Third Quarter Conference Call -- Fiscal 2008
07 / 25 / 2008Highlights
Recent Conference Calls
(INTRODUCTION FOR CONFERENCE CALL)
Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today''s date, our most recent Form 10Q filed on May 5, 2008 and in certain of our other public filings with the SEC.
We''ve provided some financial schedules to help our listeners better follow along with the prepared comments. For those of you who do not already have the document, a copy of today''s financial presentation is available on our investor relations home page and webcast page at http://www.moog.com.
Good morning. Thanks for joining us. This morning, we'll review the results for our third quarter of '08, we'll update our guidance for the balance of '08, and we'll provide our initial outlook for fiscal '09.
The third quarter of fiscal '08 was an excellent quarter. Sales were up 23% to $497 million. Net earnings of $31.1 million were up 22%. Earnings per share at $.72 were also up 22%. Our guidance for this quarter had been $.69, so the results exceeded our expectations. On a year-to-date basis, earnings per share of $2.02 are up 17% from a year ago.
Sales in our four largest Segments are running way ahead of our original plan for fiscal '08. Very strong margin performance in our Industrial Segment and in the Components Group have more than offset a margin shortfall in Aircraft and Medical Devices. As recently as fiscal '05, our Aircraft Group was not only our largest Segment, but also had the highest margins. As all of you know, we're now in a period when Boeing and Airbus are both developing new airplanes and a number of new Business Jets are in design. During such a period, a company that does flight control actuation, if successful in winning business, will be making major investments in R&D as well as investing in new facilities and in working capital. We're right in the middle of one of those periods and fortunately for us, while our Aircraft Group profitability reflects these investments, our Industrial Segment and our Components Group are achieving their best performances in their history.
If you look at our consolidated P&L and compare it to the similar quarter of a year ago, our gross profits, although they were up $17 million, were lower as a percentage of sales. However, R&D, SG&A and interest were also a lower percentage of sales so that our earnings both before and after taxes were the same percentage as a year ago on a sales base 23% higher. The result is a 22% increase in earnings per share.
So, let me review each of the Segments.
Aircraft Q3 '08
Total Aircraft sales were up 17% to $175 million. The increase was all on the military side. Military sales were up $26 million, or 32%. Over half the increase was on the F 35 development program. Sales in the quarter were $30.3 million, up $14.4 million from a year ago. In addition to increased workload both in our Company and in that of our partners (Parker Hannifin, Hamilton Sundstrand and Curtiss Wright), this quarter also included a profit rate adjustment for having achieved certain weight objectives.
Another of the big increases was on the V-22 program. Sales in the quarter of $11.1 million were up $4.8 million from a comparable quarter a year ago. The military aftermarket also produced a big increase. Sales reached $33.1 million, a 32% increase over last year.
Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements. A description of these risks, uncertainties and other factors is contained in our news release of today''s date, our most recent Form 10Q filed on May 5, 2008 and in certain of our other public filings with the SEC.
We''ve provided some financial schedules to help our listeners better follow along with the prepared comments. For those of you who do not already have the document, a copy of today''s financial presentation is available on our investor relations home page and webcast page at http://www.moog.com.
Good morning. Thanks for joining us. This morning, we'll review the results for our third quarter of '08, we'll update our guidance for the balance of '08, and we'll provide our initial outlook for fiscal '09.
The third quarter of fiscal '08 was an excellent quarter. Sales were up 23% to $497 million. Net earnings of $31.1 million were up 22%. Earnings per share at $.72 were also up 22%. Our guidance for this quarter had been $.69, so the results exceeded our expectations. On a year-to-date basis, earnings per share of $2.02 are up 17% from a year ago.
Sales in our four largest Segments are running way ahead of our original plan for fiscal '08. Very strong margin performance in our Industrial Segment and in the Components Group have more than offset a margin shortfall in Aircraft and Medical Devices. As recently as fiscal '05, our Aircraft Group was not only our largest Segment, but also had the highest margins. As all of you know, we're now in a period when Boeing and Airbus are both developing new airplanes and a number of new Business Jets are in design. During such a period, a company that does flight control actuation, if successful in winning business, will be making major investments in R&D as well as investing in new facilities and in working capital. We're right in the middle of one of those periods and fortunately for us, while our Aircraft Group profitability reflects these investments, our Industrial Segment and our Components Group are achieving their best performances in their history.
If you look at our consolidated P&L and compare it to the similar quarter of a year ago, our gross profits, although they were up $17 million, were lower as a percentage of sales. However, R&D, SG&A and interest were also a lower percentage of sales so that our earnings both before and after taxes were the same percentage as a year ago on a sales base 23% higher. The result is a 22% increase in earnings per share.
So, let me review each of the Segments.
Aircraft Q3 '08
Total Aircraft sales were up 17% to $175 million. The increase was all on the military side. Military sales were up $26 million, or 32%. Over half the increase was on the F 35 development program. Sales in the quarter were $30.3 million, up $14.4 million from a year ago. In addition to increased workload both in our Company and in that of our partners (Parker Hannifin, Hamilton Sundstrand and Curtiss Wright), this quarter also included a profit rate adjustment for having achieved certain weight objectives.
Another of the big increases was on the V-22 program. Sales in the quarter of $11.1 million were up $4.8 million from a comparable quarter a year ago. The military aftermarket also produced a big increase. Sales reached $33.1 million, a 32% increase over last year.
© Moog Inc.
