Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial
results for the quarter and fiscal year ended October 2, 2021.
Fourth Quarter Highlights
- Sales of $724 million, up 2% from a year ago;
- GAAP diluted earnings per share of $1.07, up 32%, including
$0.18 of one-time adjustments;
- Operating margins of 8.7%;
- Effective tax rate of 19.0%; and
- $63 million cash flow from operating activities.
Full-Year 2021 Highlights
- Sales of $2.9 billion, down 1% from a year ago;
- GAAP diluted earnings per share of $4.87, including $0.18 of
one-time adjustments, up 1% from adjusted results a year ago;
- Operating margins of 9.5%;
- Effective tax rate of 22.8%; and
- $293 million cash flow from operating activities.
Fiscal 2022 Guidance
- Sales of $3.0 billion, a 6% increase;
- Forecast diluted earnings per share of $5.50, plus or minus
$0.20;
- Forecast full year operating margins of 10.3%;
- Forecast tax rate of 25.5%; and
- Forecast $338 million cash flow from operating activities.
Segment Results
Aircraft Controls segment sales in the quarter were $298
million, 8% higher year over year. Total commercial aircraft
revenues were $99 million, up 23%. Sales from the Genesys
acquisition and strong sales to Airbus for the A350 compensated for
lower 787 sales to Boeing. Commercial aftermarket sales increased
25% on strong 787 activity.
Military aircraft revenues in the quarter were up 2% to $199
million. OEM revenues were 12% higher, to $144 million. Increased
funded development and acquired sales from the Genesys acquisition
offset lower F-35 Joint Strike Fighter sales. Military aftermarket
sales of $55 million were off 16% when compared to a very strong
quarter last year.
Full-year Aircraft Controls segment sales were $1.16 billion,
down 4%. Total military aircraft sales increased 8%, to $782
million. Military OEM sales, led by F-35 program sales and foreign
military sales, were $574 million, an increase of 22%. Military
aftermarket sales were off 17%, with the decrease tied to lower
F-35 spares and V-22 repair volume. Sales to commercial customers
were down 22%, with aftermarket down 7% year over year, all related
to COVID challenges.
Space and Defense segment sales in the quarter were $200
million, down 3% year over year. Space sales of $81 million were 3%
lower on weakness in sales for launch vehicles, hypersonics, and
satellite engines. Defense sales were down 4%, at $119 million,
mainly tied to weaker sales of security products and missile
controls.
Space and Defense sales for the year increased 4%, to $799
million. Space sales were $333 million, up 13%, driven by increases
across space vehicles and avionics. Defense sales of $466 million
were off 2% on lower sales of security products and missile
controls.
Industrial Systems segment sales in the quarter were $226
million, in line with last year’s fourth quarter, excluding foreign
exchange adjustments. Industrial automation sales were up 11% on
strength across the portfolio tied to increases in global capital
spending. Energy sales increased 10% year over year as off-shore
production activity picked-up in the quarter. Sales into simulation
and test applications were mostly flat. Medical product sales
decreased 17% on slowing demand for OEM components used for sleep
therapy and imaging.
Full-year Industrial Systems segment sales were $892 million,
down 2%. Industrial automation sales of $427 million were 5%
higher. Energy sales were down 6%, at $120 million. Simulation and
test sales were 13% lower as the flight simulator market has not
rebounded from the effects of the pandemic. Sales of medical pumps
and associated products, at $255 million, were 7% lower after the
surge experienced last year.
Consolidated 12-month backlog was $2.1 billion, up 24% from a
year ago.
“As we entered fiscal ’21, we projected that COVID would be with
us throughout the year and anticipated top and bottom results
similar to the second half of fiscal ’20,” said John Scannell,
Chairman and CEO. “Looking back on the year, our business performed
much better than this. As we now enter fiscal ’22, we’re optimistic
about the future, while remaining realistic about the challenges.
We anticipate sales of just over $3 billion and earnings per share
of $5.50, plus or minus $0.20, representing an increase of 6% on
the top line and 13% on the bottom line.”
In conjunction with today’s release, Moog will host a conference
call on Friday November 5, 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
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 press
release 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 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. In evaluating these forward-looking
statements, you should carefully consider the factors set forth
below.
Although it is not possible to create a comprehensive list of
all factors that may cause actual results to differ from the
results expressed or implied by our forward-looking statements or
that may affect our future results, some of these factors and other
risks and uncertainties that arise from time to time are described
in Item 1A “Risk Factors” of our Annual Report on Form 10-K and in
our other periodic filings with the SEC and include the
following:
COVID-19 PANDEMIC RISKS
- We face various risks related to health pandemics such as the
global COVID-19 pandemic, which have had 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;
- If we are unable to adequately enforce and protect our
intellectual property or defend against assertions of infringement,
our business and our ability to compete could be harmed; 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 currency,
political and trade risks and adverse changes in local legal and
regulatory environments could impact our results of
operations;
- 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
- 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.
While we believe we have identified and discussed above the
material risks affecting our business, there may be additional
factors, risks and uncertainties not currently known to us or that
we currently consider immaterial 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. Any
forward-looking statement speaks only as of the date on which it is
made, and we disclaim any obligation to update any forward-looking
statement made in this report, except as required by law.
