Okay, moving along. Our next guest is Victor Mendelson, the Co-President and CEO of HEICO's Electronic Technologies Group. HEICO is the world's largest manufacturer of FAA-approved jet engine and aircraft component-related parts, other than OEMs and their subcontractors, as well as a leading producer of various types of electronic equipment for aviation, defense, medical, telecom, and electronic industries. HEICO has 83 million A shares and 55 million common. The common trade around $252 for a $30 billion market cap, $2 billion of net debt for a $33 billion total enterprise value. We are honored and delighted to have with us today, HEICO and Victor. Victor, thank you for being here. Let me just sit down. Thank you very much, and thank you for having me here today. It's always a pleasure, and it's a great conference every year. I look forward to it. Well, thank you for coming and making the effort. I appreciate it. I don't think I should have to say this, but I'm still going to, maybe for those less familiar, maybe you could talk a little bit more about what HEICO does, but, I think most of us all know what, what you guys do and the performance you guys have had. Sure. What we're about is generating cash. I mean, fundamentally, that's what it's about. I'll tell you more, in a little more detail, but my brother, and my father, and I took control of the company in 1990. It was a small business with about $25 million in revenue and about $25 million market cap. And we actually... I won't bore you with the entire story, but we actually had a proxy contest for control, which, interestingly enough, we lost and had to sue the company over. But very long story. But the bottom line is, we got control, and we were always committed to building the equity value of the company. And our view was, to build the company's equity value, we had to generate cash, we had to do it increasingly, reliably, very consistently, and sort of as they say, no games. So we have an opportunistic business, and in having an opportunistic business, we started with, and we're most known for, the part of our business, which I think is probably the most exciting, and that is what they call PMA parts. So, in order to put a part on a plane, any part on a commercial aircraft has to have FAA approval. The original manufacturers, of course, get that approval when they design the plane new. And the planes need to be rebuilt more or less every 6, 7 years on average, more or less. And so a lot of parts have to be replaced, and if you don't replace the parts, you don't fly the plane. It's that simple. And so the original manufacturers are the only approved source, usually. So what do you do if you're the only approved source? Of course, rational people raise prices, and they raise prices 6%-13% a year, regardless of economic conditions. When we took over the company, they had one part under this PMA Authority, and PMA Authority basically allows a producer to reverse engineer the parts on the plane, show through tests and computations that it is identical, and sell those in competition with the OEMs. It's sort of like generic drugs are to the pharmaceuticals, and it applies to every part on the plane. So armrests to the most complicated part, hot section of the engine. Doesn't matter where, you got to get the FAA approval all the same. So we started with that one part, and people looked at it as sort of gray market, and what are you doing? Is this really reliable? It's not an easy business. We're the alternative source. So we started with one part, and that's really what we're most known for. Today, we have about 20,000 parts. It took us two years to get our second approval to make a part. And I have some parts here, if it's okay with Mr. Gabelli, to illustrate the point. And if you've seen this before... Oh, thank you. Thank you. Thank you very much. I'll start on this side here. All right, now. So there are three bags there. There's a bag with some metallic parts. You'll notice little rings. They're bushings that go in the CFM56 engine. There are 1,000 of those in the bag made of, I mean, the parts are made of ordinary cobalt steel and no special processes, nothing really unique or phenomenal about them. Again, there are 1,000 of those in the bag. There will be a quiz, and if you've heard this before, please don't answer the quiz, because that would be... Exactly. And then there's a bag of 78 drain plugs. That'll be obvious what those are. They go in the threshold of a 737 when you walk in the door, because fluids can get in, rain or whatever, and, you know, it's just a drain cover, right? And then the other is, I think, 392 Teflon washers, which I think go in an actuator in a hydraulic system, somewhere in the plane. I forget exactly where, in which plane. So I will ask you a question about those in a moment, but that's what we're most known for. And we kind of created that market. It didn't exist. It's been a long, tough slog. In my opinion, we should be doing multiples of what we sell in those parts, but it's very hard. It's very hard to convince people to buy an alternative on an airplane. I think, obviously, we've done very well with it, but there's just a lot left for us to do. There is so much penetration remaining, and it's been a great business. My brother, Eric, is really the one who built that and sort of created that value within. And so along the way, customers asked us, "Well, gee, can you do accessory component repair and overhaul?" So we don't run hangars. You're not gonna fly a plane into us. We're not doing whole engines. We go where there's a lot of value added with some engineering and parts, as opposed to just selling labor. So we have accessory component repair business. We believe it's the largest non-OEM and non-airline accessory component repair business in the U.S., also with some operations outside the U.S., and then sales outside the U.S. for that business. But that's grown, right? Customers liked us selling the replacement parts, so