Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial
results for the quarter ended July 3, 2021.
Third Quarter Highlights
- Sales of $707 million, up 8% from a year ago;
- GAAP diluted earnings per share of $1.12, up from ($0.39) a
year ago;
- GAAP diluted earnings per share of $1.12 were up 20% over
adjusted earnings per share of $0.93 a year ago;
- Operating margins of 9.2%;
- Effective tax rate of 25.7%; and
- $93 million cash flow from operating activities.
Segment Results
Aircraft Controls segment sales in the quarter were $272
million, up 9% year over year with higher commercial sales
compensating for marginally lower military sales. Total commercial
aircraft revenues were $96 million, 34% higher. Sales to commercial
OEM customers increased 26% mostly tied to acquired sales from the
recent Genesys acquisition. Commercial aftermarket sales were up
56%, to $28 million, the result of aircraft returning to service
and repair and overhaul work on legacy components.
Total military aircraft sales were down marginally, to $176
million. Military OEM sales of $128 million were 19% higher, helped
by funded development and activity across a range of programs in
the portfolio. Military aftermarket sales of $48 million decreased
31%, as our customers adjusted their inventory.
Space and Defense segment sales were $205 million, up 11% year
over year. Space sales of $86 million increased 16% on strength
across the portfolio, led by integrated space vehicles and work on
NASA programs. Defense sales were 8% higher, at $119 million, the
result of increased sales of vehicle and naval applications and
component products.
Industrial Systems segment sales were $230 million, a 3%
increase over last year. Sales of industrial automation products
were up 19%, attributed to stronger capital spending globally.
Medical product sales, including pumps and components for
respirator products, were down 15% as sales moderated from the
COVID-driven demand seen a year ago. Energy sales and sales into
simulation and test applications were mostly unchanged.
Consolidated 12-month backlog was $2.0 billion, up 21% from a
year ago.
“It was solid quarter for our business with strong cash flow and
earnings per share in line with our projections,” said John
Scannell, Chairman and CEO. “For the full year, we’re tweaking our
sales outlook slightly and keeping our earnings per share forecast
unchanged at $5.00, plus or minus $0.15. All in all, steady as she
goes.”
Fiscal 2021 Outlook
The Company updated its fiscal 2021 projections of 90 days
ago.
- Forecast sales of $2.82 billion;
- Forecast diluted earnings per share of $5.00, plus or minus
$0.15;
- Forecast full year operating margins of 10.0%;
- Forecast effective tax rate of 24.2%; and
- Forecast cash flow from operations of $292 million.
In conjunction with today’s release, Moog will host a conference
call on Friday, July 30, 2021 beginning at 10:00 a.m. ET, which
will be broadcast live over the Internet. John Scannell, Chairman
and CEO, and Jennifer Walter, 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 approximately 90 minutes
prior to the conference call.
About Moog Inc. 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:
COVID-19 Pandemic Risks
- We face various risks related to health pandemics such as the
global COVID-19 pandemic, which may have material adverse
consequences on our operations, financial position, cash flows, and
those of our customers and suppliers.
Strategic Risks
- We operate in highly competitive markets with competitors who
may have greater resources than we possess;
- 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; and
- Our sales and earnings may be affected if we cannot identify,
acquire or integrate strategic acquisitions, or as we conduct
divestitures.
Market Condition Risks
- 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 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;
- 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; and
- We may not realize the full amounts reflected in our backlog as
revenue, which could adversely affect our future revenue and growth
prospects.
Operational Risks
- Our business operations may be adversely affected by
information systems interruptions, intrusions or new software
implementations;
- 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;
- 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; and
- 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.
Financial Risks
- 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;
- Our indebtedness and restrictive covenants under our credit
facilities could limit our operational and financial
flexibility;
- The phase out of LIBOR may negatively impact our debt
agreements and financial position, results of operations and
liquidity;
- 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;
and
- Unforeseen exposure to additional income tax liabilities may
affect our operating results.
Legal and Compliance Risks
- Contracting on government programs is subject to significant
regulation, including rules related to bidding, billing and
accounting standards, and any false claims or non-compliance could
subject us to fines, penalties or possible debarment;
- Our operations in foreign countries expose us to political and
currency risks and adverse changes in local legal and regulatory
environments;
- Government regulations could limit our ability to sell our
products outside the United States and otherwise adversely affect
our business;
- We are involved in various legal proceedings, the outcome of
which may be unfavorable to us; and
- Our operations are subject to environmental laws, and complying
with those laws may cause us to incur significant costs.
General Risks
- The United Kingdom's decision to exit the European Union may
result in 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;
- Future terror attacks, war, natural disasters or other
catastrophic events beyond our control could negatively impact our
business; and
- Our performance could suffer if we cannot maintain our culture
as well as attract, retain and engage our employees.
