Will focus on Historical Strengths, Product
Development and Team Members
HEICO Corporation (NYSE: HEI.A) (NYSE: HEI) today provided an
update on its views of the COVID-19 crisis (the “Crisis”), actions
the Company is taking to address the Crisis and its thoughts on the
Company’s outlook consistent with a request issued by the
Securities and Exchange Commission’s Chairman and the Director of
its Division of Corporate Finance to all listed companies last
week. Laurans A. Mendelson, HEICO’s Chairman & Chief Executive
Officer, along with Company Co-Presidents, Eric A. Mendelson and
Victor H. Mendelson, made the following comments:
“First, we are deeply grateful to our remarkable Team Members
for their continued extraordinary dedication. We are truly blessed
to continue to have the finest and most talented people at all of
our businesses. Given that our Team Members are HEICO’s most
important facet, we are not following the mass-layoff practices
adopted by many other companies. Instead, our companies continually
evaluate their outlooks and needs on an individual basis, adjusting
their work requirements as appropriate. Unfortunately, this led to
some layoffs, temporary reduced work hours and temporary pay
reductions at subsidiaries negatively impacted by the dramatic
decline in commercial air travel. We know it is a difficult time
for many Team Members and deeply regret the instances that forced
us to take such actions. Just five short weeks ago, we were doing
the opposite and look forward to being able to do that again.
Believing that sacrifice should be shared, we asked our
corporate staff to absorb temporary pay reductions, which they
willingly accepted. The three of us, along with Carlos L. Macau,
Jr., our Executive Vice President and Chief Financial Officer,
Thomas S. Irwin, our Senior Executive Vice President, and Joseph W.
Pallot, our General Counsel, will be taking a 20% salary reduction.
Further, all members of our Board of Directors will reduce their
compensation by the same percentage.
HEICO’s Team Members are the key to our business, which means
our Team Members’ health and safety is paramount. Nearly all of our
approximately 70 facilities remain in operation, as they are deemed
“essential businesses” by governmental entities because they
produce products—usually of a defense and/or medical nature-- even
if some are operating at greatly reduced levels or with much less
business. As our Team Members, customers and investors know, HEICO
operates in a very decentralized and entrepreneurial method so that
each of our facilities is a relatively small and close-knit
operation whereby facility management knows the entire team well
and the operation is very much like a family. They are able to
undertake customized actions designed to maximize health and safety
much better than a single approach dictated from the Company’s
headquarters.
HEICO’s corporate staff has assisted our subsidiaries in
obtaining personal protective equipment, cleaning supplies and
other gear, and has assisted our subsidiaries in exchanging useful
practices information through daily and weekly conference calls,
and other methods. Further, our corporate human resources and legal
staff has provided non-stop guidance to our subsidiaries on the
myriad ways to help our Team Members and on legislative changes
(including federal, state and local rules).
With HEICO’s support, our subsidiaries implemented varying
health and safety measures at their facilities, including:
requiring face mask use; requiring glove use; requiring hand
sanitizer and sanitizing wipe use; increasing work station
distances; staggering work shifts; rotating work shifts to varying
weeks; increasing work-from-home capabilities and having all people
who can work remotely do so; restricting access to various facility
areas to certain Team Members only; prohibiting non-Team Member
access to facilities; closing break rooms; removing internal doors;
increased facility sanitizing; Team Member temperature taking;
prohibiting attendance when displaying any signs of illness; and
various other steps.
With respect to our sales and income, half of HEICO’s revenue is
derived from Defense, Space, Medical and other high-end electronic
and industrial markets. That half of HEICO’s business has not been
fundamentally impacted by the Crisis and business remains
materially consistent with pre-crisis expectations. However, we do
experience, and expect to continue experiencing, periodic
operational disruptions resulting from supply chain disturbances,
staffing challenges, temporary facility closures, transportation
interruptions and other conditions which slow production or
increase costs. While these issues have not yet been material, it
is impossible to predict their future impact and our current
experience indicates the likely effect will be to delay orders and
shipments measured in weeks and months, and to temporarily increase
some costs, as opposed to profoundly changing our business
overall.
For example, we believe many of our defense and medical
component design, manufacturing and supply operations are crucial
suppliers to markets with continuing strong needs, and have been so
advised in writing by customers, including the United States
Department of Defense. While it has not had a material impact on
our consolidated revenues, demand for our components used in
medical equipment, such as ventilators, x-ray systems,
sterilization equipment and personal protective equipment, has
increased.
