It's Justin Bergner here. Pleased to join Tony and the industrials team here at Gabelli today. We're going to be starting momentarily Victor Mendelson Co-President of HEICO Corporation who from what I understand is approaching the building as we speak. Just hold tight for a couple minutes and we'll get started with HEICO. For background, I've been with the firm for nine years and focused on multi-industrial electrical transportation companies mainly those multi-industrial companies in the aerospace arena. Yeah, we'll just pause for two minutes. Victor. Sure. I mean, HEICO has been a great compounder over the last couple decades since. Nice to see you, Victor. Good. I'm going to let you take the podium. Quick introduction. Victor doesn't really need much of an introduction, but he's Co-President of HEICO Corporation. He founded the Electronic Technologies Group in 1996, has been CEO since then, and he's held a lot of other positions at HEICO, including General Counsel for 15 years. HEICO is the world's largest designer maker of FAA-approved alternative commercial aerospace aircraft replacement parts as part of a diversified aerospace defense and electronics manufacturing and servicing company. As I was mentioning when Victor arrived, since 1990, an investment in HEICO would have produced over a 20% compound annual growth rate. HEICO has 136 million shares outstanding, dual share class. The common shares recently traded at $155, $18.5 billion market capitalization, $400 million net debt for $19 billion enterprise value. Victor's going to deliver a few slides, and then we'll launch into a discussion about the company. Thanks, Victor. Thank you. And sorry to have. My apologies. Made you rush over. No, it's just apologies for late. I walked here from a decent distance. Didn't plan enough, and now I'm sweating like Nixon debating Kennedy. Hopefully you'll forgive that and that won't take too much. I'm not going to read every one of the bullets. I'm going to tell you essentially what HEICO is. What we're about is generating cash flow. It's about building and compounding our cash, and thereby the equity value of the company. We do that in the aerospace defense and electronics industries because those are very good places in which to make cash and to generate cash. You have dynamics there, kind of a slow-moving technology, so you're not at the bleeding edge of technology. Investments are made and then recouped over a very long period of time. As airplane models fly for a long time. Missile systems and other defense equipment are used and deployed for decades. That means it's a great dynamic for returning cash to our shareholders. The way, of course, we do that, frankly, is growing the business, not through paying out dividends or share repurchases, though we have done that. There's a lot of inside ownership. We have about 20% of the company on the inside, including a 401(k) plan where every team member in the U.S. is in the 401(k) plan. That means every team member in the U.S. is a HEICO shareholder because we match the team member contributions as well as just plain straight contributions that are made in HEICO stock. Everybody at the company here in the U.S. is a HEICO shareholder. The way we do this is, as I said, you see the first bullet, cash is paramount, but it's a flat organization. It's an entrepreneurial organization that we run focused on niche products. We don't want to be at the top of the food chain. We've discovered and noticed that people at the top of the food chain generally have low margins. We believe in being a high-margin business, which we'll talk about, you'll see in a moment. We achieve those high margins by trying to do unique things as well as diversify the products and platforms that we're on so that we are not subject necessarily to the vicissitudes of any single event. We saw that in the pandemic. We're very heavy in commercial aviation, typically about 52%-53% commercial aviation. The balance of our business, defense, space, and some of the other markets actually grew during the pandemic. We were nicely profitable throughout, even when our commercial aviation business was down momentarily by, like, 80%. We took over the company in 1990. I say took over. We actually had a proxy contest for control of the company, so we were, I guess, what you today call activists. We had become, my father, my brother, and I, the largest shareholders in the company. I had found it as an investment for us when I was in college. Actually my senior year of college, we had the proxy contest, which we narrowly lost, by the way. Had to sue over those results, but eventually got control. We got control of a company in trouble, which is why I believe we won the proxy fight in the first place, and stood over it. It was a company going downhill, and we pledged that we were going to enhance shareholder value, and we were going to make our money in the equity. Yes, while we get paid and we'll get bonus and things like that, the key to us is the equity value. That's really what drives us. That's what gets us up in the morning. Again, we do that through cash generation and the things you see here. One of those key things, by the way, is we've kept a very strong balance sheet. We make a lot of acquisitions, you'll see in a moment. We do that off of our $1.85 billion revolving credit facility, which has every 5 years, it kind of doubled, starting at a certain point, obviously not day one. Customers come first, and we have a very important culture in the company. That's the entrepreneurial culture