yeah. So all in, it was a tick over 7% organic growth for the whole company.

Question: Bert Subin - Stifel, Nicolaus & Company, Incorporated - Analyst : Hey, good morning and thank you for the questions. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Good morning, Bert.

Question: Bert Subin - Stifel, Nicolaus & Company, Incorporated - Analyst : Eric, as you think forward for FS, I guess, just for the aftermarket replacement parts business, I know it was brought up earlier on the airline side, you are seeing trimming capacity, lower yields. It doesn't sound like that's had any impact yet. Do you think there is an opportunity to gain meaningful share if we go into a little bit of a slowdown just because it opens up or makes the portfolio more attractive to customers that maybe bought PMA parts in sort of a lower percentage? Or do you think that becomes sort of the element where pricing maybe balances with volume? Just curious how you're thinking about maybe the next several quarters if things do slow down. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yes. Again we haven't seen signs of any slowdown to date. As a matter of fact, quite the contrary, sort of surprisingly to the contrary. And with regard to normally when there is a slowdown, obviously volumes drop, and that is when we pick up additional market share. That's when customers realize that they've got to take advantage of our additional cost savings, parts and repairs. And we pick up market share at that point. And then of course, when the economy recovers, we recover even stronger than most because we've picked up market share. The customers are very excited about the HEICO product line. They want to have competition. They are demanding competition. And HEICO provides very fair competition in that regard. So I think that we are going to do very well and, for sure, pick-up market share, get additional parts, and repairs designed when that -- if that occurs.

Question: Larry Solow - CJS Securities - Analyst : Thanks so much. Good morning, everybody. Thanks for taking the questions and congrats on really impressive growth. And even, Victor, it sounds like some good bookings growth for your side of the business. So it looks like we'll be having, hopefully, some good couple of quarters upcoming. I guess a question, Eric for you, just a couple. Thank you for some of that detail on the Wencor. So it sounds like you are certainly getting -- it looks like, some revenue synergies and stuff combining a lot of common services and whatnot. I'm just curious like, I don't know if you could break this out, but has your organic growth at Wencor kept up or even exceeded sort of the overall growth of FSG over the last few quarters? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group I would say it is very consistent with FSG. I mean we look at the various Wencor businesses, and their organic growth is very consistent. I mean some are -- there can be a little anomalies here or there. But in general, they are doing very well and consistent with the legacy HEICO businesses.

Question: Larry Solow - CJS Securities - Analyst : Got you. Just a question, well it sounds like the Capewell acquisition, a nice little tuck-in. Any more color on that? It looks like, I guess, it is going to be in specialty products, so a little more niche, higher margin stuff, maybe a little bit more some choppy sales, bigger quarters sometimes, right? Is that how to look at that kind of -- Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group It is a terrific business. And they basically have two main product lines. One is the commercial and military --the commercial and military aerial descent business. So basically, when you are -- the cockpit egress business, you need to have basically a way out of the cockpit in case the cockpit door is blocked or also cargo aircraft or tankers need egress from the aircraft in the event of a problem. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call And they have a very sophisticated, well time-tested, appreciated product, which is in a number of commercial and military aircraft, which is really key and really the only way to get people out of the aircraft in the event they need to escape. And the standard slides are either inactive or don't exist on certain types of aircraft. So that's part of their business. And then the other part of their business is the area of descent piece, whether you're parachuting out of an airplane or if they're dropping tanks or various equipment, the C130s or C-17s or whatever it is, you've got fairly sophisticated parachutes that attach to it. And there are various attachment mechanisms and aerial drop mechanisms, which are really critical. So we think that this is a great business. It's really appreciated by its customers, and frankly, is the pioneer in this business and since the 1940s. It was the original company that designed the device, which permit paratroopers to jump out of airplanes and to detach once they hit the ground and not get dragged as a result of the parachute. And so that's a very strong business. It's a very nichey business, and that's why we thought it fit very well in our Specialty Products Group. And of course, our specialty products has a lot of connection to the overall -- to the other parts of Flight Support. So I think it's a very good fit. We're very excited about it.