The other half of our sales are derived from commercial aviation
products and services. It is well known that commercial air travel
suffered a global dramatic decline in March 2020 and most people
expect that to last until either the virus materially ceases to be
a factor in daily life or until a medical solution to the virus
occurs, which could be simultaneously. We share those views. Once
that occurs-- and we don’t know when that will be-- we believe
that, based on prior travel downturns and a sensible view of human
behavior, commercial air travel will resume within a reasonable
time at a rate comparable to prior to the Crisis.
As much of HEICO’s commercial aviation revenue is derived from
sales of products and services which save aircraft operators, like
airlines, significant costs compared to their alternatives, we
believe our commercial aviation aftermarket revenues will recover
faster than the overall market because aircraft operators will need
to avail themselves of our cost-saving solutions and because of our
robust product development programs.
We have managed through three other major commercial aviation
downturns, though this is the deepest one. In prior downturns, we
continued our aircraft replacement parts product development
activities in order to offer our customers greater savings
opportunities during the downturn and afterward. This strategy
successfully provided us with a robust growth rate in the recovery
and we plan to follow the same strategy in this downturn.
In our last earnings press release issued on February 25, 2020,
we provided sales and earnings estimates for fiscal 2020, but noted
that it excluded any impact from the Crisis, as it was at such an
early stage. Given developments over the past few weeks, we, like
many other public companies, feel it is impossible to predict with
precision our sales and income for the balance of this fiscal year
and, therefore, withdraw our fiscal year 2020 guidance. We will
provide an update on our views with our next earnings report for
this year’s second quarter, ending on April 30, 2020.
As disclosed in our last Form 10-Q filed on February 27, 2020,
HEICO entered the Crisis with a strong cash position, low-debt to
trailing-twelve-month EBITDA ratio and strong liquidity. The
Company has continued to generate cash and remains focused on cash
generation, though no assurance can be given about continued levels
of cash generation. Paying our Team Members and other partners,
including our vendors, on a timely basis remains a HEICO hallmark.
In addition, we will continue to seek and make acquisitions as
appropriate to ensure HEICO’s strength and growth.
HEICO remains committed to serving its customers, its Team
Members, partners and shareholders. We are grateful for your
continued support and to your help in resuming HEICO’s growth.”
HEICO Corporation is engaged primarily in the design,
production, servicing and distribution of products and services to
certain niche segments of the aviation, defense, space, medical,
telecommunications and electronics industries through its
Hollywood, Florida-based Flight Support Group and its Miami,
Florida-based Electronic Technologies Group. HEICO's customers
include a majority of the world's airlines and overhaul shops, as
well as numerous defense and space contractors and military
agencies worldwide, in addition to medical, telecommunications and
electronics equipment manufacturers. For more information about
HEICO, please visit our website at http://www.heico.com.
Certain statements in this press release constitute
forward-looking statements, which are subject to risks,
uncertainties and contingencies. HEICO's actual results may differ
materially from those expressed in or implied by those
forward-looking statements as a result of factors including: the
severity, magnitude and duration of the Crisis; HEICO’s liquidity
and the amount and timing of cash generation; the continued decline
in commercial air travel caused by the Crisis, airline fleet
changes or airline purchasing decisions, which could cause lower
demand for our goods and services; product specification costs and
requirements, which could cause an increase to our costs to
complete contracts; governmental and regulatory demands, export
policies and restrictions, reductions in defense, space or homeland
security spending by U.S. and/or foreign customers or competition
from existing and new competitors, which could reduce our sales;
our ability to introduce new products and services at profitable
pricing levels, which could reduce our sales or sales growth;
product development or manufacturing difficulties, which could
increase our product development and manufacturing costs and delay
sales; our ability to make acquisitions and achieve operating
synergies from acquired businesses; customer credit risk; interest,
foreign currency exchange and income tax rates; economic conditions
within and outside of the aviation, defense, space, medical,
telecommunications and electronics industries, which could
negatively impact our costs and revenues; and defense spending or
budget cuts, which could reduce our defense-related revenue.
Parties receiving this material are encouraged to review all of
HEICO's filings with the Securities and Exchange Commission,
including, but not limited to filings on Form 10-K, Form 10-Q and
Form 8-K. We undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future events or otherwise, except to the extent
required by applicable law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200415005708/en/
Victor H. Mendelson, (305) 374-1745 ext. 7590 Carlos L. Macau,
Jr., (954) 987-4000 ext. 7570
Heineken (EU:HEIA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Heineken (EU:HEIA)
Historical Stock Chart
From Apr 2023 to Apr 2024