I mentioned, where I'm truly overhead. I'm nothing but overhead. I'm not adding, like being here today, I'm not adding any value to our customers and to our team members, right? They're out there making products, selling it, and so they're the heroes in our companies. I t's engineers, it's the people manufacturing the product, and the people selling it, delivering it, and accounting for it who really matter. So hence that very important 401(k) plan, where we literally have hundreds of millionaires in the 401(k) plan. That's not at the executive level because you know how 401(k) plans work. They're capped, right? Highly paid. This is throughout the organization. In a great return. We probably put about somewhere between $5 million and $6 million into the 401(k) plan in HEICO stock, around the time we took over the company, a little bit before actually. Now that stock is probably worth, in the aggregate, it's been distributed into people's accounts. In the aggregate, somewhere around $3 billion. Our team members have done really well, and that keeps them focused on the customers. We bought a company in 2000 in Florida called Future Aviation, and this was on the wall. It didn't say HEICO on it. We bought it. We bought it from a great entrepreneur, founder, manager, and I'm going to talk about those in a moment. That's it. It goes to the heart of what we do. We let our businesses operate. We do not run from the top. People say to us, "Well, isn't that a risky strategy? I mean, how do you know they're not going to get out of control?" My answer is, you look at, I don't want to pick on GE, but you look at what happened at GE. Honeywell went through that at one point in time, and Siemens went through it. I mean Boeing is certainly having its issues. Having a highly centralized organization, in our opinion, just means that you propagate the errors. Having businesses where the entrepreneur who's running it, in our case, often it's the founder, is close to everything. You have small organizations. Probably our average site size, about 75, 80 people. If somebody doesn't show up for work that day, the boss knows. This is a slide actually that I just added myself. I was at a company visiting last week, a potential acquisition where the founder is there running it and great business, niche products niche subcomponents. I saw this on the wall. I had to take a picture of it with my phone. Truthfully, I'd love to tell you that we were on the top, that we had a plan, we set out, and we just executed as we went, and everything was perfect. It really does feel and look more like that. Overall, you'll see our numbers. The trend is very good. We've actually had very few down years. What we've learned on this journey is that things go wrong, and the ability to resolve those issues is the key. The ability to sort of bob and weave and get through them and not get stuck in a particular dogma. Look, we're sort of the anti-big company. You don't come to HEICO and expect a big training session, and today is Thursday, and everybody's going to go to the pep rally at noon, and everybody's going to wear a green shirt. That's just not how it works. Each of our businesses solves their own problems and creates the value for us, and it's worked out extremely well. The way the business breaks down now is what we call our Flight Support Group and our Electronic Technologies Group. You can see this is the pre and post-pandemic numbers. The essence of this is our Flight Support Group is mostly commercial aviation and mostly commercial aviation aftermarket. Our Electronic Technologies Group is about majority defense, also some commercial aviation space and other markets. You see how HEICO lays out on the right. I would say our commercial will grow because the market's just growing. I would expect that commercial aviation may be a little less than half of the business going forward as opposed to a little more than half. Still a phenomenal business and a lot of recovery behind this. I mean, you see the travel numbers. They're only back about three-quarters of the way. We have a lot of room, I think, behind us. Our Flight Support Group, what we do is we are known mostly for the design, manufacture, and sale of aircraft replacement parts, FAA-approved alternative aircraft replacement parts. When a plane is designed and it's certificated. The only party that's allowed to supply the replacement parts for that aircraft, the commercial aircraft that is, and defense for the most part too. The only party allowed to supply the replacement parts is the OEM because it got the various component OEMs, the subsystem OEMs included, because it got the certification in the first place. Airplanes, commercial aircraft need to be rebuilt every 6-7 years. Not all the parts, but a very large number of parts in the plane have to be replaced. If there's only one source to get them, that OEM, because that's the only approved source, you have to have FAA approval to put a part on a plane, whether it's the most critical component or the least critical. The OEMs, you have to replace the parts on a time-certain basis for the operator of the aircraft, and therefore the OEMs are free to raise prices, which they do 6%-13% a year regardless of economic conditions. Terrible recession, they raise prices. Good times, they raise prices. The FAA has a provision in their regulations that allows reverse engineering through tests and computations of aircraft parts and then the certification to sell those. When we took over the company, HEICO had one part. That's why