Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported August 25, 2026 · Beat 6 of last 6 quarters
HEICO Corporation reported Q3 FY2026 revenue of $1.41B, a beat of 4.2% against consensus, and EPS of $1.67, a beat of 9.9%.
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HEICO's record results underscore robust demand across defense, aerospace, and industrial technology, with management citing AI and data center construction as a growth driver for its electronic components. The company's ability to expand margins and generate strong cash flow positions it to fund further acquisitions, potentially accelerating its participation in AI infrastructure buildout through niche electronic and thermal management products.
HEICO delivered record Q3 FY26 results with consolidated net sales up 23% to $1.41B, operating income up 34% to $355M, and net income up 33% to $235M. Both segments posted record sales and operating income: FSG grew 18% (12% organic) and ETG grew 36% (18% organic). Operating margins expanded at both segments, with FSG at 25.9% and ETG at 26.0%. Cash flow from operations surged 49% to $345M. The company completed two acquisitions (Cook Defence and CalRamic) and issued $1.2B in senior notes, extending credit facility maturity to 2031 and increasing capacity to $2.2B (expandable to $3B).
Management remains bullish, citing record backlog and strong demand across all verticals, including defense, aerospace, space, and industrial tech. They expect continued net sales growth at both FSG and ETG, supported by underlying demand and recent acquisitions. They reiterated a long-term goal of 15-20% annual net income growth, with a full acquisition pipeline and enhanced liquidity (up to $3B in credit capacity) to fund deals. Margin guidance remains unchanged at 22-24% GAAP operating margin for ETG (equating to 26-28% EBITDA margin), with management cautious about extrapolating recent above-range margins due to mix sensitivity.
“Earnings are opinion, cash flow is fact. 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.”
on Cash flow strength
“Right now seems to be a moment where customers are saying, 'How quickly can you get this to us? Can you get it to us faster?'”
on Demand and expedite requests
“We don't look for the single magic silver bullet. It's mixing metaphor here, singles to doubles, and it's this very steady growth rate. We're looking for that 15% to 20% bottom line growth each year.”
on Growth strategy
Can you provide more color on the strong organic growth and whether any particular category is driving it?
Victor Mendelson noted growth was broad-based across all verticals, with the highest percentage growth in industrial technology markets, but defense and commercial aviation/aerospace were also extremely strong. He highlighted record backlog and strong orders, with customers requesting expedited deliveries across defense, commercial aviation, and other markets.
Regarding ETG margins, are the recent above-range margins entirely mix-driven or are there longer-lasting SG&A efficiencies?
Carlos Macau acknowledged ETG is mix-sensitive and cautioned against extrapolating recent margins, but noted SG&A efficiencies and overhead absorption from revenue growth are contributing. He declined to raise margin guidance, preferring to wait for more quarters of data.
Can you break down FSG organic growth by product line and discuss PMA adoption and defense vs. commercial in specialty products?
Carlos Macau explained that the segment is mix-sensitive and that SG&A efficiencies and overhead absorption from revenue growth are contributing to margin strength. He declined to raise margin guidance, preferring to wait for more quarters of data.