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SEC filingHEICO Corporation reported strong Q1 2026 results with net sales increasing 14% year-over-year to $1.18 billion, driven by growth in both operating segments. Net income attributable to HEICO rose 13% to $190.2 million, with diluted EPS of $1.35 compared to $1.20 in Q1 2025. Operating income increased 15% to $259.9 million, though operating margin remained relatively stable at 22.1%. The company generated $178.6 million in operating cash flow but used $447.0 million in investing activities primarily for acquisitions. Total assets grew to $9.04 billion, with shareholders' equity reaching $4.58 billion. Management expects continued sales momentum supported by organic demand and recent acquisitions.
HEICO Corporation delivered strong first quarter results for fiscal 2026, with net sales increasing 14% year-over-year to $1.18 billion. Net income attributable to HEICO grew 13% to $190.2 million, resulting in diluted earnings per share of $1.35 compared to $1.20 in the prior year quarter. Operating income increased 15% to $259.9 million, though operating margin remained relatively stable at 22.1% compared to 22.0% in Q1 2025. The company reported comprehensive income of $217.4 million, with $202.8 million attributable to the parent company. Interest expense decreased to $29.5 million from $32.5 million in the prior year quarter, reflecting lower weighted-average interest rates and reduced debt levels.
Revenue growth was driven by strong performance across both operating segments. The Flight Support Group (FSG) reported net sales of $820.0 million, representing a 15% increase year-over-year, with 12% organic growth and $18.7 million contributed by fiscal 2025 acquisitions. The FSG experienced increased demand across all product lines: aftermarket replacement parts grew $59.5 million, repair and overhaul parts and services increased $20.6 million, and specialty products rose $7.8 million. The Electronic Technologies Group (ETG) reported net sales of $370.7 million, a 12% increase year-over-year, with 6% organic growth and $21.5 million from acquisitions. ETG's organic growth was driven by increased demand for other electronics ($8.1M), aerospace ($8.1M), and defense products ($3.4M), partially offset by decreased space product demand ($3.4M).
Gross profit margin declined to 38.6% in Q1 2026 from 39.4% in Q1 2025, primarily due to a 3.2% decrease in the ETG's gross profit margin partially offset by a 0.4% increase in the FSG's margin. The ETG margin decline reflected less favorable defense product mix and decreased space product sales, while the FSG margin improvement resulted from higher sales volume and favorable product mix within repair and overhaul services. Selling, general and administrative expenses increased to $195.1 million from $178.9 million but improved as a percentage of sales to 16.6% from 17.4%, reflecting efficiencies from sales growth. Research and development expenses included in cost of sales increased to $31.9 million from $27.6 million. The effective tax rate increased to 11.5% from 7.0%, reflecting a smaller tax benefit from stock option exercises.
Operating activities generated $178.6 million in cash flow, down from $203.0 million in Q1 2025, primarily due to a $107.2 million decrease in accrued expenses and other current liabilities. Investing activities used $447.0 million, including $441.4 million for acquisitions, $14.0 million for deferred compensation plan investments, and $13.5 million in capital expenditures. Financing activities provided $309.6 million, with $443.0 million borrowed under the revolving credit facility partially offset by $103.0 million in repayments. Total assets increased to $9.04 billion from $8.50 billion at October 31, 2025, with goodwill growing to $3.91 billion. Total liabilities were $4.00 billion, including $2.50 billion in long-term debt. Shareholders' equity reached $4.58 billion, with a debt-to-equity ratio of 54.7%.
Management expects continued sales momentum across both FSG and ETG segments, supported by organic demand and recent acquisitions. The company remains focused on selective acquisition opportunities aligned with its growth strategy while emphasizing long-term shareholder value through strategic acquisitions and organic growth. Capital expenditures for fiscal 2026 are anticipated to be approximately $80-90 million. Management believes operating cash flow and available borrowings under the revolving credit facility will be sufficient to fund cash requirements for at least the next twelve months. The company had $2.45 billion in remaining performance obligations (backlog) as of January 31, 2026, with $1.35 billion expected to be recognized during the remainder of fiscal 2026.