we got deeper into that, which led us, in turn, as I said, we're opportunistic, led us, in turn, into distribution. And we have specialty distribution businesses, which are extremely successful, within our business, within our company. And they are not just stock distributors, where there's a catalog, and somebody pulls off the catalog. They actually engage in sales and development for really, sort of, very often the second source of supply for a particular part that may have two approvals on the airplane, and they're, again, very successful. All of these businesses, by the way, we started out with acquisitions. We've made about 100 acquisitions since 1996, when we started making acquisitions, most typically from the entrepreneur, founder, manager. So it's, it's entrepreneurs like we are, right? People who are really concerned with the bottom line, and the business's performance. They stay close to the customer. We, we don't believe in a structure where there are vice presidents and group vice presidents and assistant vice presidents. We don't want anybody too far from the customer or from the engineering. And, you know, that's panned out well. We've noticed that in a small business, if you look at HEICO, we've got about 10,000 people, but it's not 10,000 people in some one location. You know, it's about 100, 100-person operations, that kind of thing. And if you've got 75 or 100 people in a business, there's nowhere to hide. If somebody doesn't show up today, the boss knows. So that's a big part of our thought process. And then we make specialty components. So, for example, we make the entire, or not the entire, but most of the body of the Patriot- 2 missile, the Arrow 3 missile. Mostly it's for missile defense, so we make some serious components in those. We don't make, obviously, the whole missile. And there are a number of others, Hellfire, exhaust nozzles, things like that. So we have a lot of specialty components we do, and that includes some machining and milling, but again, in niches, we're not looking to do it on a broad basis. And then we have an electronics business, which I oversee, and that is, we call our Electronic Technologies Group, and they're niche subcomponents found in the basically mission-critical, high-reliability parts that are required for something else to work. I brought a few of them here today, by the way. I'll pass these around as well. Got to get them all back. But this is a communications antenna we make. I believe we are the largest maker in the U.S. of, maybe the world, of commercial aircraft antennas, communications and navigation and things like that. But the range, I mean, the range is pretty broad. We make, for example, again, we stay in the niches, so we are the leading maker of laser rangefinder receivers. So we don't make a rangefinder. We don't make a laser system for military purposes. We just make the receiver chip that picks up the reflected light in the atmosphere, and then helps the system calibrate where the weapon needs to go. I'm also handing around a point-of-load converter. It's a satellite product from our subsidiary near Paris, called 3D PLUS, a company we acquired back in 2011. Very successful company, which is probably on every satellite that's made, as well as, if it's right, some memory modules that are used in satellites. So again, the strategy has always been, in a sense, to go where others ain't, and to focus, let the businesses operate themselves. Those 100 acquisitions I mentioned, from the 80% from the entrepreneur, founder, managers, they wanna sell to somebody who will keep the business operating where it is, under the same name, with the same people. People often ask me, "Well, isn't that risky? You're gonna have these businesses spread around." And I actually think it's less risk because if you buy right, and we're not buying broken businesses or businesses with poor records and or even records. We're buying businesses that have stood the test of time. We don't buy new businesses, and they've been through every downturn and every problem there is. So kind of in a large nutshell, that is what we do. There are a lot of other components we make in the electronics business. We are the producer of the what they call them pingers, people refer to as pingers, the underwater locator beacons that are used on cockpit voice data recorders. People call them black boxes. They're actually orange boxes, but... And I'm gonna hand around a memory module that we also make at that French subsidiary, and our operations are spread around the world. Well, that's a wonderful overview, and it was such a nice, nice, pleasant surprise opening up the 13Fs this past quarter and seeing the Berkshire of the aerospace and defense industry, meeting the actual Berkshire. So congratulations. Thank you. -with that. We've always thought that.... For the ETG business, the Electronic Technologies Group, how do you think about meaningful growth drivers and whether from a specific program or just in specifically maybe in defense itself? Where are you seeing the growth drivers there? Yeah. So right now and our Electronic Technologies Group, for those of you who know the company, we've always said that's a business that should grow low- to mid-single digits organically, and then we grow, obviously, more with acquisitions. Right now, and I would expect it to carry through, but we're doing our fiscal 2025 budgets now. Fiscal 2025 starts for us on November 1st. I would expect defense to continue to propel us. I think a recovery in our non-aerospace markets, non-aerospace and defense markets, which is about 30% typically of that business, I would expect to see that. Right now, it kind of feels like recoveries start sometime in the first three or six months of calendar 2025. So I think we'll get a tailwind from that, from those other markets. Our commercial aviation has been extraordinary for us in ETG, as it's been in the rest of the business, and I would expect that to continue to be strong. It's