Welcome to the HEICO Corporation first quarter 2025 financial results Call. My name is Samara, and I will be your operator for today's call. Certain statements in this conference call will 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. Factors that could cause such differences include the severity, magnitude, and duration of public health threats, such as the COVID-19 pandemic, HEICO's liquidity and the amount and timing of cash generation, lower commercial air travel, 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 cost 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, cybersecurity events or other disruptions of our information technology systems could adversely affect our business, our ability to make acquisitions, including obtaining any applicable domestic and/or foreign governmental approvals and achieve operating synergies from acquired businesses, customer credit risk, interest, foreign currency exchange and income tax rates, and economic conditions, including the effects of inflation within and outside of the aviation, defense, space, medical, telecommunications, and electronics industries, which could negatively impact our costs and revenues. Parties listening to this call 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. I now turn the call over to Laurans Mendelson, HEICO's Chairman and Chief Executive Officer. Thank you, Samara, and good morning to everyone on the call. We thank you for joining us, and we welcome you to this HEICO first quarter fiscal 2025 Earnings Announcement Teleconference. I'm Larry Mendelson, Chairman and CEO of HEICO Corporation. I'm joined here this morning by Eric Mendelson and Victor Mendelson, HEICO's Co-Presidents, and Carlos Macau, our Executive Vice President and CFO. Before highlighting our exceptional first quarter of fiscal 2025 results, I would like to personally thank HEICO's incredible team members for their hard work, dedication, and commitment to excellence. Their tireless efforts to exceed customer expectations and deliver outstanding results with unique efficiency are the driving force behind our remarkable success. Your efforts and accomplishments continue to shape HEICO's bright future. We're very proud of our first quarter results, which reflect consolidated margin expansion, strong cash flows, and record net sales in both of our segments. I remain very bullish on HEICO's ability to win new opportunities during fiscal 20 25. As we look ahead to the remainder of fiscal 20 25, our team is filled with great optimism. The current U.S. administration's pro-business agenda aligns well with our long-term goals, providing an environment for innovation, investment, and expansion. With our strategic focus on key markets like defense, space, and commercial aviation, and the exceptional talent and drive of our team members, HEICO is uniquely positioned to capitalize on new opportunities and sustain our momentum across diverse industries. Summarizing our first quarter fiscal 20 25 results, consolidated operating income and net sales in the first quarter of fiscal 20 25 represent record results for HEICO, improving by 26% and 15%, respectively, as compared to the first quarter of fiscal 20 24. Consolidated net income increased 46% to a record $168 million, or $1.20 per diluted share, in the first quarter of fiscal 2025, and that was up from $114.7 million, or $0.82 per diluted share, in the first quarter of fiscal 2024. Net income attributable to HEICO in the first quarter of fiscal 2025 and 2024 were both favorably impacted by a discrete income tax benefit from stock option exercises. The tax benefit in the first quarter of fiscal 2025, net of non-controlling interest, was $26.5 million, or $0.19 per diluted share, and that was up from $13.3 million, or $0.10 per diluted share, in the first quarter of fiscal 2024. Excluding the impact of this tax benefit in both periods, earnings per share increased $0.29 per diluted share, or 40% up. Flight Support Group set all-time quarterly operating income and net sales records in the first quarter of fiscal 2025, improving 22% and 15%, respectively, over the first quarter of fiscal 2024. The increases principally reflect strong 13% organic net sales growth, mainly attributable to increased demand for the Flight Support Group's aftermarket replacement parts and repair and overhaul parts and services product lines, and the impact from our profitable fiscal 2024 and 2025 acquisitions. The Electronic Technologies Group operating income and net sales improved 38% and 16%, respectively, over the first quarter of fiscal 2024. These increases principally reflect strong 11% net sales growth, organic sales growth, mainly attributable to increased defense, space, and aerospace product deliveries, and the positive impact from our fiscal 2024 and 2025 acquisitions. Cash flow provided by operating activities increased 82% to $203 million in the first quarter of fiscal 2025, and that was up from $111.7 million in the first quarter of fiscal 2024. We continue to forecast strong cash flow from operations for the entire fiscal 2025. Consolidated EBITDA increased 22% to $273.9 million in the first quarter of fiscal 2025, and that was up from $224.4 million in the first quarter of fiscal 2024. Our net debt-to-EBITDA ratio was 2.08 times as of January 31, 2025, and that compared to 2.06 times as of October 31, 2024. Acquisition opportunities and M&A diligence efforts within both of our operating segments remain highly active, reflecting a robust pipeline of potential targets. We consistently seek complementary acquisitions that meet our strategic and financial goals. This is guided by a disciplined approach that we pursue acquisitions that make financial sense and are accretive to our earnings while enhancing long-term shareholder value. In January 2025, we paid our regular semiannual cash dividend of $0.11 per share, which was our 93rd consecutive semiannual cash dividend since 1979. We were also very busy with acquisitions, having completed several key acquisitions in fiscal 2025's first quarter. In November, our Exxelia subsidiary acquired 70% of SVM Private Limited, a designer and manufacturer of high-performance electronic passive components and subsystems primarily serving the healthcare and industrial end markets. In December, we secured an exclusive license and purchased key assets from Honeywell International in order to support the Boeing 777 AIMS and the 737NG P-8/E-7 AIMS product lines. In January, we acquired a 90% interest in Millennium International, a business jet avionics repair company which complements HEICO's growing avionics repair capabilities. All of these acquisitions were funded principally using proceeds from our revolving credit facility and cash provided by our operating activities. In addition, we expect each of these acquisitions to be accretive to our earnings within the year following the acquisitions. At this time, I would like to introduce Eric Mendelson, Co-President of HEICO and President of HEICO's Flight Support Group, and he will discuss the first quarter results of the Flight Support Group. Eric? Thank you very much. The Flight Support Group's net sales increased 15% to a record $713.2 million in the first quarter of fiscal 2025, up from $618.7 million in the first quarter of fiscal 2024. The net sales increase in the first quarter of fiscal 2025 reflects strong 13% organic growth and the impact from our profitable fiscal 2024 and 2025 acquisitions. The organic net sales growth mainly reflects increased demand for our aftermarket replacement parts and repair and overhaul parts and services. Wencor continues to exceed our expectations, and this was an excellent acquisition for