SOURCE: Moog Inc.

Moog Inc.

January 30, 2015 07:55 ET

Moog Reports First Quarter Results

EAST AURORA, NY--(Marketwired - Jan 30, 2015) - Moog Inc. (NYSE: MOG.A) (NYSE: MOG.B) today announced first quarter sales of $631 million, down 2% from a year ago, the result of negative foreign currency effects. Net earnings of $35 million increased by 10% and earnings per share of $.86 were 23% higher, in part the result of the Company's on-going share repurchase program.

Aircraft segment sales, at $266 million, were unchanged from last year. Commercial aircraft sales increased 10% on strong OEM production which included $62 million in sales to Boeing and $23 million in sales to Airbus. Commercial aircraft aftermarket sales of $30 million were slightly higher than a year ago. 

Military aircraft sales were down 8% to $126 million. OEM sales were down 14% as production on fighter aircraft programs slowed and activity on the F-35 Joint Strike Fighter was lower. Military aftermarket sales were nominally higher, at $51 million.

Space and Defense sales of $100 million were unchanged from a year ago. Defense sales were 6% higher and space market sales were down 4%, the result of a decrease in demand for satellite avionics products.

Industrial Systems sales of $133 million were 7% lower than last year, mostly driven by the stronger U.S. dollar. Industrial automation products were down 2%, while sales of simulation and test systems were down 16%. Energy products were down 10% in total, with wind energy controls unchanged from a year ago.

Components Group sales, at $100 million, were 3% lower than a year ago. Industrial automation sales, at $24 million, were 7% higher. Sales into aerospace and defense markets were mostly unchanged. Medical components sales were down $2 million, or 10%. Sales of energy market products were down $2 million from the elevated levels of last year.

Medical Devices segment sales of $31 million were down 3% with lower sales of pumps and administration sets mostly offset by an increase in sales of OEM sensors.

Twelve month consolidated backlog was $1.4 billion, unchanged from a year ago.

Projections for fiscal 2015 were also updated. The company is reducing its sales forecast for the year by $95 million which will result in sales of $2.57 billion, net earnings of $157 million and earnings per share of $3.85. This updated guidance does not include the impact of additional share repurchases. The completion of the Company's previously authorized 9 million share repurchase program during FY'15 would result in earnings per share guidance of $3.95. 

"Overall Q1 was a mixed quarter for the company," said John Scannell, Chairman and CEO. "On a positive note, earnings came in slightly ahead of our forecast and cash was very strong. However, during the quarter we started to feel the impact of three macroeconomic headwinds, the strengthening of the U.S. dollar, the industrial malaise outside the U.S. and the sharp and sustained drop in the price of oil. As a result, we are introducing some caution in our forecast and revising our outlook for the remainder of fiscal '15 downward. Despite these challenges, we are still forecasting fiscal '15 to be another year of strong cash flow and record earnings per share."

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 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 link 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;
  • new 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
    January 3,
 2015
    December 28,
 2013
NET SALES   $ 630,523     $ 643,385
COST OF SALES     446,605       444,076
GROSS PROFIT     183,918       199,309
  Research and development     31,321       35,755
  Selling, general and administrative     97,827       99,901
  Interest     5,368       5,129
  Redemption of senior subordinated notes     --       8,002
  Other     (36 )     3,665
EARNINGS BEFORE INCOME TAXES     49,438       46,857
INCOME TAXES     14,173       14,760
NET EARNINGS   $ 35,265     $ 32,097
               
               
NET EARNINGS PER SHARE              
  Basic   $ 0.87     $ 0.71
  Diluted   $ 0.86     $ 0.70
               
               
AVERAGE COMMON SHARES OUTSTANDING              
  Basic     40,594,886       45,384,652
  Diluted     41,080,179       46,010,035
                 
                 
   
Moog Inc.  
CONSOLIDATED SALES AND OPERATING PROFIT  
(dollars in thousands)  
   
    Three Months Ended  
    January 3,
 2015
    December 28,
 2013
 
Net sales:                
  Aircraft Controls   $ 266,368     $ 265,416  
  Space and Defense Controls     99,955       99,450  
  Industrial Systems     133,366       144,079  
  Components     99,905       102,685  
  Medical Devices     30,929       31,755  
Net sales   $ 630,523     $ 643,385  
Operating profit and margins:                
  Aircraft Controls   $ 24,458     $ 31,771  
      9.2 %     12.0 %
  Space and Defense Controls     8,726       7,853  
      8.7 %     7.9 %
  Industrial Systems     13,219       12,286  
      9.9 %     8.5 %
  Components     14,700       16,189  
      14.7 %     15.8 %
  Medical Devices     4,598       3,628  
      14.9 %     11.4 %
Total operating profit     65,701       71,727  
      10.4 %     11.1 %
Deductions from operating profit:                
  Interest expense     5,368       5,129  
  Equity-based compensation expense     3,398       3,774  
  Redemption of senior subordinated notes     --       8,002  
  Corporate expenses and other     7,497       7,965  
Earnings before income taxes   $ 49,438     $ 46,857  
                 
