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INCOME TAXES | 12 Months Ended
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Oct. 31, 2024
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | INCOME TAXES The components of income before income taxes and noncontrolling interests are as follows (in thousands):
| Year ended October 31,
| 2024 |  | 2023 |  | 2022
Domestic | $596,060 |  |  | $479,990 |  |  | $429,329 |
Foreign | 81,526 |  |  | 75,293 |  |  | 61,694 |
Income before taxes and noncontrolling interests | $677,586 |  |  | $555,283 |  |  | $491,023 |
The components of the provision for income taxes on income before income taxes and noncontrolling interests are as follows (in thousands):
| Year ended October 31,
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $97,164 |  |  | $96,492 |  |  | $63,861 |
State | 19,195 |  |  | 18,225 |  |  | 13,015 |
Foreign | 24,143 |  |  | 22,714 |  |  | 14,648 |
| 140,502 |  |  | 137,431 |  |  | 91,524 |
Deferred: |  |  |  |  |
Federal | (17,038) |  |  | (19,049) |  |  | 8,154 |
State | (2,911) |  |  | (4,311) |  |  | 1,129 |
Foreign | (2,053) |  |  | (3,171) |  |  | (407) |
| (22,002) |  |  | (26,531) |  |  | 8,876 |
Total income tax expense | $118,500 |  |  | $110,900 |  |  | $100,400 |
A reconciliation of the federal statutory income tax rate to the Company’s effective tax rate is as follows:
| Year ended October 31,
| 2024 |  | 2023 |  | 2022
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal income tax benefit | 2.5 | % |  | 2.5 | % |  | 2.6 | %
Foreign-derived intangible income deduction | (2.4 | %) |  | (1.9 | %) |  | (1.9 | %)
Tax-exempt (gains) losses on corporate-owned life insurance policies | (2.3 | %) |  | (.6 | %) |  | 2.8 | %
Research and development tax credits | (2.1 | %) |  | (1.9 | %) |  | (1.5 | %)
Tax benefit related to stock option exercises | (2.0 | %) |  | (1.1 | %) |  | (3.6 | %)
Nondeductible compensation | 2.2 | % |  | 1.4 | % |  | 1.2 | %
Other, net | .6 | % |  | .6 | % |  | (.2 | %)
Effective tax rate | 17.5 | % |  | 20.0 | % |  | 20.4 | %
The Company's effective tax rate decreased to 17.5% in fiscal 2024, down from 20.0% in fiscal 2023. The decrease in the Company's effective tax rate reflects a larger tax benefit from stock option exercises recognized in the first quarter of fiscal 2024. The Company recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal 2024 and 2023 of $13.6 million and $6.2 million, respectively. Additionally, the decrease in the Company's effective tax rate reflects a larger favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan (the “LCP”) in fiscal 2024, net of the nondeductible portion of the related gains in the LCP accounts of certain executive officers, as well as increased foreign-derived intangible income, which is subject to a lower tax rate. The Company's effective tax rate decreased to 20.0% in fiscal 2023, down from 20.4% in fiscal 2022. The decrease in the Company's effective tax rate principally reflects a favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the LCP in fiscal 2023 as compared to tax-exempt unrealized losses recognized in fiscal 2022. This was partially offset by a larger tax benefit from stock option exercises recognized in the first quarter of fiscal 2022 and the portion of acquisition costs associated with fiscal 2023 acquisitions that were not deductible for income tax purposes. The Company recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal 2023 and 2022 of $6.2 million and $17.8 million, respectively. The Company files income tax returns in the U.S. federal jurisdiction and in multiple state jurisdictions. The Company is also subject to income taxes in certain jurisdictions outside the U.S., none of which are individually material to the accompanying consolidated financial statements. Generally, the Company is no longer subject to U.S. federal, state or foreign examinations by tax authorities for years prior to fiscal 2020. One of the Company's foreign subsidiaries files income tax returns in The Netherlands and Thailand where the statute of limitations is open for its fiscal 2015 returns. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company believes that it is more likely than not that it will generate sufficient future taxable income to utilize all of its deferred tax assets and has therefore not recorded a valuation allowance on any such asset. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| As of October 31,
| 2024 |  | 2023
Deferred tax assets: |  |  |
Inventories | $92,498 |  |  | $85,560 |
Deferred compensation plan liability | 57,016 |  |  | 44,882 |
Capitalized research and development costs | 48,820 |  |  | 29,142 |
Operating lease liabilities | 28,270 |  |  | 26,771 |
Share-based compensation | 11,387 |  |  | 10,665 |
Performance-based compensation accrual | 8,183 |  |  | 6,632 |
Contract liabilities (deferred revenue) | 6,146 |  |  | 2,885 |
Interest expense limitation carryforward | 4,869 |  |  | 24,770 |
Other | 16,788 |  |  | 19,092 |
Total deferred tax assets | 273,977 |  |  | 250,399 |
Deferred tax liabilities: |  |  |
Goodwill and other intangible assets | (330,624) |  |  | (324,774) |
Property, plant and equipment | (27,701) |  |  | (28,533) |
Operating lease right-of-use assets | (26,766) |  |  | (25,620) |
Other | (3,042) |  |  | (3,318) |
Total deferred tax liabilities | (388,133) |  |  | (382,245) |
Net deferred tax liability | ($114,156) |  |  | ($131,846) |
As a result of the Tax Cuts and Jobs Act, the Company began capitalizing research and development costs beginning in fiscal 2023, which are now amortized over five years for income tax purposes. As of October 31, 2024 and 2023, the Company’s liability for gross unrecognized tax benefits related to uncertain tax positions was $6.5 million and $4.4 million, respectively, of which $5.1 million and $3.4 million, respectively, would decrease the Company’s income tax expense and effective income tax rate if the tax benefits were recognized. A reconciliation of the activity related to the liability for gross unrecognized tax benefits during fiscal 2024 and 2023 is as follows (in thousands):
| Year ended October 31,
| 2024 |  | 2023
Balances as of beginning of year | $4,363 |  |  | $3,503 |
Increases related to current year tax positions | 2,521 |  |  | 1,356 |
Increases related to prior year tax positions | 88 |  |  | 214 |
Lapses of statutes of limitations | (521) |  |  | (710) |
Balance as of end of year | $6,451 |  |  | $4,363 |

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