Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial
results for the quarter ended April 2, 2022.
Second Quarter Highlights
- Sales of $771 million were up 5% from a year ago;
- GAAP diluted earnings per share of $0.91 included $0.59 per
share in restructuring and impairment charges;
- Non-GAAP diluted adjusted earnings per share of $1.49, up 12%
from adjusted earnings per share a year ago;
- GAAP operating margins of 7.4% with adjusted operating margins
of 10.6%;
- $23 million GAAP cash flow from operating activities and $13
million adjusted cash flow from operating activities;
- GAAP effective tax rate of 24.9% and adjusted effective tax
rate of 24.4%.
Segment Results
Aircraft Controls segment revenues in the quarter were $311
million, 2% higher year over year. Commercial aircraft revenues
were $119 million, a 16% increase. Sales to commercial OEM
customers were unchanged with an increase in A350, 737, and
business jet sales compensating for slower sales of 787 and other
OEM products. Commercial aftermarket sales increased 61% on very
strong repair and overhaul activity, particularly on the 787
aircraft, and one-time sales of test equipment that were booked in
the quarter.
Military aircraft sales were $192 million, down 5% year over
year. Military OEM sales were down 11%, to $137 million. Lower F-35
Joint Strike Fighter sales and foreign military sales were
partially offset by increased V-22 sales. Military aftermarket
sales were 14% higher on increases across multiple programs.
Space and Defense segment revenues were $223 million, an
increase of 8% year over year. Defense sales of $136 million
increased 15%. Strong sales of the RIwP® turret and various
components continued and offset lower sales for tactical missile
applications. Space sales were mostly unchanged, at $87 million,
the result of reduced hypersonic development activity and lower
sales of heritage space components, offset by growth in sales of
new space vehicles.
Industrial Systems segment sales in the quarter were $236
million, up 10% from a year ago, excluding the impact of foreign
exchange movements and portfolio shaping activities. Sales of
simulation and test products were 50% higher, as flight simulation
activity for pilot training increased. Energy sales were up 14%,
tied to the strength in oil prices and associated onshore and
offshore exploration activity. Sales of products for industrial
automation applications were down marginally, as the company
completed minor portfolio shaping activities. Medical product sales
were down 4%, the result of slower sales of components used in
ventilators.
In the second quarter, the Company incurred $25 million of
restructuring and impairment charges. Delayed recovery in the
commercial aircraft OEM business resulted in $19 million of charges
within the Aircraft Controls segment. The Company also recorded $4
million related to further portfolio refinements in the Space and
Defense Controls and Industrial Systems segments and $2 million of
asset write-downs related to exiting activities in Russia as a
result of the invasion of Ukraine.
Consolidated 12-month backlog was $2.3 billion, up 17% from a
year ago.
“We’re pleased with our results this quarter which came in ahead
of forecast,” said John Scannell, Chairman and CEO. “Our backlog
continues to grow, and our longer-term outlook remains positive.
We’re managing through the on-going challenges associated with
COVID and supply chain disruptions and are confident in meeting our
forecast for the remainder of the year.”
Fiscal 2022 Outlook
The Company updated its fiscal 2022 projections and adjusted
figures provided 90 days ago.
- Forecasted sales of $3.0 billion;
- Forecasted GAAP diluted earnings per share of $5.24, and
adjusted diluted earnings per share of $5.50, both plus or minus
$0.20;
- Forecasted GAAP operating margins of 10.0% and adjusted
operating margins of 10.3%;
- Forecasted cash flow from operating activities of $328 million
and adjusted cash flow from operating activities of $228 million;
and
- Forecasted GAAP effective tax rate of 25.0% and adjusted
effective tax rate of 25.4%.
In conjunction with today’s release, Moog will host a conference
call today 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 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 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 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 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 or Lockheed Martin as a customer
or a significant reduction in sales to either 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 (UNAUDITED) (dollars in thousands,
except per share data)
Three Months Ended
Six Months Ended
April 2, 2022
April 3, 2021
April 2, 2022
April 3, 2021
Net sales
$
770,787
$
736,402
$
1,494,873
$
1,420,356
Cost of sales
556,070
536,493
1,085,776
1,030,804
Inventory write-down
1,705
—
3,205
—
Gross profit
213,012
199,909
405,892
389,552
Research and development
30,720
30,453
58,428
58,461
Selling, general and administrative
111,019
105,131
222,816
204,734
Interest
8,263
8,629
16,245
17,049
Gain on sale of business
—
—
(16,146
)
—
Asset impairment
15,236
—
15,236
—
Restructuring
7,793
—
7,793
—
Other
1,268
(6,432
)
1,384
(3,191
)
Earnings before income taxes
38,713
62,128
100,136
112,499
Income taxes
9,626
13,440
24,784
25,969
Net earnings
$
29,087
$
48,688
$
75,352
$
86,530
Net earnings per share
Basic
$
0.91
$
1.51
$
2.35
$
2.69
Diluted
$
0.91
$
1.51
$
2.34
$
2.68
Average common shares outstanding
Basic
31,984,674
32,146,247
32,021,036
32,110,365
Diluted
32,120,726
32,325,494
32,154,442
32,281,158
Results shown in the previous table include impacts associated
with the gain on the sale of our Navigation Aids business, as well
as inventory write-down charges, asset impairment and restructuring
related to the impact of continued portfolio shaping activities and
the Ukraine crisis. The table below adjusts the income taxes, net
earnings and diluted net earnings per share to exclude these
impacts. While management believes that these non-GAAP financial
measures may be useful in evaluating the financial condition and
results of operations of the Company, this information should be
considered supplemental and is not a substitute for financial
information prepared in accordance with GAAP.