a nice mix of new production, as we call line fit, and aftermarket. If you could, could you maybe break out the growth differential in ETG within space, aerial, and ground programs? Sure. Space, I would say space is going to be, if I were to guess, for us, probably a lower single digits growth rate for us, and again, I think that commercial aviation, I just would expect that to continue to be in the higher, in the mid to higher single digits, and I would hope that space, excuse me, defense would do that, too, but again, big caveat there is we haven't done our budgets yet, and I could be totally wrong. But I have to be careful because I don't have the budgets for next year, and I don't want to get out ahead of Regulation FD. Could you maybe talk a little bit more about an ETG portfolio, your split of OEM versus aftermarket? And is there a PMA, how large is the PMA component, or is there in the ETG business? We really only do PMA in the Flight Support Group, but we do have some of the ETG businesses work with our PMA companies and supply them and help them on engineering. What we won't do, of course, is compete with the customer, and we're not going to sell to a customer in our Electronic Technologies Group and then go compete in the Flight Support Group. So we are fastidious about that. Why, why isn't the aftermarket component opportunity not larger in this ETG business? It seems like there potentially could be. You have you're in a lot of programs. What's the dynamic there? For the most part, most of the products don't fail, right? And they're not wear parts, so the aftermarket portion is fairly small. Now, in commercial aviation, and that part of the business, aftermarket is meaningful. But the other things we make tend to be electronic components, capacitors, power supplies, resistors, position sensors, those laser range finder receivers, antennas that go on missiles or other munitions that, you know, maybe there's a test or something on the ground, you know, they've got to do some sample testing, but by and large, those, those obviously don't come back. We could talk maybe about defense budgets. You know, what do you see with... Obviously, the election's coming up. What do you see as far as different scenarios and with the defense budget and how it would impact the ETG business in a new administration? Yeah. It's a very good question. I really don't know. There are a lot of arguments to be made. I mean, certainly, President Trump in his first term believed strongly in recapitalizing the defense base. And, you know, if that's an indication of what he'd do in a second term, that's great. He seems to be concerned about our foreign commitments, so I'm not sure if he would have the same commitment to it. But my general sense is he gets it. He gets that a strong defense is a great way to avoid wars. Ronald Reagan said, "Of the four wars in my lifetime, none happened because America was too strong." And I think Trump buys into that. I'm not sure what Harris buys into. I don't think anybody really does. Showing my bias there, but I do know that she probably wants to get reelected. The Biden administration has been committed to places like Ukraine and Israel and others, too, along the way. So it's... I'm sorry to equivocate, but I really don't know what the answer is. Could you maybe talk about maybe moving over to the other FSG business? Could I take a moment? Where are those parts? Sorry. Yeah. You have three bags back there and the others? That would be great if I could have them back. So here's the quiz, and we'll start as we talk about the flight support, if it's okay with you, if we could start with the quiz. So again, for those who have not seen this before, and don't tell your neighbor if you have. Don't supply the answer. There's nothing to win here anyway. I'm not gonna leave the parts behind, as you can tell. Thank you so much. I appreciate it. They're all there. I've got to count, though. In any event, so these bags. Let's start with this bag of bushings, the things, the washers, a thousand bushings. How much do you think the OEM charges for that bag of parts? They go on a CFM56 engine. Okay, I hear $2,000. Any other guesses? Okay. You know, that's, by the way, that is that would be expensive, right? I mean, these are things you go into Home Depot, and you put them in a scoop, and, you know, they're a penny apiece. You walk out a few bucks later. The price of this bag is $50,000 at OEM pricing. By the way, the new version is almost $100,000, and the reason very simple, we weren't in the market for it, you know, for that part. That bag is there as they're building up, right? We don't get approval on a part and start selling it until there's a large enough, a sufficiently large base, right? It doesn't make economic sense. So the 392 Teflon washers, $50,000. And finally, these phenomenal 78 drain plugs, $50,000. So you get the idea. That's why we're critical to our customers. We help them control their costs. And anyway, so I just wanted to answer that as we started. That was a bit of a segue you can get into, switching to the FSG business. You know, given the leverage to older aircraft, you know, how does organic growth over the next few years look like that's gonna track out? What are you seeing there? You're talking about, for the parts business or flight support? For FSG. I'm sorry, for the FSG. FSG, generally. Our target for FSG generally is in the upper single digits, and we think that's achievable organically. I'm talking about the organic part of it, and that's a mix of the parts business, of course, and all the others that go into it. And again, we look to more or less double that or maybe a little less than double, but through acquisition, sort of 50/50. You know, given airlines are, and again, part of the segue here is, you know, they're focused on cost savings, has there been evidence of further interest in PMAs? Obviously, costs have gone up for these airlines. So, can you explain sort of the