HEI Heico Corp

Management Discussion

• Our consolidated net sales in the first nine months of fiscal 2019 increased by 16% to a record $1,514.1 million, up from net sales of $1,300.8 million in the first nine months of fiscal 2018. The increase in consolidated net sales principally reflects an increase of $104.3 million (a 20% increase) to a record $615.0 million in net sales within the ETG and an increase of $107.8 million (a 13% increase) to a record $915.5 million in net sales within the FSG. The net sales increase in the ETG reflects organic growth of 13% and net sales of $42.4 million contributed by fiscal 2019 and 2018 acquisitions. The ETG's organic growth is mainly attributable to increased demand for our defense, aerospace and space products resulting in net sales increases of $45.8 million, $15.0 million and $4.7 million, respectively. The net sales increase in the FSG principally reflects organic growth of 13%. The FSG's organic growth is mainly attributable to increased demand and new product offerings within our aftermarket replacement parts and specialty products product lines resulting in net sales increases of $76.1 million and $28.0 million, respectively. Sales price changes were not a significant contributing factor to the ETG and FSG net sales growth in the first nine months of fiscal 2019.