HEICO. Our customers continue to find great value in our larger aftermarket product offerings for their aerospace parts and component repair and overhaul needs, which has translated into excellent growth opportunities and success for both our legacy businesses and Wencor. We continue to operate Wencor as a standalone business operation. I have defined our strategy as cooperation, cash capabilities, and consistency without consolidation. The results have proven this to be the absolutely correct strategy. As I've mentioned before, we continue to make good progress working together in serving our customers in a combined, seamless fashion. Some examples of how we are working together include: one, utilization of all HEICO and Wencor PMAs and DERs at all repair stations; two, commercial and defense aftermarket sales cooperation; three, Wencor e-commerce platform lists all HEICO non-competitive PMAs; four, Wencor is utilizing HEICO's manufacturing base to quote and build many new products; five, engineering and regulatory cooperation; six, sharing our best-in-class vendors; and seven, our back-office synergies, such as payroll, insurance, retirement benefit plans, cybersecurity, and export compliance, that will help offset additional regulatory compliance costs, such as SOX and our FAA ODA. Flight Support Group's defense sales continue to grow, presenting a strong opportunity, especially as the current U.S. presidential administration prioritizes defense and cost efficiency. As one example, we are making progress in setting the path to selling aircraft replacement parts to DOD agencies, building upon our efforts over the past two years and, frankly, the decade before. While we don't expect this to contribute meaningfully to our 2025 revenues, we are very excited about the significant savings the U.S. government taxpayers can reap from buying our parts, just as so many commercial airlines do around the world. For competitive reasons, I can't get into further detail on these efforts, but I can say that serious work is going into making this happen. Our missile defense components business is experiencing significant growth as well, driven by increasing demand from the U.S. and its allies. With a substantial backlog of defense missile orders and ongoing shortages, we anticipate meaningful expansion from this firm pipeline, reinforcing our commitment to delivering cost-effective solutions without compromising quality. The Flight Support Group's operating income increased 22% to a record $166.1 million in the first quarter of fiscal 2025, up from $136.1 million in the first quarter of fiscal 2024. The operating income increase principally reflects the previously mentioned net sales growth, SG&A expense efficiencies realized from the net sales growth, and an improved gross profit margin. The improved gross profit margin principally reflects the previously mentioned higher aftermarket replacement parts net sales. The Flight Support Group's operating margin increased to 23.3% in the first quarter of fiscal 2025, up from 22% in the first quarter of fiscal 2024. The increased operating margin principally reflects the previously mentioned lower SG&A expenses as a percentage of net sales and improved gross profit margin, mainly reflecting efficiencies realized from the previously mentioned net sales growth. Acquisition-related intangible amortization expense consumed approximately 270 basis points of our operating margin in the first quarter of fiscal 2025. The FSG's cash margin before amortization, or what we refer to as EBITDA, was approximately 26%, which has been consistently excellent and is 120 basis points higher than the comparable Flight Support Group cash margin of 24.8% in the first quarter of fiscal 2024. I am very happy with the continued expansion of our cash margin and believe our efficient decentralized operating structure has permitted us to expand these margins as we simultaneously delight our customers with fair prices coupled with undisputed industry-leading quality and turnaround times. This is an incredible accomplishment, which is truly unique in our industry. Now, I would like to introduce Victor Mendelson, Co-President of HEICO and President of HEICO's Electronic Technologies Group, to discuss the first quarter results of the Electronic Technologies Group. Thank you, Eric. The Electronic Technologies Group's net sales increased 16% to $330.3 million in the first quarter of fiscal 2025, up from $285.9 million in the first quarter of fiscal 2024. The net sales increase reflects strong 11% organic net sales growth and the impact from our fiscal 2024 and 2025 acquisitions. The organic net sales growth mainly reflects increased deliveries of our defense, space, and aerospace products. Further orders remain very strong, with the ETG's backlog reaching the highest-ever quarter-end amount on order. Our non-aerospace and defense markets witnessed sequential order improvement in the first quarter, which we believe bodes well for a sales recovery in those markets later this year as customers continue working off their excess inventory. The Electronic Technologies Group's operating income increased 38% to $76.5 million in the first quarter of fiscal 2025, up from $55.3 million in the first quarter of fiscal 2024. The operating income increase principally reflects the previously mentioned net sales growth, SG&A expense efficiencies realized from the net sales growth, and an improved gross profit margin. The improved gross profit margin principally reflects the previously mentioned favorable mix of increased space, defense, and aerospace products net sales. The Electronic Technologies Group's operating margin improved to 23.1% in the first quarter of fiscal 2025, up from 19.3% in the first quarter of fiscal 2024. The improved operating margin principally reflects lower SG&A expenses as a percentage of net sales, mainly due to the previously mentioned efficiencies and the previously mentioned improved gross profit margin due to the favorable product mix. Importantly, before acquisition-related intangibles amortization expense, our operating margin was above 27.2% as intangibles amortization consumed around 410 basis points of our operating margin. This is, you will recall, how we judge our businesses, as it most closely correlates to cash. On a true operating basis, these are excellent cash margins, and we are very pleased with them. I turn the call back over to Larry Mendelson. Thank you, Victor. As for the outlook, we look ahead to the remainder of fiscal 2025 and continue to anticipate net sales growth in both the FSG and ETG divisions, primarily driven by strong organic growth supported by increased demand for most of our products. In addition, we plan to accelerate growth through our recently completed acquisitions while positioning ourselves to capitalize on our cost-saving solutions for customers. Our priorities remain focused on providing excellent career opportunities for our team members while advancing new products and services development, expanding market penetration, and maintaining our fiscal strength and flexibility, all with a commitment to delivering long-term value to our shareholders. We believe the future is extremely bright for HEICO, and when we study the numbers in the first quarter and see the large gains in both margins and cash flow, we know that the balance of 2025 is going to be very strong. And we feel that we have a tremendous opportunity to grow HEICO larger than what it is today, and we will continue to do so. I offer the opportunity for any of you to call or, if you have some questions or comments now, but if your comments are not taken today, please call Carlos or me or