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 (LOSS) (UNAUDITED) (dollars in
thousands, except per share data)
Three Months Ended
Nine Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net sales
$
707,352
$
657,539
$
2,127,708
$
2,177,659
Cost of sales
516,750
486,760
1,547,554
1,587,569
Inventory write-down
—
18,795
—
18,795
Gross profit
190,602
151,984
580,154
571,295
Research and development
33,095
27,407
91,556
82,303
Selling, general and administrative
100,597
96,899
305,331
302,517
Interest
8,239
9,440
25,288
29,923
Long-lived asset impairment
—
31,871
—
31,871
Restructuring
—
5,306
—
5,306
Other
76
4,415
(3,115
)
14,294
Earnings (loss) before income taxes
48,595
(23,354
)
161,094
105,081
Income taxes (benefit)
12,473
(10,764
)
38,442
17,899
Net earnings (loss)
$
36,122
$
(12,590
)
$
122,652
$
87,182
Net earnings (loss) per share
Basic
$
1.12
$
(0.39
)
$
3.82
$
2.60
Diluted
$
1.12
$
(0.39
)
$
3.80
$
2.59
Average common shares outstanding
Basic
32,125,524
32,601,481
32,115,400
33,515,584
Diluted
32,355,238
32,601,481
32,305,834
33,722,723
Results shown in the previous table include charges associated
with the COVID-19 pandemic. These impacts include inventory
write-down, long-lived asset impairment and restructuring charges.
The table below adjusts the income taxes (benefit), net earnings
(loss) and diluted net earnings (loss) per share to exclude these
impacts.
Reconciliation to non-GAAP adjusted income taxes (benefit), net
earnings (loss) and diluted net earnings (loss) per share are as
follows:
Three Months Ended
Nine Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
As Reported:
Earnings (loss) before income taxes
$
48,595
$
(23,354
)
$
161,094
$
105,081
Income taxes (benefit)
12,473
(10,764
)
38,442
17,899
Effective income tax rate
25.7
%
46.1
%
23.9
%
17.0
%
Net earnings (loss)
36,122
(12,590
)
122,652
87,182
Diluted net earnings (loss) per share
$
1.12
$
(0.39
)
$
3.80
$
2.59
COVID-19 Pandemic Charges:
Earnings before income taxes
$
—
$
55,972
$
—
$
55,972
Income taxes
—
13,012
—
13,012
Net earnings
—
42,960
—
42,960
Diluted net earnings per share
$
—
$
1.32
$
—
$
1.32
As Adjusted:
Earnings before income taxes
$
48,595
$
32,618
$
161,094
$
161,053
Income taxes
12,473
2,248
38,442
30,911
Effective income tax rate
25.7
%
6.9
%
23.9
%
19.2
%
Net earnings
36,122
30,370
122,652
130,142
Diluted net earnings per share
$
1.12
$
0.93
$
3.80
$
3.91
The diluted net earnings per share associated with the charges
have been calculated using the quarterly average outstanding shares
in the period in which the charges were incurred.
Moog Inc. CONSOLIDATED
SALES AND OPERATING PROFIT (LOSS) (UNAUDITED) (dollars in
thousands)
Three Months Ended
Nine Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net sales:
Aircraft Controls
$
272,131
$
249,388
$
863,266
$
930,749
Space and Defense Controls
204,887
183,906
599,217
563,156
Industrial Systems
230,334
224,245
665,225
683,754
Net sales
$
707,352
$
657,539
$
2,127,708
$
2,177,659
Operating profit (loss):
Aircraft Controls
$
20,545
$
(42,053
)
$
70,485
$
31,240
7.5
%
(16.9
)%
8.2
%
3.4
%
Space and Defense Controls
21,339
22,290
71,037
72,224
10.4
%
12.1
%
11.9
%
12.8
%
Industrial Systems
23,004
17,903
66,715
69,477
10.0
%
8.0
%
10.0
%
10.2
%
Total operating profit (loss)
64,888
(1,860
)
208,237
172,941
9.2
%
(0.3
)%
9.8
%
7.9
%
Deductions from operating profit:
Interest expense
8,239
9,440
25,288
29,923
Equity-based compensation expense
1,791
1,390
6,420
4,661
Non-service pension expense (income)
928
4,241
(3,053
)
11,440
Corporate and other expenses, net
5,335
6,423
18,488
21,836
Earnings (loss) before income taxes
$
48,595
$
(23,354
)
$
161,094
$
105,081
Operating Profit and Margins - as adjusted
are as follows:
Three Months Ended
Nine Months Ended
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Aircraft Controls operating profit (loss)
- as reported
$
20,545
$
(42,053
)
$
70,485
$
31,240
Inventory write-down
—
18,535
—
18,535
Long-lived asset impairment
—
31,530
—
31,530
Restructuring
—
2,896
—
2,896
Aircraft Controls operating profit - as
adjusted
$
20,545
$
10,908
$
70,485
$
84,201
7.5
%
4.4
%
8.2
%
9.0
%
Space and Defense Controls operating
profit - as reported
$
21,339
$
22,290
$
71,037
$
72,224
Long-lived asset impairment
—
341
—
341
Restructuring
—
185
—
185
Space and Defense Controls operating
profit - as adjusted
$