Question: Larry Solow - CJS Securities - Analyst : Great. Excellent. Thanks, everybody.

Question: Peter Arment - Robert W. Baird - Analyst : Thanks good morning, Larry, Eric, Victor, Carlos. Nice results. Victor, could you talk a little bit about -- you talked about some of the booking rates and sort of the confidence, and you start to see ETG growth thinking about next year. But just maybe some of the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call end-markets that you are seeing, is defense -- I assume it's almost 50% of your segment. Is that growing mid-single digits and it's just other areas that are seeing some softness? Or maybe just a little more color there. Thanks. Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group Yeah. So Peter, the defense part of the business and commercial aviation really have been extremely strong, experiencing double-digit growth. And again that is where some of our longer-term bookings really come on the defense side. And seeing some of those fill out beyond '25 as well as some of the quote activity in the order indications, again, to 2025 and beyond. So right now, I feel like defense is a good leader for us. And commercial aviation has really been phenomenal. So when I take that together, I look at the other markets, which are down consistent with, I think, what other people are seeing in these kinds of markets, and it looks like those order rates are bottoming out. It appears to us that our customers have kind of used up the excess inventory and the orders are coming in. And if you add six-month lead time on that, it gets us into fiscal '25. And that's why I say I feel like there will be a very nice tailwind from that next year. Of course, I can't be certain on that, but that's just how it feels right now.

Question: Peter Arment - Robert W. Baird - Analyst : Okay. That's helpful. And then just, Carlos, maybe just sticking with you, on the leverage, it has come down exactly where you guys kind of thought it would, to 2.1 turns. How are you thinking about just given that the M&A pipeline is full, but your ability want to still de-lever? What's -- any updated thoughts on where you're taking the leverage to?

Question: Peter Arment - Robert W. Baird - Analyst : Terrific, I'll leave it there. Thanks guys.

Question: David Strauss - Barclays - Analyst : Good morning. Thanks for taking my question. I wanted to ask about working capital. Last year, you had a fairly big inventory build. This year, fairly big inventory build. How are you thinking about potentially slower growth or working capital or maybe working capital just coming down on an absolute basis from here? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Hi, David, this is Eric. I'll start out with the big picture and then Carlos will get into the specifics on the financial. HEICO has always been focused on customer service, making sure that we capture all of the incremental sales that we can capture. And if you look at coming out of COVID, HEICO recovered much quicker than most. And as a result of not cutting our people, not trimming our inventories too much, and bottom-line, we were able to support the market when others weren't. And that's really been a huge HEICO advantage. So I can tell you from an operational perspective, Victor and I are very, very focused on all of our business units, reviewing working capital, understanding specifically how the inventory or the receivables have increased. Obviously, receivables, that's up due to the huge increase in sales. But with regard to inventory, our businesses have been really outstanding in terms of having the correct inventory on the shelf. There are a lot of companies where their inventory blows up and they've got the wrong stuff on the shelf and they can't sell it, and then people find out after the fact that it's a problem. HEICO has always been very, very careful not to do that. And as a result, we have very, very robust inventory reserve policies to make sure that we are being very proactive, and we make sure that we have the right inventory. So I think that there's no question that there is a big internal focus on inventory. We want to slow the growth, but it is really key to our business. And frankly, when you look at the 17% organic growth that we had in the aftermarket business, that was really outstanding. And that can only be accomplished through increased inventories. But Carlos will get into the specifics for you.

Question: David Strauss - Barclays - Analyst : Great. Thanks for the detailed answer. The other question I had on FSG margins. I know you talked about the year-over-year improvement. But margins did drop. GAAP margins did drop a little bit sequentially. What drove that 50-basis-point drop sequentially? Was that mix or something else?

Question: David Strauss - Barclays - Analyst : Got it. Okay. Thanks very much. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Thank you.