Eric or Victor, and we will be happy to give you the outlook. Keep in mind that ETG has the largest backlog in its history. Thank you very much, and we now open the floor for questions. Samara, you can open the floor for questions. Thank you. And if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. And our first question comes from Larry Solow with CJS Securities. Yes. Hi, good morning. Peter Lukas for Larry this morning. You guys covered a lot, and I do appreciate that. I guess just starting with Flight Support Group, very impressive mid-teen sales growth on top of mid-20s in the first quarter last year. You talked about the growth drivers being organic demand for aftermarket repair services. I guess maybe if you could just give us a little more color. Is that penetration of existing customers or expansion with newer customers? How should we think about that? Hi, this is Eric. I'd be happy to answer the question. So I think that most of the growth is coming from expansion with existing customers. We pretty much sell to everybody in the industry, so it's just deeper market penetration. You pointed out that the 13% organic growth was on top of about 12% organic growth last year. So that really is, I think, an outstanding accomplishment. It speaks to the increased market penetration and the fact that we're hanging on to this market. We're continuing to grow. Our customers want additional cost-savings products and services, and it's really taking hold very well. And then, just lastly, looking at the margins, 23% operating margins in the quarter, I guess, again, driven by higher aftermarket sales. But how should we think about that going forward with sales expected to grow sequentially? What keeps margins? What looked to be kind of flat for the rest of the year? Is that simply a question, a mix? It's funny you asked that. So we get budgets and updated forecasts from all our subsidiaries. And one of our investors commented to me that on the last call, I said something about how while our people are phenomenal, they also tend to sandbag quite well. So they turn in their numbers. They turn in their budgets. And I don't think it's sandbagging. I think it's truly what they think that they can accomplish, mildly conservative. And what ends up happening is the demand is much higher than they anticipate. And their people really come through and are able to develop the products, get the products in, get them sold, and we're able to perform and do much better. So while I'm very happy with our roughly 26% EBITDA margin in the first quarter, I'm reluctant to predict anything higher. Now, if you look at the trend and what happens, we continue to move up. And we've gone on an EBITDA basis from, I don't know, roughly 18% to now 26% over the last approximately 10 years. And we've just gradually taken that up. And I think that's as a result of having a team that has been working together for a very long time. They understand each other. They trust each other. They like each other. And they're able, as a result, to make, if you will, make bets, take risks that the results are going to be very good and everybody's going to do their job. So while we are not forecasting increasing margins, I mean, that has been our trend, and our people are working very hard to make that happen. Extremely helpful. Thanks. I'll jump back in the queue. Thank you. Our next question comes from Sheila Kahyaoglu with Jefferies. Good morning, guys, and great quarter. So I guess my first question, just a little bit of fun here, margins are 23% in both segments for the first time. So how do we think about the expansion from there? Eric, Victor, you both mentioned EBITDA margins well above that in the 27% range. So how do we think about margin expansion for both segments from here and longer term, but near term, how price contributed to each segment? Hi, Sheila. This is Victor. For the Electronic Technologies Group, as you've probably heard me say, I feel comfortable with that EBITDA range in the 26%-28% range, right? And hopefully 28, hopefully higher, and the goal is higher. But I'd rather everybody be comfortable at this level. And if we do better, which we're certainly working to do and hoping to do, we'll deliver on that at that time. And Eric will answer on Flight Support. Sheila, I mean, it's a great question with regard to the margins. And we never forecasted, we never predicted that the margins would end up being where they are. Our style at HEICO, as you know, for following us and getting to know us over the last decade or two, has been just to keep our heads down, work very hard, execute on the details. Everything is in the details. And making sure that we minimize the obsolete inventory, that we make sure technically the parts are where they need to be. We understand the pricing, what makes our customers happy. And when you look at Flight Support Group, it's not an OEM. We don't have typically proprietary products where we are the only authorized supplier. We go to sleep every night knowing that the vast majority, 90-plus% of our product line, is also offered by somebody else. And yet we're able to turn out this 26% EBITDA, which we think is the most important margin because depreciation and CapEx are roughly equivalent. And if you're going to be in business long-term, EBITDA is the correct way to look at it. But even on an EBITDA basis, because that's what our peers do, we're 27%. So to be an independent business doing 27% EBITDA margin, I think is frankly phenomenal. And honestly, I never thought that we would get here. So having said that, our people are working really hard in order to continue to improve, improve efficiency. This is not done through pricing. This is done through watching our costs, increasing our product line, absorbing more fixed overhead. So I think, look, we're going to work very hard to make those margins continue to trend up. But when you talk about 27% margins for a competitive aerospace business, I think it shows, if you will, the uniqueness of the franchise and the fact that most others in the space, in the independent space, don't operate at those type of margins. So I'm nervous to predict that they're going to go higher, but I would say I'm optimistic and hopeful that they will. Sure. Maybe, Eric, if I could ask one on PMA, since we didn't get to chat about this. I know you don't want to talk about defense PMA opportunities, but overall, PMA adoption has become a hot topic as MRO facilities are pretty tight. What are you thinking about penetration into the market, adoption, and any new product opportunities that you're seeing and thinking about in 2025? Yeah. So we continue to focus on broadening our product line, developing more parts. We're really very excited about the new acquisitions that we've had in Flight Support in the first quarter. One is the Honeywell AIMS and VIA product lines, which basically is the avionics brains for the 777 and the 737NG. And that also includes the new manufacturer of those units for the E-7 and the P-8s that are being delivered. So I like very much the broadening of our capability. We already had a very wide avionics business, broad avionics business, but that's an example of getting into some really critical technology, which is coupled with the display units that we acquired over a year ago. And then also, I'm very excited about our Millennium International acquisition. So this is really the leading bizjet avionics repair facility, I think, independent facility in the world. You speak to the customers. There is nobody like Millennium. Not even HEICO was doing the stuff that Millennium is doing. And we are just absolutely overjoyed that they are in the HEICO family. And