Moog Reports First Quarter Results
January 27 2017 - 8:05AM
Moog Inc. (NYSE:MOG.A) (NYSE:MOG.B) announced today financial
results for the quarter ended December 31, 2016.
First Quarter Highlights
- Diluted earnings per share of $0.84, up 18% from a year
ago;
- Sales of $590 million, up 4% from a year ago;
- Progress in selling four small European space businesses
resulting in a net $0.07 per share loss on the divestitures
(including $0.18 per share tax benefit);
- Operating margins (excluding the $9 million pretax loss from
selling the European space businesses) were 10.4%, up from 9.1% a
year ago;
- Strong cash flow from operating activities.
Segment Results
Total Aircraft Controls sales in the quarter
were $268 million, up 6% year over year. Military aircraft sales of
$128 million were 6% higher. F-35 Joint Strike Fighter sales were
up 26%, to $27 million. Other OEM sales were up 8%, to $53 million.
Military aftermarket sales were $48 million, down slightly on lower
B-2 spares and C-5 modernization activity.
Commercial aircraft revenues increased 5%, to
$141 million. Sales of OEM products to Airbus increased 40%, to $35
million, including a 72% increase in A350 program sales. Boeing OEM
sales were flat at $61 million. Commercial aftermarket sales were
off marginally, at $27 million, due to lower initial provisioning
of 787 and A350 spares.
Space and Defense segment sales were $93
million, up 11% year over year. Space sales were 13% higher,
attributed to strong space avionics and satellite engine sales.
Defense sales were up 10% on increased demand for ground vehicle,
missile and naval products.
Industrial Systems segment sales in the quarter
were $112 million, down 10%. Energy sales were off 6% and
industrial automation sales were off 9%. Simulation and test sales
were down 16% from last year’s strong first quarter.
Components segment sales in the quarter were
$116 million, up 10% from a year ago, with sales increases seen in
each of the three major markets. Aerospace and defense sales of $39
million were 11% higher largely attributed to sales for Northrop
Grumman’s Guardian program. Medical market sales of $48 million
were up 11% on increased sales of pumps and associated products.
Industrial product sales for specialty markets were up 6%.
Consolidated year-end 12-month backlog was $1.2 billion.
Fiscal 2017 Outlook
- Forecast sales of $2.42 billion, up 1% over last year, down $20
million from last quarter’s forecast;
- Forecast earnings per share of $3.50, plus or minus $0.20,
unchanged from last quarter’s forecast;
- Forecast full year operating margins of 10.0%, down slightly
from last quarter’s forecast due to loss on divestitures;
- Another year of solid cash flow from operations.
“Earnings per share before specials of $0.91
were above our guidance from 90 days ago,” said John Scannell,
Chairman and CEO. “It was a good start to the year and it puts us
on track for our full year guidance. Most of our businesses have
stabilized since this time last year and we are seeing positive
results from restructuring and our portfolio reviews of the past
few 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, wind energy, 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 statements are not guarantees of future performance and are
subject to several factors, risks and uncertainties, the impact or
occurrence of which 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 long-term 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 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;
- 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;
- governmental regulations and customer demands related to
conflict minerals may adversely impact our operating results;
- 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;
- 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; and
- we are involved in various legal proceedings, the outcome of
which may be unfavorable to us.
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.