Moog Inc.
CONSOLIDATED STATEMENTS OF
EARNINGS (LOSS) (UNAUDITED)
(dollars in thousands, except
per share data)
Three Months Ended
Fiscal Year Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Net sales
$
724,285
$
706,895
$
2,851,993
$
2,884,554
Cost of sales
528,716
530,581
2,076,270
2,118,150
Inventory write-down
—
3,913
—
22,708
Gross profit
195,569
172,401
775,723
743,696
Research and development
33,972
28,562
125,528
110,865
Selling, general and administrative
106,697
95,430
412,028
397,947
Interest
8,604
8,974
33,892
38,897
Long-lived asset impairment
1,500
5,968
1,500
37,839
Restructuring
—
5,394
—
10,700
Pension settlement
—
121,324
—
121,324
Other
2,116
6,413
(999)
20,707
Earnings (loss) before income taxes
42,680
(99,664)
203,774
5,417
Income taxes (benefit)
8,112
(21,687)
46,554
(3,788)
Net earnings (loss)
$
34,568
$
(77,977)
$
157,220
$
9,205
Net earnings (loss) per share
Basic
$
1.08
$
(2.40)
$
4.90
$
0.28
Diluted
$
1.07
$
(2.40)
$
4.87
$
0.28
Average common shares outstanding
Basic
32,104,127
32,539,248
32,112,589
33,257,684
Diluted
32,274,296
32,539,248
32,297,956
33,437,801
Results shown in the previous table include charges associated
with the COVID-19 pandemic, as well as a charge associated with the
purchase of a single premium non-participating group annuity
contract from Metropolitan Tower Life Insurance Company and the
related transfer of future benefit obligations and annuity
administration for certain retirees and beneficiaries under the
Moog Inc. Employees' Retirement Plan. COVID-19 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
Fiscal Year Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
As Reported:
Earnings (loss) before income taxes
$
42,680
$
(99,664)
$
203,774
$
5,417
Income taxes (benefit)
8,112
(21,687)
46,554
(3,788)
Effective income tax rate
19.0
%
21.8
%
22.8
%
(69.9)
%
Net earnings (loss)
34,568
(77,977)
157,220
9,205
Diluted net earnings (loss) per share
$
1.07
$
(2.40)
$
4.87
$
0.28
COVID-19 Pandemic Charges:
Earnings before income taxes
$
—
$
15,275
$
—
$
71,247
Income taxes
—
3,494
—
16,506
Net earnings
—
11,781
—
54,741
Diluted net earnings per share
$
—
$
0.36
$
—
$
1.68
Pension Settlement:
Earnings before income taxes
$
—
$
121,324
$
—
$
121,324
Income taxes
—
28,632
—
28,632
Net earnings
—
92,692
—
92,692
Diluted net earnings per share
$
—
$
2.85
$
—
$
2.85
As Adjusted:
Earnings before income taxes
$
42,680
$
36,935
$
203,774
$
197,988
Income taxes
8,112
10,439
46,554
41,350
Effective income tax rate
19.0
%
28.3
%
22.8
%
20.9
%
Net earnings
34,568
26,496
157,220
156,638
Diluted net earnings per share
$
1.07
$
0.81
$
4.87
$
4.81
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 (UNAUDITED)
(dollars in thousands)
Three Months Ended
Fiscal Year Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Net sales:
Aircraft Controls
$
297,972
$
275,001
$
1,161,238
$
1,205,750
Space and Defense Controls
200,018
206,958
799,235
770,114
Industrial Systems
226,295
224,936
891,520
908,690
Net sales
$
724,285
$
706,895
$
2,851,993
$
2,884,554
Operating profit:
Aircraft Controls
$
26,193
$
3,430
$
96,678
$
34,670
8.8
%
1.2
%
8.3
%
2.9
%
Space and Defense Controls
17,296
29,443
88,333
101,667
8.6
%
14.2
%
11.1
%
13.2
%
Industrial Systems
19,233
10,548
85,948
80,025
8.5
%
4.7
%
9.6
%
8.8
%
Total operating profit
62,722
43,421
270,959
216,362
8.7
%
6.1
%
9.5
%
7.5
%
Deductions from operating profit:
Interest expense
8,604
8,974
33,892
38,897
Equity-based compensation expense
1,041
1,000
7,461
5,661
Pension settlement
—
121,324
—
121,324
Non-service pension expense (income)
859
3,791
(2,194)
15,231
Corporate and other expenses, net
9,538
7,996
28,026
29,832
Earnings (loss) before income taxes
$
42,680
$
(99,664)
$
203,774
$
5,417
Operating Profit and Margins - as adjusted are as follows:
Three Months Ended
Fiscal Year Ended
October 2, 2021
October 3, 2020
October 2, 2021
October 3, 2020
Aircraft Controls operating profit - as
reported
$
26,193
$
3,430
$
96,678
$
34,670
Inventory write-down
—
3,913
—
22,448
Long-lived asset impairment
—
(268)
—
31,262
Restructuring
—
444
—
3,340
Aircraft Controls operating profit - as
adjusted
$
26,193
$
7,519
$
96,678
$
91,720
8.8
%
2.7
%
8.3
%
7.6
%
Space and Defense Controls operating
profit - as reported
$
17,296
$
29,443
$
88,333
$
101,667
Long-lived asset impairment
—
—
—
341
Restructuring
—
—
—
185
Space and Defense Controls operating
profit - as adjusted
$
17,296