                 
 
Moog Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
    January 3,
 2015
  September 27,
 2014
ASSETS            
CURRENT ASSETS            
  Cash and cash equivalents   $ 240,240   $ 231,292
  Receivables     706,373     780,874
  Inventories     523,823     517,056
  Other current assets     128,906     134,842
    TOTAL CURRENT ASSETS     1,599,342     1,664,064
PROPERTY, PLANT AND EQUIPMENT, net     546,329     555,348
GOODWILL     746,557     757,852
INTANGIBLE ASSETS, net     166,391     178,070
OTHER ASSETS     57,116     53,118
TOTAL ASSETS   $ 3,115,735   $ 3,208,452
LIABILITIES AND SHAREHOLDERS' EQUITY            
CURRENT LIABILITIES            
  Short-term borrowings   $ 100,415   $ 103,660
  Current installments of long-term debt     36     5,262
  Accounts payable     153,148     162,667
  Customer advances     143,094     145,500
  Contract loss reserves     33,914     35,984
  Other accrued liabilities     223,479     269,731
    TOTAL CURRENT LIABILITIES     654,086     722,804
LONG-TERM DEBT, excluding current installments            
  Senior debt     551,099     765,114
  Senior notes     300,000     --
LONG-TERM PENSION AND RETIREMENT OBLIGATIONS     279,219     288,216
DEFERRED INCOME TAXES     89,545     83,931
OTHER LONG-TERM LIABILITIES     1,670     972
    TOTAL LIABILITIES     1,875,619     1,861,037
COMMITMENTS AND CONTINGENCIES     --     --
SHAREHOLDERS' EQUITY            
  Common stock     51,280     51,280
  Other shareholders' equity     1,188,836     1,296,135
    TOTAL SHAREHOLDERS' EQUITY     1,240,116     1,347,415
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 3,115,735   $ 3,208,452
             
             
   
Moog Inc.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(dollars in thousands)  
   
    Three Months Ended  
    January 3,
 2015
    December 28,
 2013
 
CASH FLOWS FROM OPERATING ACTIVITIES                
  Net earnings   $ 35,265     $ 32,097  
  Adjustments to reconcile net earnings to net cash provided (used) by operating activities:                
    Depreciation     19,833       19,444  
    Amortization     6,741       7,950  
    Equity-based compensation expense     3,398       3,774  
    Redemption of senior subordinated notes     --       8,002  
    Other     7,824       5,631  
  Changes in assets and liabilities providing (using) cash:                
    Receivables     62,772       36,329  
    Inventories     (15,381 )     (2,270 )
    Accounts payable     (6,528 )     (16,042 )
    Customer advances     (1,019 )     383  
    Accrued expenses     (35,922 )     (25,964 )
    Accrued income taxes     (3,060 )     3,081  
    Pension assets and liabilities     970       (3,360 )
    Other assets and liabilities     3,580       (820 )
      NET CASH PROVIDED BY OPERATING ACTIVITIES     78,473       68,235  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
    Purchase of property, plant and equipment     (20,160 )     (20,019 )
    Other investing transactions     71       (8,577 )
      NET CASH USED BY INVESTING ACTIVITIES     (20,089 )     (28,596 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
    Net short term repayments     (3,236 )     (600 )
    Net (repayments) proceeds from revolving lines of credit     (214,000 )     182,165  
    Net (repayments) proceeds on long-term debt     (5,234 )     36  
    Proceeds from senior notes, net of issuance cost     294,718       --  
    Payments on senior subordinated notes     --       (191,575 )
    Payment of premium on redemption of senior subordinated notes     --       (6,945 )
    Proceeds from sale of treasury stock     9,951       1,530  
    Purchase of outstanding shares for treasury     (122,443 )     (2,617 )
    Purchase of stock held by SECT     (4,460 )     (1,792 )
    Excess tax benefits from equity-based payment arrangements     4,855       1,112  
      NET CASH USED BY FINANCING ACTIVITIES     (39,849 )     (18,686 )
                 
Effect of exchange rate changes on cash     (9,587 )     1,526  
INCREASE IN CASH AND CASH EQUIVALENTS     8,948       22,479  
    Cash and cash equivalents at beginning of period     231,292       157,090  
    CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 240,240     $ 179,569  
                 
                 

Contact Information

  • Contact:
    Ann Marie Luhr
    716-687-4225

    Moog Inc.
    East Aurora, New York, 14052
    716-652-2000