Reconciliation to non-GAAP adjusted income taxes, net earnings
and diluted net earnings per share are as follows:
Three Months Ended
Six Months Ended
April 2, 2022
April 3, 2021
April 2, 2022
April 3, 2021
As Reported:
Earnings before income taxes
$
38,713
$
62,128
$
100,136
$
112,499
Income taxes
9,626
13,440
24,784
25,969
Effective income tax rate
24.9
%
21.6
%
24.8
%
23.1
%
Net earnings
29,087
48,688
75,352
86,530
Diluted net earnings per share
$
0.91
$
1.51
$
2.34
$
2.68
Gain on Sale of Business:
Earnings before income taxes
$
—
$
—
$
(16,146
)
$
—
Income taxes
—
—
(4,273
)
—
Net earnings
—
—
(11,873
)
—
Diluted net earnings per share
$
—
$
—
$
(0.37
)
$
—
Other Charges:
Earnings before income taxes
$
24,734
$
—
$
26,234
$
—
Income taxes
5,883
—
6,237
—
Net earnings
18,851
—
19,997
—
Diluted net earnings per share
$
0.59
$
—
$
0.62
$
—
Pension Curtailment Gain:
Earnings before income taxes
$
—
$
(5,830
)
$
—
$
(5,830
)
Income taxes
—
—
—
—
Net earnings
—
(5,830
)
—
(5,830
)
Diluted net earnings per share
$
—
$
(0.18
)
$
—
$
(0.18
)
As Adjusted:
Earnings before income taxes
$
63,447
$
56,298
$
110,224
$
106,669
Income taxes
15,509
13,440
26,748
25,969
Effective income tax rate
24.4
%
23.9
%
24.3
%
24.3
%
Net earnings
47,938
42,858
83,476
80,700
Diluted net earnings per share
$
1.49
$
1.33
$
2.60
$
2.50
The diluted net earnings per share associated with the
adjustments have been calculated individually and in total using
the quarterly average outstanding shares in the period in which the
adjustments occurred. Accordingly, adjusted diluted net earnings
per share may not reconcile when totaled due to rounding.
Moog Inc. CONSOLIDATED
SALES AND OPERATING PROFIT (UNAUDITED) (dollars in
thousands)
Three Months Ended
Six Months Ended
April 2, 2022
April 3, 2021
April 2, 2022
April 3, 2021
Net sales:
Aircraft Controls
$
311,268
$
304,361
$
614,585
$
591,135
Space and Defense Controls
223,349
206,168
431,205
394,330
Industrial Systems
236,170
225,873
449,083
434,891
Net sales
$
770,787
$
736,402
$
1,494,873
$
1,420,356
Operating profit:
Aircraft Controls
$
12,441
$
22,018
$
54,356
$
49,940
4.0
%
7.2
%
8.8
%
8.4
%
Space and Defense Controls
24,075
26,652
45,374
49,698
10.8
%
12.9
%
10.5
%
12.6
%
Industrial Systems
20,723
23,813
37,914
43,711
8.8
%
10.5
%
8.4
%
10.1
%
Total operating profit
57,239
72,483
137,644
143,349
7.4
%
9.8
%
9.2
%
10.1
%
Deductions from operating profit:
Interest expense
8,263
8,629
16,245
17,049
Equity-based compensation expense
1,920
2,127
4,578
4,629
Non-service pension expense (income)
1,472
(4,901
)
2,957
(3,981
)
Corporate and other expenses, net
6,871
4,500
13,728
13,153
Earnings before income taxes
$
38,713
$
62,128
$
100,136
$
112,499
Operating Profit and Margins - as adjusted are as follows:
Three Months Ended
Six Months Ended
April 2, 2022
April 3, 2021
April 2, 2022
April 3, 2021
Aircraft Controls operating profit - as
reported
$
12,441
$
22,018
$
54,356
$
49,940
Gain on sale of business
—
—
(16,146
)
—
Restructuring
4,232
—
4,232
—
Asset impairment
14,594
—
14,594
—
Aircraft Controls operating profit - as
adjusted
$
31,267
$
22,018
$
57,036
$
49,940
10.0
%
7.2
%
9.3
%
8.4
%
Space and Defense Controls operating
profit - as reported
$
24,075
$
26,652
$
45,374
$
49,698
Inventory write-down
—
—
1,500
—
Restructuring
1,837
—
1,837
—
Space and Defense Controls operating
profit - as adjusted
$
25,912
$
26,652
$
48,711
$
49,698
11.6
%
12.9
%
11.3
%
12.6
%
Industrial Systems operating profit - as
reported
$
20,723
$
23,813
$
37,914
$
43,711
Inventory write-down
1,705
—
1,705
—
Restructuring
1,724
—
1,724
—
Asset impairment
642
—
642
—
Industrial Systems operating profit - as
adjusted
$
24,794
$
23,813
$
41,985
$
43,711
10.5
%
10.5
%
9.3
%
10.1
%
Total operating profit - as adjusted
$
81,973
$
72,483
$
147,732
$
143,349
10.6
%
9.8
%
9.9
%
10.1
%