it was a $25 million business, essentially at one part, which it sold under that authority. They were the only company really doing it. Sort of a bad word, right? It's sort of like generic drugs are to the pharmaceutical industry. We made it legitimate. We have over 12,000 parts now, and we save some airlines over $40 million a year because we charge about 30% less than the OEM. We are now critical to many airlines' maintenance and overall strategies. You think about it, they can't control fuel costs, labor costs. Well, we know that, right? But there are some areas where they can get control over their costs, and we provide that in maintenance. We're a very special value. Along the way, we found that our customers were asking us to do more things. They said, "Well, can you do accessory component repair and overhaul?" Not fly the plane in and tear down. We don't want to do that. We want to do heavy maintenance, as they call it, where we're just selling labor. We want to sell parts where we have some advantage. We've built up over time the largest maintenance repair and overhaul accessory component maintenance repair and overhaul outside the OEMs and airlines in the United States. Servicing and returning to service, repairing and overhauling the accessory components on the aircraft. From that, it led us to distribution as well as defense sustainment, where we're sustaining older defense aircraft that are getting past a certain service life. The OEMs don't want to sustain those, and we actually take that over and sometimes even license from defense OEMs like Lockheed Martin. Our Flight Support Group, we have a niche strategy. We make components that go in something else and subcomponents that go in something else. Again, we don't want to be the top of the food chain. They range from things you probably never heard of, laser rangefinder receivers, the capacitor charging power supplies, just as a couple examples. We also make all of the pingers, the underwater locator beacons, that are used on the cockpit voice and data recorders or the orange-colored black boxes. Those are just examples. We literally make hundreds of different components and subcomponents. Obviously, it comes into the tens of thousands when you break down the part numbers. Kind of different items, we make literally hundreds that go in something else. Often we are the only supplier or one of a few suppliers, and we are very cost competitive as well. Our view is that we want to make sure our customers don't have an excuse to look elsewhere, get anyone else. I mentioned our acquisition strategy. We've actually, as of last week, completed 94 since we started making acquisitions in 1996. 15 of those actually since the pandemic start. We kept doing it through the pandemic. We weren't afraid. Our acquisitions kind of come in two flavors. 80% are where we leave the entrepreneur, founder, manager. We leave the company alone in a manner of speaking, and they keep running it and doing after we close what they did before. In most instances now, the seller actually keeps an interest in the company, averaging about 20%. We have one more large acquisition, which we announced that we expect to close or hope to close later this year, and we still have a healthy pipeline. That's been about half of our growth, by the way, acquisitions. About half organic, half acquired, and I think I would expect that our ratio will be comparable as we move forward. Maybe it becomes 60/40, in some years 40/60, and it reverses, but somewhere in this range seems comparable. It's really very simple. We partner with people. We don't view it as though we're acquiring it and consolidating it, in most instances. 20% of our businesses have been consolidations. We're good at that too. A number of our people are good at that, where we buy a business or a product line and move it into something we own, with that being the understanding on day one. Otherwise, sellers like us for being a good home for their business, and that's really what we provide. You can see. I'm not going to read, obviously, all these slides here, but the idea is they get a network. They get people who are very knowledgeable in the industry, but they keep running the business, and mining out the value. That means today we have about 7,000 team members in 25 states in the US, 12 other countries, and financially, it's been a good picture. As I said you look at the trend, there have been a few down years, but not many. This year, the trailing twelve months with about $2 billion in revenue. More important than that, of course, is the cash flow. These are GAAP numbers, but this is, I guess in a way, I'm sort of most proud of this dealing with cash flow, and we've gone from about $2 million cash flow in 1992. Trailing twelve months, about operating cash flow, $434. Our shareholders have done well. That promise that we made back in 1989 when we had our proxy contest has worked out. This, of course, goes up and down and down and up, but the trend has been. That's HEICO in a nutshell. Stay where I am. Okay. Thank you for that great overview. Just, one or two questions that come to mind, from your, discussion of the company. Maybe just give me an example of something that you would avoid that doesn't sort of top of the food chain for you. And then I guess the second question is, you mentioned that you're typically 30% lower price, than the OEM parts. How did that number come to be, or why 30%? Good question. To answer the first question, we avoid most things, by the way. All right. Here, good idea. Ask you