we can offer our customers PMA and DER if that's what they want. Or if they want OEM, we're happy to do that as well. So it's whatever the customer wants. So I think that speaks to the broadening, and I think there's going to be a lot more potential for us in the bizjet space. We're very, very much focused there. People have asked us to get into it, and I'm very excited about it. But again, we just continue to broaden the capabilities. Ten years ago, nobody would have ever thought that HEICO would control the Aircraft Information Management System of the 737NG or the 777. And we couple that with our 20,000 PMAs and whatever it is, nearly 10,000 DERs, and it's a pretty broad offering, which just continues to grow step by step every quarter. Great. Thank you. Thanks. Our next question comes from Noah Poponak with Goldman Sachs. Hey, Noah. Hey, good morning, everyone. How are we doing? Good morning. Thanks for the time. I wanted to follow up on the pricing question because a few quarters ago, we had talked on here about it's not the number one weapon in your arsenal necessarily for expanding profitability and creating value, but it is an industry with pricing power. And then some of your peers and companies in the OEM parts have had price increases well above the historical average recently in the inflationary window we've been in. And so you had the strategic decision of, do you just keep taking even more market share, especially via PMA, which has attractive pricing, or do you close that price gap, or do you close? Do you do half and half? And you had talked about maybe leaning more into price than you had in the past just because that gap had opened. And so I was curious where you stood on that, how much of that was in the margin of this quarter. I think it's a really interesting question. Thank you. Yeah, no, it's a great question, Noah. And we clearly have left a lot of money on the table. Our philosophy always has been that we've got to cover our cost increases. And we exist because our customers need reasonable prices coupled with the shortest turn times and the highest quality. And that's really what we've done. So the answer is no. We have not squeezed the orange in order to deliver these numbers. We could, frankly, I think our prices could be a lot higher, but we don't do that. And our prices have been, as you know, sort of the increases have been sort of low single digits, maybe the high end of low single digits, but really sufficient in order to cover our cost increases. We do have certain contracted customers where, as a result of fixed prices for a longer period of time, there could be more substantial price increases. But if you look at it on an annualized basis, it's still that, I would say, low single digits up to the high end of the low single digits. So we have not, no, we've not pushed the pricing. We want to make sure that we're very fair. And I think when you look at the, I know Wall Street looks at organic growth. They want to see the revenue, organic growth rate, and that seems to be the metric. And 13% is great. But what I really look at is the 22% on the operating income side because that's what all of none of our people, we don't talk revenue at HEICO. We talk earnings. And when you look, 22% operating income increase, of which, let's just say, 90% of that is or 80% of that is organic, that's huge. And we do that without jacking prices inappropriately. So I think we have a good, a very, very good balance. And that's why we have, if you will, a lot of gas in the tank and why people want to work with HEICO. Okay, great. I appreciate that, Eric. And just one on ETG, I guess the defense space and aero segment of it up 11% in the quarter. And that's been volatile and I think a watch item for people. And it did that despite having a fairly tough compare. Victor, Carlos, can you just kind of talk about what you're seeing there? How do you expect that to trend through the rest of the year? Carlos, do you want to? I could take a stab at that. So no, we had tremendous growth in defense space and aerospace in Q1. And it doesn't feel to me like that that's going to subside. Now, I would caution you that ETG's characteristics are very lumpy. We have big quarters and down quarters. And I think, broadly speaking, for the year, I see a continuation of growth in defense and aerospace. Space, I see being very lumpy. It was good this quarter. Next quarter, based on shipments, it could be down. It could be up. We don't know yet. And we still have what I would consider a little bit of a tailwind that's coming back in the other electronics area, which for the first quarter was pretty flattish, maybe just a tick down. And so we haven't seen the big recovery yet that we talked about in December. But I do expect as we get into our second quarter here that we should see some life. And then that'll be more tailwind. So I have some good expectations for the ETG this year. Yeah, and I'll add to that. This is Victor. On the other markets, the non-A&D markets, we're seeing orders moving in the right direction. Not a bow wave, not a huge amount, but definitely moving in the right direction. And as I mentioned in my comments, improving a bit sequentially in the quarter. And so that, I think, bodes well there. But as Carlos said, continue to expect this volatility. That's been our pattern over literally the decades. And sometimes we break out of that and people think we're at a different inflection point, but we tend to look over the course of the year for the overall average. Okay, great. Thanks so much. Thank you. Thanks, Noah. Our next question comes from Scott Mikus with Melius Research. Good morning. Good morning. Good morning. Larry, Victor, Eric, Carlos, quick question on leverage. You ended with leverage at 2.1x, but you still deployed $255 million of capital for acquisitions in the quarter. Just given how big the overall enterprise is and the amount of cash you're generating, is there any fundamental shift in how much leverage you want to operate the business with on a go-forward basis? The answer is no. We are generally the maximum leverage we use is 3x EBITDA. And we promised the street that we would drop it to 2x within one year, which we did. We like it at 2x. But if we see a very desirable acquisition, we can go to 3x because we have such strong cash flow. I mean, our cash flow permits us to go from 3x or 3.5x back to 2x within, say, 12-14 months. So we want to take advantage of our ability to make an acquisition using cash because people like cash. And if we get a good opportunity, we will reach. And we're very careful. We want to make sure that that opportunity will create strong cash flow itself. Number two, that it will have increased the earnings per share and that it will be a strong business, and so far, we have accomplished those objectives, so I think that we've used our capital in a very, very careful way, and you've seen the results. When we made an acquisition of Wencor, people said, "Oh my God, you stretched to 3x or so," and look at the results, so I think you're going to see more of the same. The one thing that I think HEICO is really good at is managing its capital, and we have shown that over the last 30 years, and I believe it will continue exactly the same. Okay. And then switching over to supply chain, a lot of your peers have talked about seeing meaningful improvement in their supply chain. I was wondering if you could provide color on how the suppliers are performing at both FSG and ETG. And then are there any sort of metrics you can provide, whether it's on-time delivery or parts conforming to quality that are coming from your suppliers? Yeah, so look, this is Victor. I'll