Moog Inc. |
CONSOLIDATED STATEMENTS OF EARNINGS |
(dollars in thousands, except per share
data) |
|
|
|
Three Months Ended |
|
|
December 31, 2016 |
|
January 2, 2016 |
Net sales |
|
$ |
589,670 |
|
|
$ |
568,457 |
|
Cost of sales |
|
417,164 |
|
|
406,997 |
|
Gross profit |
|
172,506 |
|
|
161,460 |
|
Research
and development |
|
34,564 |
|
|
34,798 |
|
Selling,
general and administrative |
|
85,063 |
|
|
82,994 |
|
Interest |
|
8,486 |
|
|
8,322 |
|
Other |
|
7,905 |
|
|
(309 |
) |
Earnings before income
taxes |
|
36,488 |
|
|
35,655 |
|
Income taxes |
|
6,430 |
|
|
9,495 |
|
Net earnings
attributable to Moog and noncontrolling interest |
|
30,058 |
|
|
26,160 |
|
|
|
|
|
|
Net earnings (loss)
attributable to noncontrolling interest |
|
(506 |
) |
|
(81 |
) |
|
|
|
|
|
Net earnings
attributable to Moog |
|
$ |
30,564 |
|
|
$ |
26,241 |
|
|
|
|
|
|
Net earnings per share
attributable to Moog |
|
|
|
|
Basic |
|
$ |
0.85 |
|
|
$ |
0.71 |
|
Diluted |
|
$ |
0.84 |
|
|
$ |
0.71 |
|
|
|
|
|
|
Average common shares
outstanding |
|
|
|
|
Basic |
|
35,869,052 |
|
|
36,713,949 |
|
Diluted |
|
36,272,767 |
|
|
37,028,331 |
|
|
Moog Inc. |
CONSOLIDATED SALES AND OPERATING PROFIT |
(dollars in thousands) |
|
|
|
Three Months Ended |
|
|
December 31, 2016 |
|
January 2, 2016 |
Net sales: |
|
|
|
|
Aircraft
Controls |
|
$ |
268,450 |
|
|
$ |
253,957 |
|
Space and
Defense Controls |
|
92,930 |
|
|
83,518 |
|
Industrial Systems |
|
112,399 |
|
|
125,179 |
|
Components |
|
115,891 |
|
|
105,803 |
|
Net
sales |
|
$ |
589,670 |
|
|
$ |
568,457 |
|
Operating profit: |
|
|
|
|
Aircraft
Controls |
|
$ |
23,111 |
|
|
$ |
18,432 |
|
|
|
8.6 |
% |
|
7.3 |
% |
Space and
Defense Controls |
|
7,096 |
|
|
11,515 |
|
|
|
7.6 |
% |
|
13.8 |
% |
Industrial Systems |
|
10,701 |
|
|
13,633 |
|
|
|
9.5 |
% |
|
10.9 |
% |
Components |
|
11,454 |
|
|
7,979 |
|
|
|
9.9 |
% |
|
7.5 |
% |
Total operating
profit |
|
52,362 |
|
|
51,559 |
|
|
|
8.9 |
% |
|
9.1 |
% |
Deductions from
operating profit: |
|
|
|
|
Interest
expense |
|
8,486 |
|
|
8,322 |
|
Equity-based compensation expense |
|
2,168 |
|
|
936 |
|
Corporate
and other expenses, net |
|
5,220 |
|
|
6,646 |
|
Earnings before income taxes |
|
$ |
36,488 |
|
|
$ |
35,655 |
|
|
Moog Inc. |
CONSOLIDATED BALANCE SHEETS |
(dollars in thousands) |
|
|
|
December 31, 2016 |
|
October 1, 2016 |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and
cash equivalents |
|
$ |
331,664 |
|
|
$ |
325,128 |
|
Receivables |
|
677,841 |
|
|
688,388 |
|
Inventories |
|
464,402 |
|
|
479,040 |
|
Prepaid
expenses and other current assets |
|
39,659 |
|
|
34,688 |
|
Total
current assets |
|
1,513,566 |
|
|
1,527,244 |
|
Property, plant and
equipment, net |
|
508,656 |
|
|
522,369 |
|
Goodwill |
|
730,271 |
|
|
740,162 |
|
Intangible assets,
net |
|
104,940 |
|
|
113,560 |
|
Deferred income
taxes |
|
69,039 |
|
|
75,800 |
|
Other assets |
|
26,707 |
|
|
25,839 |
|
Total
assets |
|
$ |
2,953,179 |
|
|
$ |
3,004,974 |
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
Short-term borrowings |
|
$ |
1,366 |
|
|
$ |
1,379 |
|
Current
installments of long-term debt |
|
144 |
|
|
167 |
|
Accounts
payable |
|
148,253 |
|
|
144,450 |
|
Accrued
salaries, wages and commissions |
|
115,081 |
|
|
126,319 |
|
Customer
advances |
|
171,530 |
|
|
167,514 |
|
Contract
loss reserves |
|
30,045 |
|
|
32,543 |
|
Other
accrued liabilities |
|
99,843 |
|
|
116,577 |
|
Total
current liabilities |
|
566,262 |
|
|
588,949 |
|
Long-term debt,
excluding current installments |
|
1,000,338 |
|
|
1,004,847 |
|
