Moog Reports Third Quarter Results
July 26, 2019
East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter ended June 29, 2019.
Third Quarter Highlights
• Sales of $741 million, up 7% from a year ago;
• Diluted earnings per share of $1.35, up 19% from a year ago;
• Operating margins of 11.4%, up from 10.9% last year;
• Cash flow from operating activities of $20 million.
Segment Results
Total Aircraft Controls segment sales in the quarter were $337 million, up 12% year over year. Military aircraft sales of $162 million were 13% higher on strong military OEM sales for foreign military platforms and helicopters. Military aftermarket sales were $55 million, up 14% on F-35 and V-22 program activity.
Commercial aircraft revenues increased 12% to $174 million. Boeing OEM sales were $67 million, up 11%, the result of strong 787 sales. Airbus sales of $47 million increased 29% on A350 deliveries. Business jet sales were 42% higher year over year, on Gulfstream program activity. Commercial aftermarket sales were down 7%, due to lower initial provisioning for the A350.
Space and Defense segment sales were $173 million, up 16% year over year. Defense sales were up 23%, to $117 million, on increases in missile controls, ground vehicles and slip ring products. Space sales were 2%higher, with increases in sales to NASA and launch vehicles offsetting lower satellite avionics sales.
Industrial Systems segment sales in the quarter were $231 million, down 5% from last year’s third quarter. The Company’s exit from the wind pitch controls business last year accounted for most of the decrease, as energy sales were lower, at $30 million. Medical market sales were 5% higher, at $59 million, on strong enteral pump sales. Industrial automation sales of $114 million were in line with last year. Simulation and test sales of $28 million were mostly unchanged.
Total backlog was $2.1 billion, with consolidated 12-month backlog at $1.6 billion, up 7% from a year ago.Fiscal 2019 Outlook
The Company updated its projections for fiscal 2019.
• Forecast sales of $2.9 billion, unchanged from 90 days ago;
• Forecast earnings per share of $5.05, plus or minus $0.10, unchanged from 90 days ago;
• Forecast full year operating margins of 11.3%;
• Forecast cash flow from operating activities of $210 million;
• Forecast effective tax rate of 24.2%.
“It was a record quarter for our company in terms of both sales and earnings per share,” said John Scannell, Chairman and CEO. “As we look to the remainder of this year, we’re confident that we’ll meet our guidance for both sales and earnings per share, and we remain very optimistic about our longer-term growth prospects.Fifty years after Moog products helped steer the Apollo 11 mission to the Moon, our company continues to evolve and prosper. Our long-term outlook, continual investment in new technologies, unrelenting focus on meeting our customer’s demands and a deep rooted culture of mutual trust and respect are the ingredients for our success. We believe these values will continue to serve us well as we look to the next 50 years.”
In conjunction with today’s release, Moog will host a conference call beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. John Scannell, Chairman and CEO, and Don Fishback, CFO, will host the call. Listeners can access the call live or in replay mode at www.moog.com/investors/communications. Supplemental financial data will be available on the webcast web page 90 minutes prior to the conference call.
Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog’s high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine and medical equipment. Additional information about the company can be found at www.moog.com.
Cautionary Statement
Information included or incorporated by reference in this report that does not consist of historical facts, including statements accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,” “projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume” and “assume,” are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these could cause actual results to differ materially from the expected results described in the forward-looking statements. These important factors, risks and uncertainties include:
• the markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate;
• we operate in highly competitive markets with competitors who may have greater resources than we possess;
• we depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs;
• we make estimates in accounting for over time contracts, and changes in these estimates may have significant impacts on our earnings;
• we enter into fixed-price contracts, which could subject us to losses if we have cost overruns;
• we may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects;
• if our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted;
• contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible debarment;
• the loss of The Boeing Company as a customer or a significant reduction in sales to The Boeing Company could adversely impact our operating results;
• our new product research and development efforts may not be successful which could reduce our sales and earnings;
• our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement could prevent or restrict our ability to compete;
• our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;
• our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;
• significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity;
• a write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth;
• our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or if we engage in divesting activities;
• our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;
• unforeseen exposure to additional income tax liabilities may affect our operating results;
• government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
• the failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages;
• we are involved in various legal proceedings, the outcome of which may be unfavorable to us;
• future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and
• our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.
These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. We disclaim any obligation to update the forward-looking statements made in this report.