Question: Pete Skibitski - Alembic Global Advisors - Analyst : Good morning, guys. I guess to start with, Eric. Eric last quarter, you guys talked about the supply chain negatively impacting the repair business. And I think maybe it sounds like it did a bit this quarter as well just because it sounds like parts kind of drove the business. So can you talk through -- do you see any light at the end of the tunnel there or maybe more specifically what's going on the supply chain? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yes. I would say, Pete, we definitely have supply chain problems all over the business. Our vendors are challenged. There's a huge demand out there and getting -- we really got to be on top of your supply chain. You got to be on top of your vendors to make sure that you're prioritized and that they do is what they expect. We still have a large backlog of past due. And frankly, that's driven by certain vendors or many vendors' inability to produce according to their commitments. So that continues to be a struggle. And frankly, I don't see a tremendous amount of improvement in the aviation supply chain. Basically, demand is just outstripping supply. A lot of people retired. Some businesses shut down, some businesses lost their, if you will, special processes. Despite everyone knowing that this is a high-tech industry, there are a lot of, I would say, less documented processes out there with suppliers. And when they didn't need to produce for a period of time, largely as a result of certain large OEMs ripping out all their orders very quickly, those folks retired. And a lot of these special processes went away undocumented. And the industry has really struggled. And I think this is why, if you look at the air framers, the engine manufacturers, they have really, really struggled, as a result of their actions, and basically slashing the supply chain the way they did. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call This is why HEICO, we fought like hell to keep our people to lay-off as few as possible to figure out how people would go to reduce schedules, because we knew that when the industry came back, we wanted to make sure that our most valuable asset was going to come back. And I can tell you that there are companies out there who just went and cut 40%, 50% of their workforces, not on a temporary basis, but on a permanent basis. And as a result, when they go back and they try to hire these folks, they can't get them back because some of retired, some are pissed off, all sorts of reasons. So it's a long road back. And I think that's why the major manufacturers are having a big, big problem.

Question: Pete Skibitski - Alembic Global Advisors - Analyst : Okay. That's helpful. I appreciate that. And if I could just ask one to Victor. Victor, you touched on it, but I was wondering if you could talk more about the medical and other area in ETG. And almost if we could bifurcate it because I know the medical portion had that COVID-type surge and now it is kind of normalizing. I imagine in the next quarter or two, that will kind of normalize. But is the broader economy negatively impacting the other portion of medical and other? Or are you not -- is that growing more strongly than medical is? Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group Yeah. I think what happened in medical is we had very strong orders in actually '21, '22 at first and the things we make, it was -- some of it was stronger, but a lot of it was weaker. Because if you remember, they talked about the elective procedures and things like that -- that were deferred. And then there was a surge in 2021 and 2022 and even part of 2023. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call And then I think what happened was the manufacturers concluded they had too much on the shelves, and I think maybe some of the orders at our customers' level, right from the end-users, did not materialize or they were slower. They have had to work through those -- that inventory. And we are now seeing more of the customers coming back to us saying, you know what, can you move things to the left, right? As opposed to moving them out to the right before as opposed to deferring them, can you pull these in? Can you ship sooner? We were going to defer this order, but now we're not going to, right? We were having discussions like those. I don't know if it is a sign of the broader economy as well mixed into it. It's a good question, and I wish I had great visibility on that. But I do know at the very least, it seems like a classic case of over-order and higher expectations for, let's say, the actual health care delivery -- from the health care delivery system out of manufacturers.

Question: Pete Skibitski - Alembic Global Advisors - Analyst : Okay. Great. Thanks, guys. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Thank you, Pete. Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group Louis Raffetto, Wolfe Research.