$
29,443
$
88,333
$
102,193
8.6
%
14.2
%
11.1
%
13.3
%
Industrial Systems operating profit - as
reported
$
19,233
$
10,548
$
85,948
$
80,025
Inventory write-down
—
—
—
260
Long-lived asset impairment
—
6,236
—
6,236
Restructuring
—
4,950
—
7,175
Industrial Systems operating profit - as
adjusted
$
19,233
$
21,734
$
85,948
$
93,696
8.5
%
9.7
%
9.6
%
10.3
%
Total operating profit - as adjusted
$
62,722
$
58,696
$
270,959
$
287,609
8.7
%
8.3
%
9.5
%
10.0
%
Moog Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands)
October 2, 2021
October 3, 2020
ASSETS
Current assets
Cash and cash equivalents
$
99,599
$
84,583
Restricted cash
1,315
489
Receivables, net
945,929
855,535
Inventories, net
613,095
623,043
Prepaid expenses and other current
assets
58,842
49,837
Total current assets
1,718,780
1,613,487
Property, plant and equipment, net
645,778
600,498
Operating lease right-of-use assets
60,355
68,393
Goodwill
851,605
821,856
Intangible assets, net
106,095
85,046
Deferred income taxes
17,769
18,924
Other assets
32,787
17,627
Total assets
$
3,433,169
$
3,225,831
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Current installments of long-term debt
$
80,365
$
350
Accounts payable
200,602
176,868
Accrued compensation
112,703
109,510
Contract advances
263,686
203,338
Accrued liabilities and other
212,005
220,488
Total current liabilities
869,361
710,554
Long-term debt, excluding current
installments
823,355
929,982
Long-term pension and retirement
obligations
162,728
183,366
Deferred income taxes
64,642
40,474
Other long-term liabilities
112,939
118,372
Total liabilities
2,033,025
1,982,748
Shareholders’ equity
Common stock - Class A
43,803
43,799
Common stock - Class B
7,477
7,481
Additional paid-in capital
509,622
472,645
Retained earnings
2,237,848
2,112,734
Treasury shares
(1,007,506)
(990,783)
Stock Employee Compensation Trust
(79,776)
(64,242)
Supplemental Retirement Plan Trust
(63,764)
(53,098)
Accumulated other comprehensive loss
(247,560)
(285,453)
Total shareholders’ equity
1,400,144
1,243,083
Total liabilities and shareholders’
equity
$
3,433,169
$
3,225,831
Moog Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
(dollars in thousands)
Fiscal Year Ended
October 2, 2021
October 3, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings
$
157,220
$
9,205
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation
76,671
74,243
Amortization
13,488
12,729
Deferred income taxes
8,162
(40,845)
Equity-based compensation expense
7,461
5,661
Impairment of long-lived assets and
inventory write-down
1,500
60,547
Pension settlement
—
121,324
Other
745
9,636
Changes in assets and liabilities
providing (using) cash:
Receivables
(73,459)
111,525
Inventories
19,576
(99,015)
Accounts payable
20,520
(84,065)
Contract advances
59,298
65,680
Accrued expenses
2,290
(3,516)
Accrued income taxes
4,653
(17,964)
Net pension and post retirement
liabilities
12,503
33,305
Other assets and liabilities
(17,402)
20,727
Net cash provided by operating
activities
293,226
279,177
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash
acquired
(77,600)
(54,265)
Purchase of property, plant and
equipment
(128,734)
(88,284)
Other investing transactions
15,177
(3,644)
Net cash used by investing activities
(191,157)
(146,193)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of
credit
799,950
1,151,550
Payments on revolving lines of credit
(838,936)
(1,187,159)
Proceeds from long-term debt
78,700
15,128
Payments on long-term debt
(68,080)
(74,470)
Proceeds from senior notes, net of
issuance costs
—
491,769
Payments on senior notes
—
(300,000)
Payments on finance lease obligations
(2,156)
(1,167)
Payment of dividends
(32,106)
(25,210)
Proceeds from sale of treasury stock
10,866
7,014
Purchase of outstanding shares for
treasury
(31,673)
(232,290)
Proceeds from sale of stock held by
SECT
679
24,721
Purchase of stock held by SECT
(4,239)
(6,774)
Other financing transactions
—
(5,878)
Net cash used by financing activities
(86,995)
(142,766)
Effect of exchange rate changes on
cash
768
2,306
Increase (decrease) in cash, cash
equivalents and restricted cash
15,842
(7,476)
Cash, cash equivalents and restricted cash
at beginning of period
85,072
92,548
Cash, cash equivalents and restricted cash
at end of period
$
100,914
$
85,072
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211105005166/en/
Ann Marie Luhr 716-687-4225
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