HEICO Corporation 2025 10-K: Aftermarket Strength & Margins

For investors tracking the aerospace and defense sectors, HEICO Corporation is a name that often commands attention due to its unique niche in the aftermarket parts industry. The company recently released its latest 10-K filing for the fiscal year ended October 31, 2025. Our goal today is to unpack these audited numbers to understand how the company is capitalizing on the current aviation landscape and managing its operational costs.

HEICO operates primarily through two segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). For those new to the name, HEICO is famous for being the world’s largest manufacturer of FAA-approved jet engine and aircraft component replacement parts (often called PMA parts). Think of them as the high-quality "generic pharmaceuticals" of the aviation world—offering airlines a cost-effective alternative to original equipment manufacturers (OEMs).

A Visual Breakdown of Profitability

To get a clear picture of how HEICO converts its top-line sales into bottom-line profit, we have visualized the income statement flow below. This diagram traces revenue through the various expense layers down to net income.

You might notice small negative values labeled as "Unallocated" in the revenue and cost sections of the diagram. Specifically, the data shows unallocated revenue of -$45.4 million and unallocated cost of revenue of -$42.3 million. These figures represent intersegment eliminations. Essentially, when HEICO's Flight Support Group sells a component to the Electronic Technologies Group (or vice versa), the company subtracts that transaction from the consolidated total to avoid double-counting revenue and costs.

The Engine Room: Flight Support Group (FSG)

The standout performer in fiscal 2025 was undoubtedly the Flight Support Group. This segment generated $3.12 billion in revenue, representing the lion's share of the company's total $4.49 billion revenue.

This growth is significant given the current macroeconomic backdrop. With major aircraft manufacturers facing production delays, airlines are flying older aircraft longer. Older planes require more maintenance and replacement parts, playing directly into HEICO's strength. The FSG segment didn't just sell more; it operated efficiently, delivering an operating income of $750.4 million.

Electronics and Defense Stability

While FSG focuses on commercial aviation, the Electronic Technologies Group (ETG) provides diversification through mission-critical components for defense, space, and medical equipment. ETG reported revenues of $1.41 billion and an operating income of $325 million.

While slightly smaller than the flight support side, this segment boasts impressive margins. The ETG designs niche products like infrared simulation equipment and power supplies for radar systems—areas with high barriers to entry and "sticky" government contracts.

Margins and Bottom Line

HEICO’s ability to control costs is evident in its margins. The company reported a consolidated Gross Margin of 39.8% and an Operating Margin of 22.7%. This efficiency trickled down to the bottom line, with Net Income Attributable to HEICO reaching $690.4 million, up significantly from $514.1 million in the prior year.

Selling, General, and Administrative (SG&A) expenses were kept at 17.1% of sales, a slight improvement from 17.6% in 2024. In an inflationary environment where labor and material costs are rising, keeping overhead relative to sales in check is a strong signal of disciplined management.

Conclusion

HEICO's 2025 10-K paints a picture of a company firing on all cylinders. The ongoing supply chain constraints in the broader aerospace market, which plague OEMs, paradoxically serve as a tailwind for HEICO's aftermarket business. By offering available, lower-cost alternatives when airlines are desperate to keep fleets airborne, HEICO has cemented its position as a critical player in the supply chain.

However, risks remain. The company's strategy relies heavily on acquisitions (such as the integration of Wencor), and maintaining growth requires successfully identifying and integrating these targets. Additionally, any cooling in global defense spending could impact the ETG segment. But for now, the financials suggest HEICO is navigating these skies with precision.