start with it. The supply chain issues we had experienced a while ago have really improved, and we've talked about that on some prior calls, and I would call it more or less noise level now across the ETG. There are some businesses that are particularly affected still and others that are not, but to me, it feels fairly normal in that regard. I don't have any specific metrics on that company-wide. I can say that our past dues, if you will, the hours past due in our backlog has dropped dramatically. I don't think it was terrible. I think, though, at one point, as I recall, a couple of years ago, we felt it was about $50 million or so in total where we had things shifting out to the right, but it's dramatically less than that now. I'd call it more in the normal range. Eric, I don't know if you have a take for Flight Support business. Yeah. I would say, in general, things are getting a little bit better. There are some areas getting better. There are other areas getting worse. I can tell you that our sales could have been nicely higher if all of our suppliers were able to deliver. There's been just a massive, our suppliers have had a significant issue with regard to labor. I think that that's getting settled out now. The answer is yes. We do look at the on-time metrics by dollars, by orders, by quantity in all of the businesses. So we do study it. I'm not prepared to share the details right now, especially since we operate a decentralized business. And I don't have a, if you will, a consolidated report which pulls all that together. But we do review it at each of the businesses. So I would say getting better, but not great. And then, of course, this most recent issue with SPS and the unfortunate fire that they had is obviously going to further constrain the industry. And what we'll have to see, I think that's going to impact a lot of participants in the industry. Thanks for taking the questions. Thank you. Thank you. Our next question comes from Jan Engelbrecht with Baird. Good morning, Larry, Eric, Victor, and Carlos. I'm on for Peter Arment this morning. Thanks for taking the time on the questions and congrats on a really strong quarter. Victor, maybe a question for you on DOGE and just defense. Just given the constant news flow we're seeing tied to DOGE and they're currently reviewing Pentagon contracts, could you just provide your updated view on HEICO's positioning within defense markets and your opportunity to win meaningful content, just given the value-based approach that you follow? And obviously, this aligns really well with the current administration's goals. And is there any particular areas maybe within sort of supporting legacy or airborne fleets or defense electronics with radar and missile defense platforms that you see as really strong areas to target? So I think there's some very nice opportunity for us in there. And to be clear, we believe there will be winners and losers. And this hasn't shaken out yet as to what we'll win and what we'll lose. So we can't say with certainty what we'll experience. But as you pointed out, our focus has always been on cost-saving solutions for the customers where we provide some lower-cost alternative than to what they could do otherwise. And so that continues to be the case. I think the things that we're excited about in particular are some of the missile defense programs. We have some very good content on those. Some of the newer space-based programs where I think we can offer some really great solutions there in the ETG, as well as that basic blocking and tackling that I talked about. And again, we've always, as Eric mentioned, with our PMA parts business, we've never pushed on the pricing lever. That has been our strategy and approach all along to deliver great value to the customer. So they're not looking to go somewhere else or figure out how to go somewhere else. So I think it's definitely inures to our benefit all the time, but especially at a moment like this. For the Flight Support Group, Eric may want to address that, but I do think there's some very nice revenue upside for us, not necessarily this year, but as we get a little further out on commercial parts, equivalent parts for military use. Yeah. Victor, I agree with everything that you said. I think there are going to be very good opportunities within the Defense Department for competitive reasons. We never get into specific customers nor products. Obviously, the spend is tremendous. We all know that there's tremendous areas for improvement. Everybody acknowledges that. I really need to, if you will, congratulate the administration on this focus because everybody has known this for a long time. Frankly, not much or anything has been done about it. Even everybody in the industry and all of the AIA members agree that there's tremendous opportunity for efficiency gains in terms of process, cost, alternatives. I think HEICO is going to be very well positioned. You're familiar with our product line, whether it's parts, repairs, distribution, defense sustainment, specialty manufacturing. I think we are going to be in the sweet spot here. That's what HEICO has been built to do, to deliver those types of savings. I'm quite optimistic. Again, this is not going to be a fiscal 2025 story. Maybe there'll be a little bit of revenue in fiscal 2026, but a lot has to be done. And that'll take a little bit of time. But I think at least we're on our way. Terrific. Thanks, Eric and Victor. That's really helpful. Just a quick follow-up. Just perhaps, Eric, back to your comments, just some high-level thoughts on commercial aerospace, global travel at record levels. But the OEM build rates are directionally moving higher, specifically at Boeing in 2025. Can you just talk about for FSG, just the impact, if any, on medium-term margins, call it the next one to three years as the industry makes shifts towards aftermarket, towards more of an OEM mix? Yeah. That's been spoken about now for a couple of years, and yes, some of the Boeing in particular has had more challenges, but if you look, I mean, Airbus has been delivering a lot of new aircraft, and if you look at the way the fleet is expanding and how people want to travel as incomes increase around the world. I spent the first three days of this week reviewing our sales with all of our sales leaders in the various businesses, and I can tell you they don't see any slowdown whatsoever, so I think things are going to be very strong, and I'm really not, I'm just not worried about it. If down the road there's a reduction, then fine, we go ahead and handle it. We've been through in the last 35 years so many phases of this industry. But fundamentally, you look at the age of the fleet out there and how you've got this, whatever it is, 20,000, 20-something thousand aircraft aging one year per year. Yes, some of the older ones will come out, but the vast majority of them are going to continue to consume a lot of parts at higher price points. And I think HEICO is very well positioned. If a customer wants OEM material, we've got it for them. If a customer wants alternative material, we've got it for them. If the OEMs that we represent want to develop alternatives and want to expand their business, there is no better distributors to go with than Seal Dynamics and Wencor. I mean, they knock the ball out of the park continually. And they are able to grow their principals business because once you're locked out of a particular program, you can't access it. And between Seal Dynamics and Wencor, they're tied in with all the airlines. And the principals come to them. And we provide opportunity to be able to grow their business as a result of the connection with all of the other