a lot of. Which one? That's better. That's good. That's better? Okay. Thank you. It looks cosmetically better, Victor. Absolutely. Good point. Thank you. I think that will now be our last. It'll follow the warning slide, right? We avoid most acquisitions, actually. We avoid most business. What we don't want are fast moving technologies where we've got to evolve kind of consumer product like businesses. We're not making things as a rule of thumb that go in cell phones. We've had a lot of opportunity to buy Apple suppliers and Samsung suppliers and had this great hockey stick, and we've stayed away from that. We don't want to buy from serial entrepreneurs. Somebody who's on business three and wants to sell that or four to us, and he talks about how great their businesses were, we don't want that. We want somebody who loves the business and is really excited about it. Unless I guess if we're a consolidation where we don't care and say we're just moving it in and it's losing money, and we're getting a great value. Serial entrepreneurs, that hasn't happened. We don't want businesses that have had quality problems. Stay away from those kinds of businesses. The big no-go zone is low margins. It has to be 20% operating margin, which is an EBITA margin, not EBITDA, by the way, because depreciation is real in the form of CapEx, it's cash that gets. To us, it's got to be at least 20% going in, or fairly certain that maybe it's a very confident be 20. We rarely do that, though, take that. Margins are important because margins communicate a lot of things. It communicates, obviously, good economics, but as critically important, it means the customers value the business, right? They're able to do something. They are doing something special that gets to that point. We want that sustainably. We're not looking like it had one year and then, you know. It's got to be something that's. We want proprietary products. Really don't like to kind of build to print sort of. Only place we've come close to that is where it's build to spec, and we're buying a company that's. The question on how do we price at 30%. That just seems to be where the market is. That seems to be what it takes. It's not always 30, by the way. Sometimes it's 25, but average is 30. That seems to be what it takes to move people. You would think they do it for 5%, or you think they do it for 10%, but it has to be a motivation, because there's a perceived risk. Knock on wood. We've never had an in-flight failure of a part. No OEM can say that, right? So, but still there's that perception. That's by the way, that's on our parts business. That's not it's parts and repair. It's really nowhere else. Emily, our clients own your stock for 28 years. Thank you. You've been here for most of those. Thank you for your confidence. Yeah, just in terms of scale, I mean, you're basically high EBITDA, low CapEx, generates significant cash flow. Said 94 deals since 1990. You're going to be here in 5 years. How many will you have? No, never mind. It's a good question. By the way, as an aside this is a prolific year for us. It just so happens to work out that way. One of those acquisitions, Sensor Systems, a great antenna company. We're talking 7.5 years. I've been going every 4-6 months for 7.5 years. By the way, they would only sell to us, but they weren't ready to sell. Exxelia, we've been talking to for four years. Some years we'll have the bumper crop, and we're not going to buy a company by the way, it's just to buy it, right? We got to get growth. We're going to buy this. Yeah, it doesn't fit. It's not right, but let's go buy it. And be on forever. We want to keep the businesses. In line with, I guess, you've had a lot of acquisitions throughout the years. I guess, how long did it take you to develop that framework? I guess, what are some of the things that you use to remain accountable? Because you, as you alluded markets go up and down, and you're probably faced with a lot of deals. How do you kind of stay down to earth and grounded? I guess the last part first, maybe. What do we look at? I mean, how do we monitor the deal? We have the one thing. I think if you do what we're doing, you have to have a very robust central finance organization that is really tracking information and data. Of course, it takes the public reporting part seriously. As wrong-headed as I think so much of GAAP is and kind of non-economic and nonsensical, follow it. I mean, we do what we're supposed to do. But the internal part of that is very rigorous internal reporting that we can monitor and see what's going on. The good news is, I think if you do what we're doing and you buy right, meaning not just the price, but you buy good people and good organizations, they don't come off the wagon. I mean, you have to watch them. Most of my calls are sort of consulting calls with these "I want to do this. What do you think of that? Can you make an introduction? Can you help me here? Can you come on a trip with my customer?" they, I think use these terms, but you'll be good window dressing and to show that the parent company cares and things of that sort. We have a weekly internal financial report. Every subsidiary submits a weekly internal financial report. We call it the Monday Morning Report because we do. It has certain basic financials. This is not detailed. It doesn't go into a lot of details. It's only to a limited level of details, income, backlog orders. We can look at those, and we see how they're doing. You develop a feel, right, for the picture. That rolls up into a report. We