Long-term pension and
retirement obligations |
|
385,962 |
|
|
401,747 |
|
Deferred income
taxes |
|
10,157 |
|
|
11,026 |
|
Other long-term
liabilities |
|
4,454 |
|
|
4,343 |
|
Total
liabilities |
|
1,967,173 |
|
|
2,010,912 |
|
Commitment and
contingencies |
|
— |
|
|
— |
|
Redeemable
noncontrolling interest |
|
5,145 |
|
|
5,651 |
|
Shareholders’
equity |
|
|
|
|
Common
stock - Class A |
|
43,688 |
|
|
43,667 |
|
Common
stock - Class B |
|
7,592 |
|
|
7,613 |
|
Additional paid-in capital |
|
469,971 |
|
|
465,762 |
|
Retained
earnings |
|
1,737,103 |
|
|
1,706,539 |
|
Treasury
shares |
|
(740,838 |
) |
|
(741,700 |
) |
Stock
Employee Compensation Trust |
|
(59,307 |
) |
|
(49,463 |
) |
Supplemental Retirement Plan Trust |
|
(9,924 |
) |
|
(8,946 |
) |
Accumulated other comprehensive loss |
|
(467,424 |
) |
|
(435,061 |
) |
Total
Moog shareholders’ equity |
|
980,861 |
|
|
988,411 |
|
Total
liabilities and shareholders’ equity |
|
$ |
2,953,179 |
|
|
$ |
3,004,974 |
|
|
Moog Inc. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(dollars in thousands) |
|
|
|
Three Months Ended |
|
|
December 31, 2016 |
|
January 2, 2016 |
CASH FLOWS FROM
OPERATING ACTIVITIES |
|
|
|
|
Net
earnings attributable to Moog and noncontrolling interest |
|
$ |
30,058 |
|
|
$ |
26,160 |
|
Adjustments to reconcile net earnings to net cash provided (used)
by operating activities: |
|
|
|
|
Depreciation |
|
17,918 |
|
|
19,208 |
|
Amortization |
|
4,541 |
|
|
5,877 |
|
Deferred
income taxes |
|
1,371 |
|
|
3,532 |
|
Equity-based compensation expense |
|
2,168 |
|
|
936 |
|
Other |
|
9,868 |
|
|
804 |
|
Changes
in assets and liabilities providing (using) cash: |
|
|
|
|
Receivables |
|
(11,012 |
) |
|
5,221 |
|
Inventories |
|
6,996 |
|
|
(11,131 |
) |
Accounts
payable |
|
6,737 |
|
|
(22,522 |
) |
Customer
advances |
|
8,287 |
|
|
(498 |
) |
Accrued
expenses |
|
(17,479 |
) |
|
(17,114 |
) |
Accrued
income taxes |
|
(8,885 |
) |
|
(2,685 |
) |
Net
pension and post retirement liabilities |
|
(1,295 |
) |
|
(5,709 |
) |
Other
assets and liabilities |
|
1,309 |
|
|
(2,534 |
) |
Net cash
provided (used) by operating activities |
|
50,582 |
|
|
(455 |
) |
CASH FLOWS FROM
INVESTING ACTIVITIES |
|
|
|
|
Acquisitions of businesses, net of cash acquired |
|
— |
|
|
(11,016 |
) |
Purchase
of property, plant and equipment |
|
(14,849 |
) |
|
(12,305 |
) |
Other
investing transactions |
|
(976 |
) |
|
1,021 |
|
Net cash
(used) by investing activities |
|
(15,825 |
) |
|
(22,300 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES |
|
|
|
|
Proceeds
from revolving lines of credit |
|
62,400 |
|
|
148,605 |
|
Payments
on revolving lines of credit |
|
(67,400 |
) |
|
(93,605 |
) |
Payments
on long-term debt |
|
(50 |
) |
|
(9,540 |
) |
Proceeds
from sale of treasury stock |
|
2,135 |
|
|
2,230 |
|
Purchase
of outstanding shares for treasury |
|
(5,211 |
) |
|
(3,034 |
) |
Proceeds
from sale of stock held by SECT |
|
867 |
|
|
— |
|
Purchase
of stock held by SECT |
|
(5,709 |
) |
|
(1,020 |
) |
Excess
tax benefits from equity-based payment arrangements |
|
— |
|
|
580 |
|
Net cash
provided (used) by financing activities |
|
(12,968 |
) |
|
44,216 |
|
Effect of exchange rate
changes on cash |
|
(15,253 |
) |
|
(7,996 |
) |
Increase in cash and
cash equivalents |
|
6,536 |
|
|
13,465 |
|
Cash and
cash equivalents at beginning of period |
|
325,128 |
|
|
309,853 |
|
Cash and cash equivalents at end of period |
|
$ |
331,664 |
|
|
$ |
323,318 |
|
Contact:
Ann Marie Luhr
716-687-4225
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