HEICO and Wencor PMA and repair opportunities. But we're able to deliver a product and a service that nobody else in the industry can, bar none. So I'm quite optimistic that regardless of what happens with Boeing starting to deliver more aircraft, that HEICO's got a lot of tailwinds here. Great. Thanks for taking my question. Thank you. Our next question comes from Tony Bancroft with Gabelli Funds. Thank you so much, gentlemen. Very well done, as always. Any update? Just interested in the previous acquisition you made a little while ago on Honeywell. And I apologize, I got on late, another call. But on Honeywell's avionics businesses that you guys did, any update with that? Is there anything out there that you're interested in? Do you still like that area? Maybe just what your appetite is there. Yeah. Tony, great question. Honeywell is a phenomenal company. They put out incredible products. And we're very happy to be partnered with them. And now we have purchased three product lines from them in the last 18 months. And I think it's worked out extraordinarily well because they are able to take their limited floor space and their limited number of team members and allocate them to higher value activities. And HEICO is a great partner when it comes to buying these product lines. We execute extremely well. We're very knowledgeable about the products. And we are very well liked by the customers. So I think not only Honeywell, but many different manufacturers out there we've now purchased product lines from. And we have really a very successful, time-tested process where we're able to buy, whether it's from Northrop or Triumph or Honeywell or others that we don't even talk about. We've been able to buy product lines, get this integrated, make sure that the customers are happy. And it works out very well. So yeah, I'm overjoyed with the product lines that we bought in terms of the display units and the Aircraft Information Management System for the ELT, the emergency locator transmitters for commercial aircraft. And I think that there continues to be very good opportunity because we're known as a very reliable partner. Thank you for that. Maybe I guess I may have haven't caught you talking about, obviously, Berkshire acquired your shares. I think it's pretty obvious, but just want to get your thoughts and let you explain why you think they bought your company, obviously, as a new position for them. Would it ever be possible that they would just, I mean, just want to buy your entire company? You guys have done so well. It sort of falls in line with essentially all their values. Just want to get your thoughts on that. Yes. So I mean, we're obviously overjoyed that Berkshire has become an investor in HEICO. And we think that definitely, as you point out, our cultures align. There's a lot of similarities in the business. We didn't, if you will, set out to sort of copy Berkshire's culture. We just set out on this path 35 years ago. And it was a small $25 million company to do what made sense. And what we saw was that by operating this decentralized model with incredible operators, you're able to produce phenomenal results. And Warren Buffett is the father and the genius originally behind that whole strategy. And he does it, obviously, in a significantly larger scale than we do it. So we're very happy. As far as your comments about Berkshire wanting to or possibly buying HEICO, HEICO's not interested in selling the business. We're very happy with the continued growth. Berkshire has been absolutely phenomenal, a great shareholder. And frankly, we can learn a lot from them. So I think Warren Buffett's got an incredible team. And it's a very deep organization. And we will continue to, I think, grow our relationship with them. Great job, gentlemen. Awesome get out on the Wall of Fame there. Well done. Thank you. Our next question comes from Scott Deuschle with Deutsche Bank. Hey, good morning. Great results. Thank you. Good morning. Eric, I know fasteners aren't really an aftermarket part, but Specialty Products does do a good amount of commercial OE work. And this is maybe a naive question, but I was curious if Specialty Products have any capabilities in the fastener space. And if not, is that a business you could ever see the company getting into, particularly given the recent events at PCC? Yeah. Well, PCC, they operate a phenomenal business. Whether you look at their castings, their forgings, their fasteners, I think for HEICO to get into the business trying to compete with PCC would be foolish. They have got it so ingrained, and they know exactly what they're doing, and they're phenomenal, so there could be little opportunity here and there, but no, in the mainstream, I don't see us ever wanting to get into it to try to do what PCC, what they do. The whole fire thing is a very unfortunate thing, but that's an incredibly well-run company, and knowing PCC and the way that we do, I think that they will figure out very quickly how to get those products resourced, built elsewhere. They've got their facility up and running. I've got a lot of confidence they're going to come back online much quicker than anybody else would with this kind of problem. Okay. And then, Eric, do you think PMA parts are fully penetrated and auxiliary power units at this point relative to where it can go? Or is there still meaningful opportunity there? And I'm focused less in terms of customer adoption and more in terms of whether you think the business has PMA'd all the SKUs that you think represent the opportunity on APUs or if you think there's still more SKUs that the company can go after. I don't really, it's our policy to not comment on particular products. Honeywell does a great job on their APUs, and they've got a big market share that has not been historically a huge area for HEICO. I would, I mean, while I'm capable of providing details, just in order to be consistent with what we do with other products, I'd rather not comment, but it has not been a big part of our business. Okay. Thank you. Thank you. Our next question comes from David Strauss with Barclays. Hi, good morning. This is Josh Korn on for David. So I wanted to ask you, you've done about $400 million in acquisitions over the last two quarters. Could you give us an idea of how much those deals add in annualized revenue? Thanks. This is Carlos. So the deals that we've done have all been. They've not been individually material, so we don't really want to discuss the financial operations of each one of those deals to be consistent with the way we report them in our public filings. Okay. And then to follow up, I think on an earlier question, could you talk about how you see the sustainability of each of the 15% organic parts growth and then the 11% organic MRO growth in the quarter? Thanks. I'm very happy with the growth that we've had. I mean, obviously, we're gaining market share. We're doing very well. I've been reluctant to predict those numbers. The thing that we, as I mentioned earlier, that we really focus on is the earnings growth. Because at the end of the day, revenue is honestly meaningless. It's all about the earnings because that's the money that we can reinvest in the business and continue to grow our inventories and our footprint and everything else. So when you look, we've had 22% growth in operating income in Flight Support Group of which most of that was organic. I feel the tailwinds that we've got and the fundamentals in the industry should continue. But we don't provide guidance for that reason because we don't know specifically what it's going to be. We get most of our orders in the month of shipment. So it becomes very difficult to go out on a ledge. And