Question: Ken Herbert - RBC Capital Markets - Analyst : Hi. Good morning, Eric. Maybe, Eric, I just wanted to start with you in the FSG segment. As you think about -- since you acquired Wencor, you've basically sort of been 2x-ing your organic growth relative to sort of volume growth in the industry if I assume high single-digit 10% ASK growth we've seen over the last several quarters. As you think about normalizing, now you have Wencor and the opportunities from price, share gain, secular trend in terms of PMA growth, is 2x volume growth the right way to continue to think about how you view your aftermarket opportunity within the segment beyond fiscal '24? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Well, we certainly hope so. I don't know whether 2x is the correct number. We'll, I guess, find out after the fact. But there is no question that we had significant growth in excess of the market, whether you look at ASMs or whatever other factor, we are really growing well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call And yes, that is a result of capturing market share. And there, frankly is still a lot out there. So we're working really, really hard to make that happen. Frankly, if you had asked me this many years ago, whether we'd be at this number, I wouldn't have thought so. But our people continue to surprise us as a result of their hard work. So we hope so, but I guess time will tell.

Question: Ken Herbert - RBC Capital Markets - Analyst : Okay. And just finally can you quantify the Honeywell -- the product line impact in the second quarter growth, or I'm sorry, the third quarter growth? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Carlos, I don't know if we're providing --

Question: Ken Herbert - RBC Capital Markets - Analyst : Okay. Perfect. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group I should add, Ken that, again, just as I mentioned about Capewell in the prior call -- prior question, we are very excited about the legacy business. And we think that this has got tremendous potential, gets us into a unique technology. And we are really very, very excited about it and happy to entrench ourselves even deeper with our customers. So I think that that was an outstanding product line acquisition, and frankly, something that's extremely transformative for HEICO because it really puts us into the guts, a key part of the airplane. When you go -- next time you go in a cockpit on a 737 or NG, just take a quick look in there and you'll see our six big screens. And that is really very high visibility of course, for the pilots, but too within the airline. And we have very, very good customer response thus far. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call They are very happy that HEICO has entered this business. And we'll give them the turn time and the quality that they expect. So I am very bullish on that.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Thanks so much. Good morning. A few questions, if that's okay. I'll start out with Victor and then go to Eric for the last one. Victor, maybe can you talk about -- just to double check, the trade name impairment, that $6 million is offset by the contingent liability this quarter, so they net out. And if you could give us an idea of cash margins, 27% cash margins this quarter versus 28% last year. What happened there? And how do we think about pre-Exxelia cash margin? Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group Sure. I'm going to let Carlos answer on the impairment and the cash margins. And I will just comment that the Exxelia business, as a rule-of-thumb penalizes us by about 200 basis points of margin and somewhere in that zone. But I'll let Carlos if Carlos you don't mind taking that.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Got it. So they net out each other?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Thanks, Carlos. And good morning. I wanted to just ask about cash margins year over year. I think they were down 100 bps. Is that right? In ETG?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Okay, I must have had the wrong number. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yeah.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Okay. Got it. So that 30%, that's the drag. And then last question, Eric -- Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group The drag from the the other markets for sure okay.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Got it. Thank you so much. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Thanks, Sheila.

