Moog Reports Year End Results 2019 and Initial Guidance for 2020
November 1st, 2019
East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the fourth quarter and fiscal year ended September 28, 2019.
Fourth Quarter Highlights
• Sales of $765 million, up 9% from a year ago;
• Diluted earnings per share of $1.31;
• Operating margins of 10.4%;
• Tax rate of 21.3%;
• $52 million cash flow from operating activities.
Full-Year 2019 Highlights
• Sales of $2.9 billion, up 7% from a year ago;
• Diluted earnings per share of $5.11;
• Operating margins of 11.1%;
• Tax rate of 23.1%;
• $181 million cash flow from operating activities.
Fiscal 2020 Outlook
The Company provided its initial projections for fiscal 2020.
• Forecast sales of $3.0 billion, up 4%;
• Forecast diluted earnings per share of $5.55, plus or minus $0.20;
• Forecast full year operating margins of 11.5%;
• Forecast tax rate of 25.3%;
• Forecast $275 million cash flow from operating activities.
Segment Results
Total Aircraft Controls segment sales in the quarter were $342 million, up 12% year over year. Commercial aircraft revenues in the quarter were very strong, up 18%, to $184 million. Sales of OEM products to Boeing were up 21%, to $73 million, the result of increased 787 activity. Airbus OEM sales increased 32%, to $48 million, on A350 sales. Commercial aftermarket sales were off 12% on lower initial provisioning spares for the Airbus A350 and legacy program repairs.
Military aircraft sales increased 7%, to $158 million. Military OEM sales were 11% higher, at $106 million, on V-22 and funded development work. Military aftermarket sales were flat, at $52 million, with increased
F-35 repairs mostly offsetting slower repair work on other platforms.
Full-year Aircraft Controls sales were $1.3 billion, up 9%. Military aircraft sales of $622 million were 9% higher. Military OEM sales increased 9%, to $415 million, on very strong F-35 and other fighter aircraft deliveries. Military aftermarket sales were 9% higher, the result of increases in F-35 and V-22 repairs.
Commercial aircraft sales increased 10%, to $681 million, driven by OEM sales, whichincreased 15% year over year. Boeing OEM sales were 11% higher, at $264 million. Airbus OEM sales increased 14%, to $173 million, on A350 deliveries. Commercial aftermarket sales were off 7% on softer initial provisioning of spares for the A350.
In the quarter, Space and Defense segment sales were $190 million, up 23% year over year. Defense sales were 28% higher on sales of missile controls, the RIwP reconfigurable turret platform and power and data component sales used on multiple platforms. Space sales were 13% higher, at $60 million, attributed to hypersonic development and launch vehicle programs.
Space and Defense sales for the year increased 18%, to $683 million. The results were driven by most of the same factors as the quarterly results. Defense sales increased 27%, to $464million, the result of funded development work, higher sales for missile controls and demand for components used in a variety of ground vehicle markets. Space sales were 2% higher, at $219 million. An increase in launch vehicle program sales offset lower demand for satellite avionics products.
Industrial Systems segment sales in the quarter were $234 million, down 4% from year ago.Energy sales were off $11 million following the company’s exit from the wind pitch controls business last year. Medical product sales were up 11%, offsetting slightly lower sales of industrial automation and simulation and test products, where sales were both off 3%.
Full-year Industrial Systems sales were $918 million, 2% lower, mainly due to foreign exchange movements. Energy sales were down 26%, to $121 million, but were mostly unchanged after adjusting for the wind business exit. Sales of medical pumps and associated products increased 7%, to $227 million, in part due to market share gains for enteral pumps. Industrial automation sales of $448 million, were up 4%. Simulation and test sales were 3% lower, attributed to sales of motion bases sold into entertainment applications.
Consolidated year-end 12-month backlog was $1.50 billion, up 1% from a year ago.
“Fiscal ’19 was a record year for our company in terms of both sales and earnings per share,” said John Scannell, Chairman and CEO. “Our defense portfolio was particularly strong this year with growth across all our major platforms. It was a year in which we encountered some operational challenges due to the combination of growth and supply chain strains. We learned from the experience and initiated a program to upgrade our operations over the coming couple of years to a new level of excellence. As we look to fiscal ’20, we anticipate continued organic growth with sales next year of $3.0 billion. Operating margins will also be up, led by a healthy improvement in Aircraft margins. Finally, earnings per share of $5.55, will be 9% higher than this year.”
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;
▪ We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings;
▪ Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks, and any false claims or non-compliance could subject us to fines, 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 products and technology research and development efforts are substantial and 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 and increase our pension funding requirements;
▪ 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;
▪ The United Kingdom's decision to exit the European Union may bring short-term and long-term adverse impacts on our results of operations;
▪ Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations;
▪ 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;
▪ 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.