frankly, I think people are used to HEICO performing. So they know that at the end of the day, whatever the industry is going to do, HEICO's going to be right at the top of it. And we have a history for 35 years of doing that. So I feel very strongly that there's a lot of tailwinds. We don't see a slowdown. But to predict specific numbers going forward really isn't what we do and just becomes very difficult because we're very, very quantitative and data-driven. And to sort of make projections becomes very difficult. Okay. Great. Thank you. Thank you. Our next question comes from João Santos with UBS. Hi guys. João Santos speaking on behalf of Gavin Parsons from UBS. Thank you for taking my question. I know you guys already talked a bit about pricing. But in terms of pricing, are you able to share with us how much of your portfolio is on long-term agreements versus how much you can reprice them annually? We can reprice, I would say, if it's not annually within the next couple of years. But there's a split there in terms of the long-term agreements and the repricing annually. I don't have in front of me what that is. And again, because it's decentralized, I'd have to pull all that together from all of the operating subsidiaries. But my guess is it's in roughly the 50/50 category, something like that. Great. And in terms of aftermarket, how should we think about the pricing power in the segment given the current supply chain and competitive dynamics? We think that, frankly, we're leaving a lot of money on the table. We're making our customers very happy. We started out very small. I mean, I'm sure you know the history of the company. But we started out very small. And in particular, when you're small, you have to treat people right in order to get business. And we've maintained that philosophy for 35 years. Now, having said that, we have to cover our cost increases. And it's not possible for us to absorb cost increases and to not pass that along to the customers. We have to do that. And even if there's various catch-ups with customers because they've had fixed pricing for a period of time, we've got to go ahead and do that. And we've been successful in doing that. But we stress to our customers that we don't take advantage of them price-wise. We only go for a minority market share on all the products that we do. So we think that there's a lot of value to these customers. So I think that there's a lot of pricing opportunity for us. But we have not taken advantage of it. Perfect. Thank you very much and congrats on the quarter. Thank you very much. Our next question comes from Ron Epstein with Bank of America. Hey guys. Good morning. Morning, Ron. So just a minute. A couple of quick questions. Maybe following up on your commentary, Eric, about the fleet and the age of the 22,000 airplanes that each get a year older. Do you guys have an internal kind of guesstimate on when the average age of the fleet will actually start to come down? Because it seems like to me that might not happen until the early 2030s. But I don't know if you guys agree with that or kind of how you think about that. Yeah. We probably wouldn't look at the average. So for us, what we would look at is the number of aircraft in each of the age cohorts. So we think that continues to increase. So as you get the new aircraft delivered, you're still going to be flying the older aircraft. And I think especially in times where you've got higher interest rates, that makes newer aircraft less attractive. But we think also if you look at the newer generation aircraft, they're very, very expensive to maintain. I mean, these aircraft are insane to maintain. So the cost per equivalent unit. So we think that the tide is rising. And our market share is so relatively small that we can also grow our market share. And then frankly, we compound it with the acquisition. So you put all that together. The fact that they'll deliver more new aircraft doesn't concern me. Got it. Got it. Got it. Yeah. I mean, it does seem like there's a really long runway there. And sometimes I just want to make sure we're thinking about it right. And then another one, to follow up on a question or a comment that you made around the unfortunate fire at SPS. My understanding is that was a pretty darn big facility that made a lot of fasteners. How disruptive do you think it could potentially be, honestly, on the industry? And then I guess how does that kind of blow back on you guys? Yeah. I think it's going to be quite disruptive. However, SPS is incredible. Precision Castparts is incredibly well-run. And God forbid anybody's going to have that kind of a problem. Those guys are the ones who will figure it out, number one. Number two, necessity is the mother of invention. And while they may be sole source on a bunch of stuff, they, I'm sure, will be able to get their other facilities up and running and be able to solve a lot of that. So I think it's a little early to be able to define what that's going to be. But there definitely is going to be an impact in both OE as well as the aftermarket. I think everybody is going to be impacted. I want to be careful not to get too far over my skis with compliments on what they can do. But our experience in working with them is those guys are really sharp, and they're going to move heaven and earth to get this resolved quickly. Got it. And then maybe one last one. How are you guys thinking about tariffs given how global supply chains are in commercial aero? I guess to a far lesser extent in defense. But in commercial aero, it's so global. I mean, how do you guys think about it? What it could mean ultimately? I mean, Ron, this is Carlos. Most of our supply chain is focused in local markets, right? We have hundreds of subsidiaries. And they're all dealing with vendors in local markets. So we're not purchasing big bulk in one central location. So our risk, if you would, is diffused. And the cost of raw materials within our products, when you peel it back, it's not a huge component of the overall cost. So we've done some back-of-the-envelope math. We think it could be anywhere from net, net 3%-5% increased our product cost, assuming that there was a tariff on half the countries we do business with. And I think if that was the case, we'd have no problem passing it on to our customers. So from our standpoint, we're not terribly concerned with the outcome of that. Got it. All right, guys. Thank you very much. Thank you. Our next question comes from Gautam Khanna with TD Cowen. Hey, thanks for extending the call and allowing the questions. Sure. Guys, I was wondering on DOD PMA, do you have any sense for what the development timelines would be to get parts qualified? And if the process would be much different from what you guys encounter normally with the FAA and the other regulatory agencies? Yeah. I would say that there's going to be really continued work in development in that area. I'm reluctant to get into specifics because we don't want to tell our competitors what we are doing. And so therefore, we really don't want to get into the details on what we're on, what our strategy is. But we do think that there's a very significant market. And we'll have to see really how that develops. But again, we don't see that as. That has not been a revenue contributor to date. And we're not forecasting it in our 2025 numbers. Maybe more fundamentally, is there a process already in place? And is there any PMA penetration on military products today? So the government doesn't. They have their own approval process. So in general, just because something has a PMA doesn't mean that the government would use it. But the answer is yes. We sell a large amount to the