have a central report, and that has a lot more detail. Cash flow, cash that came in, who used cash which. How, where we are in our line of credit, what bill it is, a lot of it. It's. CFO and his group put. It's a monthly report. We call it a monthly operating report. That's it. That's really very important to keeping it grounded because sometimes businesses look like they're going astray. I mean, businesses, the best businesses is a bad year or two or three, and the worst business has a great year or two or three. How do you separate that out? How do we distinguish between who's on track and who is just suffering the vicissitudes of market? Just because it's a bad year doesn't make them a bad. I mean, that's generally how we try. I'd be remiss if I didn't ask you sort of what you're seeing in the commercial aerospace recovery. You've been putting up mid-20s% organic growth in your Flight Support Group, better growth- Yeah, that'll happen forever, at least 20 years. Better growth in specialty products. I'm kidding, by the way. Just maybe provide the contours of what you're seeing from the industry at large in your own business. How soon do we get back to 2019 level? I mean, I don't know exactly when we're back at 2019 levels for the industry overall. We all see the demand for air travel. We've grown forever 20% a year organically commercial aftermarket. That's not. I believe that our business should continue to do well. I think commercial aftermarket will continue to grow. I don't know the exact rates, to be honest with you. One thing I'm sure of is it won't be a linear ride. It'll look like that slide I put up. I mean, that's overbought or something like that. My brother and I are always concerned, are our customers overbuying. Are people buying ahead, generally in manufacturing and industry. Something we watch closely. Our sales director and our parts directors in our parts business, that is not the case. Say that, we're buying ahead because the airlines are using everything. Don't think it's a risk that if the airlines conquer the service issues and the airports don't conquer the service issues, that we'll see. Is the growth of PMA parts challenged at all by the OEs developing sort of an in-house capability and doing more Power-by-the-Hour contracts? Does that make things harder for PMA parts? It doesn't help us on the engine side. I think that's definitely limited our growth on the engine side, hourly service contracts. Hasn't affected the controls and accessories part of our business. Originally, we were all engine parts. The first part I told you about that we had when we took over the company was an engine part. It was the combustion chamber with one air mixer in the center. We were all engine until 2001. decided we better diversify that. The first 11 years, right? We started adding controls and accessories, which are now a majority of our catalog and a majority of our development. Some of the reason is the growth in service hour contracts, which by the way have been around since the early 1990s. I mean, they're not anything new. They've actually had a very high market penetration for quite a long time, and I would expect that to continue. Okay. Lastly, as we wrap up you announced a major acquisition, Exxelia, recently. Just provide a little bit perspective about what that is, why you like the business. I think it is considered a new platform for growth to some extent within the context of HEICO. What does that mean? Look, it's a component business. It's an aerospace and hi-rel or high reliability component business, or some parts of it are big product lines and capacitors and resistors, as well as some position sensors and some other electronic components. That's where we like to live. They're on. If you look at what they do, they're all over the place. They're on, I forget the number of platforms, 3,000 customers. We like that diversity of the business. We like this special niche place. We're not making mass market capacitors. We're not going after, like I said, consumer markets or things like that, or even the general industrial. They do have some industrial sales, but high end. That's what we liked about it. We liked the margins. We liked the diversity, frankly, that it will bring us a lot of non-US sales. About a third of their sales are in the US, which has worked out interestingly well for us, because when we started talking with them seriously in February, March of this year, the dollar was the euro was like 1.12, 1.13, something like that. When you look at it, we've gotten over I don't know, $55 million discount in the purchase price. Now, the European income obviously is lower, right? The US income is not for an American company. That's been a nice little tailwind for us. Hopefully, we close in time. There's no shift in the currency. If there is though, by the way, we plan for that. I mean, if there is, it still works. Those are really the things that we like about it. A little different, by the way, not sold to us by the entrepreneur founder manager. I think there's we decided to take a little risk with that because it's not our typical kind of guy. He's very entrepreneurial and the team there is very entrepreneurial and own the business pretty well, ahead of where the market has been. Victor, thank you again. My pleasure. For joining us this year. Great discussion as always. Well, thank you. Thank you for having me, and I appreciate your time, and apologize for being late. We'll move next to Graham Corporation, and Brett Kearney will join us on stage from Gabelli.