Question: Michael Ciarmoli - Truist Securities - Analyst : Thanks for taking the question and thanks for sticking around here. Maybe, Eric, just back to Ken's line of questioning, and even what you've been talking about. You are outgrowing the market. You're getting the synergies and cross and upsell opportunities from Wencor. I guess the sequential revenue growth, two-part question here. In FSG, sequential growth has ticked higher every quarter, you are over 5%. How do we think about FSG growth if and when Boeing and Airbus can start getting these planes out the door? Would you expect to see some pressure on your volumes? And I mean, you talked about airlines and you're picking up share, but I'm just curious if that's because they're just operating older equipment longer. And once we start to see some of the global fleet go under higher levels of warranty, is that going to create a natural headwind for you guys? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group I certainly hope not. I understand logically what you are saying. But I think that's also counterbalanced by the fact that a lot of aircraft have been delivered in the last 10 years. And those aircraft are significantly more expensive to maintain than the old ones. And they are all getting ordered by one year every year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call So yes, to the extent there is greater retirement that would reduce sales. However, that is being mitigated by this huge group of aircraft that have been recently delivered, and the newer generations and the fleet sizes are significantly larger than the older ones. So I think that's going to mitigate it. And you look at also the additional products that we offer now in particular with the Wencor acquisition and the display units and all that stuff, we have significantly higher content on these newer aircraft. So I think that's going to mitigate it. And then also anecdotally, I can tell you that there are a number of airlines who are in fact, operating, as you suggested, older aircraft. But I can tell you -- and don't exactly quote me on this because if I'm getting it slightly mixed up, I don't want -- but directionally, you'll understand what I'm saying. For example, on the A320, I think there is not a fifth heavy maintenance check. So they're continuing -- a number of airlines are continuing to operate this aircraft to the end of the fifth maintenance check where they had been planning on doing it. That is not creating any revenue for us. So I think that there is a certain amount of older aircraft that continue to fly which aren't generating maintenance dollars. And that stuff is going to be pulled out. So I think you look at all this together -- and I'm very bullish. We are not -- the team members at HEICO, the leadership, my family, we are not invested in HEICO for any one cycle. We're invested because we think that this is a very, very excellent space to be with both commercial travel, business and leisure as well as defense for decades. And there will inevitably be little bumps here and there. But the truth is not even the experts in the industry know where this is going to come out. And historically, we've always sailed right through those periods. So I can tell you from an operating perspective, that doesn't change our direction of travel or our focus on developing new products or making sure we have inventory on the shelf. Because whenever we've been tried -- whenever, historically, we've tried to be if you will, too cute and too smart, you miss it. And we -- HEICO's strength is because we had the parts on the shelf when no one else did.

Question: Michael Ciarmoli - Truist Securities - Analyst : I'll jump here guys. Thanks for us all, take my question. Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Thanks, Mike. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call

Question: Gautam Khanna - TD Cowen - Analyst : Good morning, guys. I had a quick question, first for Eric. Just in terms of the aftermarket replacement parts. Did you notice any discernible differences between types of products in terms of relative growth rate, like maybe engine versus airframe or stuff sell through the distribution channel versus direct? I don't know if there is any way to parse it or is it all kind of the same? Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yes. I would say it's all the same. I'm not aware of any major trends in one particular area versus the other. I mean there are always puts and takes in the quarter based on a million factors, frankly, we don't even understand. But no, I would say that the strength was very, very broad based.

Question: Gautam Khanna - TD Cowen - Analyst : Thank you, Eric. And Victor, just one for you. In the past, you've called out space at times has been something that lagged. How is that business trending within ETG? Victor Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Electronic Technologies Group Yes. I think overall -- Carlos, correct me if I have it wrong, but this year or this quarter, it's roughly flattish for us. It's an important business. Carlos, do I have that right?

Question: Gautam Khanna - TD Cowen - Analyst : Organic in the space

Question: Gautam Khanna - TD Cowen - Analyst : Perfect. Thanks guys. Appreciate it.

Question: Tony Bancroft - Gabelli Funds - Analyst : Good morning gentlemen and congratulations on a great quarter, and I thought a great job with the Capewell acquisition. I'm grateful to be a five-jump using Capewell's products and not getting dragged across the Alabama fields at Airborne school. But regarding the displays acquisition from Honeywell, obviously that looks like a great business as well. A lot of opportunity for integration there into those platforms. Are there any other programs on the display side like that out there? I know there is obviously other OEs that do it, obviously, and then smaller companies like ISSC. Just want to get your thoughts on that market. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 1:00PM, HEI.N - Q3 2024 HEICO Corp Earnings Call Eric Mendelson - HEICO Corp - Co-President and Director; President, Chief Executive Officer of HEICO Flight Support Group Yeah. We think -- Tony, this is Eric. We think the display unit is a really good market to be in. We already do some displays. I can tell you that these displays in particular would be extremely difficult if not impossible to do unless it was the way that we did it, through the purchase of the Honeywell IP to be able to overhaul these. So I think that -- that's very important. And we can take their IP and their product and then we are able to combine that with the HEICO high-quality and turn-time that our customers have come to expect and deliver a terrific product. So I'm very, very excited about this. It really fits extremely nicely within our avionics package at HEICO.