government and various businesses that we're in. So we're pretty familiar with the government process and what it takes to get stuff done. Clearly, this focus on cost and readiness is going to be, I believe, very helpful for HEICO. Yeah. I know it's awkward because you guys don't want to discuss it. But I'm more curious about obviously, you guys sell a lot of defense products to the government. But I was wondering if specifically, have you been selling PMA defense products? Or are they OEM-branded components via ETG and Specialty Products? No. We sell HEICO proprietary parts, yes, to the DOD. We sell parts that are interchangeable with the original manufacturer's parts. Yes. We've done that. Okay, so that already is a product. We have a lot of experience doing that. It's relatively small. But there are many examples of it. And yes. So we're not a stranger to it if that's what you're getting to. Yeah. That's what I was wondering. If there's precedent for it already, and it sounds like there is. What do you think the constraint on broader adoption has been historically? I don't really want to speculate on it, but I think a large part of it probably was that no one was concerned about cost, and now we're in a new world, and we have this massive budget deficit. We've got to cut our costs. We have to increase the defense output, and I think that this is just low-hanging fruit. Gotcha. Cool. And then Eric, I was curious on Wencor, the aerospace integration. You mentioned a number of the initiatives you guys have already implemented to make sure there's cross-selling. I was curious, how well-penetrated do you think that cross-sell thrust has been? Do you feel like you're far along in that journey? Or is it early? How much operative? Yeah. I think we've done well. I mean, look, we operate the businesses independently. But clearly, when you put the two product lines together, you've got much more compelling savings. So I think we're early in the, definitely in the first half. I think that there is a lot more opportunity out there. Look, I'm very happy with the progress that we've made to date. But I think our sales folks have a lot more potential out there, significant. And last one. I'm sorry. Victor, on the defense demand strength, you mentioned some product areas. Maybe if you could just broaden it. Is this pretty broad-based? Or is it you're seeing the demand strength in the missiles specifically? And that's kind of disproportionate? Or I'm just curious how broad the demand improvement is across the portfolio. It certainly varies by subsidiary. And some have a greater uptake than others. And some are actually negative. So on balance, it works out to how it's done. I would say it's pretty fortunate, it's been fairly broadly based for us on defense, particularly in some of our larger lines. So we're excited about that. And of course, in addition to that, you may remember we made an acquisition in France in January of 2023, a company called Exxelia. And one of the motivators for that was the European defense budgets. And we felt we needed a European business to help us with that. That has proven to be the correct thesis. And that's worked out extremely well. By the way, Exxelia is doing very well for us. We are very happy with it. It's been a very nice acquisition. And we are anticipating more growth and more interest there from our customers. So overall, feeling good about defense. Again, with the caveat that I mentioned earlier, the caveats that I mentioned earlier. But overall, it has the right feel for the moment. And again, one of those caveats being it will remain volatile by quarter. That will always be the case, in my opinion. Thanks a lot, guys. Appreciate it. Thanks, Gautam. Our next question comes from Louis Raffetto with Wolfe Research. Hey. Good morning, guys. Thanks for taking the question. Morning. Hey, Eric. Maybe one for you. You said before that you guys offer OE parts if customers want them or alternatives. I guess just to clarify on that, are you selling a PMA part and an OE part? Or is that more an OE part and a DER repair? Or that sort of more not on the same product, I guess? So it would typically not be on the same product over on the part side. So we represent a number of OEs on the distribution side. And so we sell OE parts. Typically, if we're doing the distribution on something, we don't also offer a PMA, although sometimes we do. But most of the time, it's just the straight representation of the OE. And we are able, for those OEs, to develop additional PMAs for them. So an OE, let's just say that they got on the 737, but they didn't get on the A320 on the particular product that they make. So what we can do is go out to the A320 customers and, through our PMA network, get those customers to support the development of and commit to purchase those parts. And then we can have the OEM for whom we distribute manufacture those PMA parts. And that's been a very successful part of our strategy. But then also separate from that, I was talking about really referring to the repair business. That we're the largest independent component overhaul firm, I believe, in the world. Non-OEM, non-airline, non-government. And although we're a lot bigger than a lot of OEMs who are like the government, but it's a very significant component repair business. And there, we do what our customers want. If they want OE parts, then we use OE parts. If they want alternatives, PMA or DER, then we'll use those. It's really customer-driven on what they want. So in that case, we stock both the HEICO PMA parts as well as the OE parts. And they make the decision. Great. Thank you. Any way you can size how big distribution is within Flight Support? Just now with Wencor, a little less easy to tell. Yeah. No. We don't, due to all the disaggregation rules, we don't get into that. So we do disaggregate into parts, repair, and specialty. The repair business now, I mean, looking at roughly what we did in the first quarter, I mean, it's over a $600 million business. So it's become quite a large enterprise. All right. Thank you, Carlos. Oh, sorry about that. Yeah. No, no, no, and then just looking at. I'm not so sure. Looking at parts, that's for the three months for the first quarter, we did over $450 million in aftermarket replacement parts. So that's roughly $1.8 billion in sales. So that's a very significant business as well. Appreciate the color, Eric. Carlos, just a quick one for you. In the past, you were able to sort of give us how you were thinking about the combined impact of taxes, minority, interest expense. Didn't know if you were able to provide that for this year. Yeah. So we had a pretty favorable rate in the first quarter. I think as we look at the next if I back out the impact in the period for the taxes, we get between 20% and 21% rates, something like that. So I think if you can assume for the next three quarters, we should run around 21%, maybe a tick above or below, depending on what transpires. And I think the NCI rate for the year runs around 7%, maybe high 7.5% of protected income. Similar metrics to what we've had in the past. But I think that's where we kind of fall out for the year. Effective rate for the year should be somewhere between 18% and 19%, is what I'm estimating. Great. Appreciate it. Thank you. Thanks, Louis. And at this time, I will turn the conference back to Laurans Mendelson for any additional or closing remarks. Thank you very much to everybody on this call. We appreciate your interest. And we are available for any kind of conference that you may want to have in the future. So thank you. And we will speak to you in the next second quarter. Thank you. And this ends the conference.