dynamics going on there? Yeah, there's a lot of interest. We do notice that airlines become much more energetic and excited about buying from us when they have their own difficulties, and that's logical. No shock there, and they tend to approve parts faster. To sell these, it's as I said in the beginning, it's difficult. You need engineering approval, and you need purchasing approval, and purchasing is incented in a totally different way than engineering. Engineering is not incented to do that, to approve any alternative. It's sort of a pain in the neck, right? They've got to worry about keeping the planes flying. They're not necessarily there to reduce costs. Also, they typically are populated by engineering departments, by, you know, former OEM people, and so they believe buying the OEM product is the right way to do it. But we seem to get through increasingly, and it seems to be moving faster for us than it has historically. I'll open the floor up to the audience. Any questions? If not, I'll continue. You know- Thought I was off the hook? You talk about the amount of PMAs that you've done, and you've talked about 300-500 a year. Is there a natural ceiling to the amount of SKU, you know, the SKUs that you could do or on an aircraft? How far could this go? Yeah, I think there is. I'm not sure exactly what that is. I think it's a lot higher than where it is right now. And, you know, the limiting factors, one is throughput through the FAA, is one limiting factor. The second is throughput through the airline's own engineering departments, and we've tried to help them with that, but not the easiest thing to do. But those would typically be the limiting factors. In terms of our production, I don't think we're limited, and in terms of our engineering talent, I don't think we're limited there either. Maybe I should frame that as, could you remind us again or talk about what% of the fleet actually uses PMA parts? Yeah, PMA parts constitute somewhere around 1%-2%, we believe, of the market, so it's tiny. And in fact, because of that 6%-13% price increase each year, interestingly enough, and I know Mr. Gabelli's heard this before from me, the market expands more than our size every year from price increases alone. And so it's like the expanding universe theory, right? You can never get to the edge of the universe because it just keeps growing. And, you know, it's a good problem to have. Right. What about, you know, obviously, the industry has shifted to sale-leasebacks and leasing. How is that, maybe how has that changed the relationship with you and, you know, versus directly airlines, or, can you discuss that dynamic? Yeah, usually the operator is responsible for maintaining the plane, and so they've got to run it, they've got to operate it. I know, there are some leasing companies historically that banned PMA parts. They said, "If you sign a lease with us, you can't use PMA parts." I think you got to be brain dead to do that. I mean, it really is a mistake, because you put your customer at a serious disadvantage. Someone else is buying parts for roughly 30% less, and then, you know, your customer can't buy them. So that's really, really changed, and the theory was so inane. The theory was that if you populate your plane with parts that cost 30% less, then the value of your plane is 30% less. So it's like if somebody's got a fancy car and they use some other air filter than the, I don't know, Rolls-Royce air filter, then somehow your car is no longer worth $500,000 or something like that. People are seeing through that logic and or lack of logic, and increasingly, that's not an issue for us. Maybe before we go, we can talk a little bit about, your, you know, capital allocation and your great use of your cash flow. What does the M&A market look like right now? Obviously, you're big acquirers, and maybe you could sort of talk through that. Yeah, it's extremely strong for us, and it's in both parts of the business. It is mostly our typical seller, the entrepreneur, founder, manager, looking for a good home for the business. But it includes some that we're looking at from private equity, as well as carve-outs or product lines. We've bought those. As I said, we're opportunistic, so we bought from all of those kinds of people. Of course, we're strategic, and there are things we want to buy, but we're not going to buy if it's not right. So it may be a great product, but the price is too high, or it may be cheap, but classy products. And we, you know, any of those variables in the mix just don't work. Those permutations wouldn't work out. It's got to be right across the board. And we're looking at various sizes of businesses, anywhere from a few million dollars of EBITDA. We look at EBITDA, because that's cash flow. I mean, the D is the same as CapEx, more or less. It's a proxy. The A is amortization and tangibles, and that's a sort of phony GAAP number. But that's not cash, obviously. So we look at EBITDA when we buy a business, and anywhere from a few million dollars in sales, excuse me, in EBITDA, up to the, you know, $50 million or so range. I heard somebody a couple days ago in our company say, "Gee, if we buy everything we're looking at, and history tells us we won't, but everything we're looking at sort of seriously at, we could spend $2 billion in fairly short order." That I can't imagine will happen. I can't imagine that'll happen, because history is a guide. We get into diligence, and things don't always pan out. But anyway, it's very active for us, a little too active right now. A lot, lot of opportunities and a lot of success. Congratulations. It's hard to keep up with you guys. Thank you for coming and making the time, and hoping to have you back next year. Well done. Thank you, and it's always an honor to come here, and I can tell you, you know, when the news about Berkshire's 13F came out, Mr. Gabelli made a very nice post on X about us, and I think that was even more thrilling to me. Thank you so much. Thanks, Victor.