Moog Inc. CONSOLIDATED
BALANCE SHEETS (UNAUDITED) (dollars in thousands)
April 2, 2022
October 2, 2021
ASSETS
Current assets
Cash and cash equivalents
$
120,395
$
99,599
Restricted cash
1,736
1,315
Receivables, net
931,297
945,929
Inventories, net
591,601
613,095
Prepaid expenses and other current
assets
67,802
58,842
Total current assets
1,712,831
1,718,780
Property, plant and equipment, net
668,602
645,778
Operating lease right-of-use assets
61,659
60,355
Goodwill
842,203
851,605
Intangible assets, net
104,608
106,095
Deferred income taxes
16,022
17,769
Other assets
35,568
32,787
Total assets
$
3,441,493
$
3,433,169
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
Current installments of long-term debt
$
372
$
80,365
Accounts payable
222,986
200,602
Accrued compensation
79,709
112,703
Contract advances
321,594
263,686
Accrued liabilities and other
217,780
212,005
Total current liabilities
842,441
869,361
Long-term debt, excluding current
installments
832,391
823,355
Long-term pension and retirement
obligations
157,962
162,728
Deferred income taxes
70,636
64,642
Other long-term liabilities
107,415
112,939
Total liabilities
2,010,845
2,033,025
Shareholders’ equity
Common stock - Class A
43,804
43,803
Common stock - Class B
7,476
7,477
Additional paid-in capital
543,292
509,622
Retained earnings
2,296,849
2,237,848
Treasury shares
(1,028,414
)
(1,007,506
)
Stock Employee Compensation Trust
(94,548
)
(79,776
)
Supplemental Retirement Plan Trust
(73,876
)
(63,764
)
Accumulated other comprehensive loss
(263,935
)
(247,560
)
Total shareholders’ equity
1,430,648
1,400,144
Total liabilities and shareholders’
equity
$
3,441,493
$
3,433,169
Moog Inc. CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in
thousands)
Six Months Ended
April 2, 2022
April 3, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings
$
75,352
$
86,530
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation
38,316
37,622
Amortization
6,735
6,436
Deferred income taxes
4,834
(1,187
)
Equity-based compensation expense
4,578
4,629
Gain on sale of business
(16,146
)
—
Asset impairment and Inventory
write-down
18,441
—
Other
2,692
(3,115
)
Changes in assets and liabilities
providing (using) cash:
Receivables
(4,223
)
(47,697
)
Inventories
6,951
9,301
Accounts payable
24,388
(5,088
)
Contract advances
60,392
51,349
Accrued expenses
(28,324
)
(1,799
)
Accrued income taxes
8,217
12,691
Net pension and post retirement
liabilities
8,927
3,846
Other assets and liabilities
(30,933
)
(16,151
)
Net cash provided by operating
activities
180,197
137,367
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash
acquired
(11,837
)
(77,600
)
Purchase of property, plant and
equipment
(74,087
)
(58,019
)
Other investing transactions
37,776
1,895
Net cash used by investing activities
(48,148
)
(133,724
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of
credit
463,950
503,200
Payments on revolving lines of credit
(455,476
)
(467,700
)
Proceeds from long-term debt
—
39,800
Payments on long-term debt
(80,181
)
(39,903
)
Payments on finance lease obligations
(1,085
)
(1,042
)
Payment of dividends
(16,351
)
(16,046
)
Proceeds from sale of treasury stock
8,701
4,230
Purchase of outstanding shares for
treasury
(26,481
)
(18,844
)
Proceeds from sale of stock held by
SECT
7,574
274
Purchase of stock held by SECT
(10,396
)
(2,559
)
Net cash (used) provided by financing
activities
(109,745
)
1,410
Effect of exchange rate changes on
cash
(1,087
)
887
Increase in cash, cash equivalents and
restricted cash
21,217
5,940
Cash, cash equivalents and restricted cash
at beginning of period
100,914
85,072
Cash, cash equivalents and restricted cash
at end of period
$
122,131
$
91,012
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220429005106/en/
Ann Marie Luhr 716-687-4225
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