21,339
$
22,816
$
71,037
$
72,750
10.4
%
12.4
%
11.9
%
12.9
%
Industrial Systems operating profit - as
reported
$
23,004
$
17,903
$
66,715
$
69,477
Inventory write-down
—
260
—
260
Restructuring
—
2,225
—
2,225
Industrial Systems operating profit - as
adjusted
$
23,004
$
20,388
$
66,715
$
71,962
10.0
%
9.1
%
10.0
%
10.5
%
Total operating profit - as adjusted
$
64,888
$
54,112
$
208,237
$
228,913
9.2
%
8.2
%
9.8
%
10.5
%
Moog Inc. CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (dollars in thousands)
July 3, 2021
October 3, 2020
ASSETS
Current assets
Cash and cash equivalents
$
90,550
$
84,583
Restricted cash
1,108
489
Receivables, net
896,998
855,535
Inventories, net
632,359
623,043
Prepaid expenses and other current
assets
49,513
49,837
Total current assets
1,670,528
1,613,487
Property, plant and equipment, net
639,202
600,498
Operating lease right-of-use assets
62,507
68,393
Goodwill
860,268
821,856
Intangible assets, net
111,867
85,046
Deferred income taxes
18,467
18,924
Other assets
20,471
17,627
Total assets
$
3,383,310
$
3,225,831
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Current installments of long-term debt
$
56,062
$
350
Accounts payable
162,890
176,868
Accrued compensation
111,159
109,510
Contract advances
259,425
203,338
Accrued liabilities and other
216,625
220,488
Total current liabilities
806,161
710,554
Long-term debt, excluding current
installments
863,682
929,982
Long-term pension and retirement
obligations
181,400
183,366
Deferred income taxes
54,168
40,474
Other long-term liabilities
110,694
118,372
Total liabilities
2,016,105
1,982,748
Shareholders’ equity
Common stock - Class A
43,802
43,799
Common stock - Class B
7,478
7,481
Additional paid-in capital
519,636
472,645
Retained earnings
2,211,305
2,112,734
Treasury shares
(1,007,754)
(990,783)
Stock Employee Compensation Trust
(85,314)
(64,242)
Supplemental Retirement Plan Trust
(69,448)
(53,098)
Accumulated other comprehensive loss
(252,500)
(285,453)
Total shareholders’ equity
1,367,205
1,243,083
Total liabilities and shareholders’
equity
$
3,383,310
$
3,225,831
Moog Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in
thousands)
Nine Months Ended
July 3, 2021
June 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings
$
122,652
$
87,182
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation
56,806
55,859
Amortization
10,000
9,847
Deferred income taxes
4,161
(10,766
)
Equity-based compensation expense
6,420
4,661
Impairment of long-lived assets and
inventory write-down
—
50,666
Other
(2,781
)
6,831
Changes in assets and liabilities
providing (using) cash:
Receivables
(21,329
)
63,272
Inventories
9,509
(86,050
)
Accounts payable
(17,530
)
(85,136
)
Contract advances
54,414
73,040
Accrued expenses
3,503
1,827
Accrued income taxes
14,776
(20,555
)
Net pension and post retirement
liabilities
8,380
24,706
Other assets and liabilities
(18,401
)
12,463
Net cash provided by operating
activities
230,580
187,847
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash
acquired
(77,600
)
(54,265
)
Purchase of property, plant and
equipment
(88,573
)
(70,423
)
Other investing transactions
3,615
(3,429
)
Net cash used by investing activities
(162,558
)
(128,117
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of
credit
653,500
977,850
Payments on revolving lines of credit
(651,986
)
(968,459
)
Proceeds from long-term debt
42,300
6,935
Payments on long-term debt
(55,891
)
(52,253
)
Proceeds from senior notes, net of
issuance costs
—
491,769
Payments on senior notes
—
(300,000
)
Payments on finance lease obligations
(1,588
)
(730
)
Payment of dividends
(24,081
)
(17,049
)
Proceeds from sale of treasury stock
4,603
3,199
Purchase of outstanding shares for
treasury
(26,702
)
(191,961
)
Proceeds from sale of stock held by
SECT
679
17,082
Purchase of stock held by SECT
(3,535
)
(6,241
)
Other financing transactions
—
(5,879
)
Net cash used by financing activities
(62,701
)
(45,737
)
Effect of exchange rate changes on
cash
1,265
(932
)
Increase in cash, cash equivalents and
restricted cash
6,586
13,061
Cash, cash equivalents and restricted cash
at beginning of period
85,072
92,548
Cash, cash equivalents and restricted cash
at end of period
$
91,658
$
105,609
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210730005110/en/
Ann Marie Luhr 716-687-4225
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