SOURCE: Moog Inc.

Moog Inc.

January 24, 2014 07:55 ET

Moog Reports First Quarter Sales up 4%

EAST AURORA, NY--(Marketwired - Jan 24, 2014) - Moog Inc. (NYSE: MOG.A) (NYSE: MOG.B) today announced first quarter sales of $643 million, up 4% from a year ago. Net earnings were $32 million and earnings per share were $.70, both lower compared to last year's first quarter. Results in the quarter included a charge of $.12 per share for costs associated with the previously announced redemption of high yield notes and a $.06 per share investment write down. Exclusive of those charges, adjusted earnings per share of $.88 were up 17% from a year ago. 

Aircraft segment sales, at $265 million, were up 5% from last year. Commercial aircraft sales increased 25% on very strong OEM production which included $56 million in sales to Boeing and $19 million in sales to Airbus. Commercial aircraft aftermarket sales of $29 million were 8% higher. 

Military aircraft sales were down 8% to $138 million. OEM sales were off 5% due to lower V-22 production rates and slowing development program activity on the F-35 Joint Strike Fighter. Military aftermarket sales were 13% lower, at $50 million.

Space and Defense sales of $99 million were 15% higher than a year ago. Sales in space markets were up 21%, driven by last year's Broad Reach acquisition. Combined sales for the defense and security markets were 8% higher.

Industrial Systems sales of $144 million were down 3%. Sales of simulation and test systems and industrial automation products were down 2% while sales of energy products were down 4%.

Components Group sales, at $103 million, increased 3% year over year. Industrial automation sales were $8 million higher with the addition of Aspen Motion Technologies, acquired in fiscal '13. Medical components sales were 6% higher. Sales into aerospace and defense markets were mostly unchanged. Sales of energy market products were lower as sales into marine markets a year ago were unusually high.

Medical Devices segment sales of $32 million were 9% lower, the result of the sale of the Ethox Buffalo operation six months ago. Higher pump sales offset lower sales of administration sets in the quarter.

Twelve month consolidated backlog was $1.4 billion, up 9% from a year ago.

The company also updated its projections for fiscal 2014. Compared with the forecast of 90 days ago, the company is planning to invest an additional $.15 per share in Aircraft R&D and $.10 per share in their SAP business system conversion. The company is also reducing its sales forecast for the year by $45 million which will result in $.10 per share lower earnings. The revised forecast is sales of $2.63 billion, net earnings of $169 million and earnings per share of $3.65. 

"We're off to a slow start in fiscal '14," said John Scannell, Chairman and CEO. "Our commercial aircraft business is strong, but our defense and industrial markets are weaker than plan. Despite the difficult market conditions, we continue to invest in programs which will deliver long term benefits. Although we have revised our fiscal '14 outlook downward somewhat, it is still a step up from fiscal '13. We will continue to focus on cost reductions and margin improvement as we move through the year."

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 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;
  • 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 Boeing as a customer or a significant reduction in sales to Boeing 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 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 could otherwise adversely affect our business;
  • 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; and
  • our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.

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.

Financial statements in this press release include As Adjusted a) Net Earnings b) Earnings Per Share c) Operating Profit and d) Operating Margin financial measures to exclude the effects of the redemption of the senior subordinated notes and the write down of an investment. Management believes these As Adjusted financial measures provide investors important insight and measurement into the company's ongoing operational performance. The Company does not intend for the information to be considered in isolation, or as substitutes to, the most closely related GAAP measures. Reconciliations to GAAP measures are contained within.

   
   
   
Moog Inc.  
CONSOLIDATED STATEMENTS OF EARNINGS  
(dollars in thousands, except per share data)  
           
    Three Months Ended  
    December 28,   December 29,  
    2013   2012  
           
               
Net sales   $ 643,385   $ 620,803  
Cost of sales     444,076     428,103  
Gross profit     199,309     192,700  
Research and development     35,755     32,328  
Selling, general and administrative     99,901     105,075  
Interest     5,129     8,596  
Redemption of senior subordinated notes     8,002     -  
Other     3,665     (2,370 )
Earnings before income taxes     46,857     49,071  
Income taxes     14,760     14,953  
Net earnings   $ 32,097   $ 34,118  
Net earnings per share              
  Basic   $ 0.71   $ 0.75  
  Diluted   $ 0.70   $ 0.75  
               
Average common shares outstanding              
  Basic     45,384,652     45,353,332  
  Diluted     46,010,035     45,708,289  
               
               
Net earnings and earnings per share - as adjusted              
               
Net earnings as reported   $ 32,097   $ 34,118  
               
Redemption of senior subordinated notes     5,481     -  
               
Write down of investment     2,748     -  
               
               
Net earnings - as adjusted   $ 40,326   $ 34,118  
               
Diluted net earnings per share - as adjusted   $ 0.88   $ 0.75  
               
   
   
   
Moog Inc.  
CONSOLIDATED SALES AND OPERATING PROFIT  
(dollars in thousands)  
             
    Three Months Ended  
    December 28,     December 29,  
    2013     2012  
             
Net Sales                
  Aircraft Controls   $ 265,416     $ 252,281  
  Space and Defense Controls     99,450       86,465  
  Industrial Systems     144,079       147,976  
  Components     102,685       99,275  
  Medical Devices     31,755       34,806  
Net sales   $ 643,385     $ 620,803  
                 
Operating Profit and Margins                
                 
  Aircraft Controls   $ 31,771     $ 31,075  
        12.0 %     12.3 %
  Space and Defense Controls     7,853       8,228  
        7.9 %     9.5 %
  Industrial Systems     12,286       9,047  
        8.5 %     6.1 %
  Components     16,189       18,846  
        15.8 %     19.0 %
  Medical Devices     3,628       1,602  
      11.4 %     4.6 %
Total operating profit     71,727       68,798  
      11.1 %     11.1 %
Deductions from Operating Profit                
                 
  Interest expense     5,129       8,596  
  Equity-based compensation expense     3,774       3,891  
  Redemption of senior subordinated notes     8,002       -  
  Corporate expenses and other     7,965       7,240  
Earnings before Income Taxes   $ 46,857     $ 49,071  
                 
                 
Operating Profit and Margins - as adjusted                
                 
  Industrial Systems as reported   $ 12,286     $ 9,047  
    Write down of investment     4,011       -  
  Industrial Systems - as adjusted   $ 16,297     $ 9,047  
      11.3 %     6.1 %
Total operating profit - as adjusted   $ 75,738     $ 68,798  
      11.8 %     11.1 %
 
 
 
Moog Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
         
    December 28,   September 28,
    2013   2013
             
Cash   $ 179,569   $ 157,090
Receivables     777,483     811,376
Inventories     553,585     551,674
Other current assets     129,164     127,235
    Total current assets     1,639,801     1,647,375
Property, plant and equipment     564,205     562,363
Goodwill and intangible assets     969,431     975,680
Other non-current assets     53,336     51,677
  Total assets   $ 3,226,773   $ 3,237,095
             
Short-term borrowings   $ 104,155   $ 105,088
Current installments of long-term debt     8,642     3,382
Contract loss reserves     38,875     44,228
Other current liabilities     540,070     570,532
  Total current liabilities     691,742     723,230
Long-term debt     586,063     600,687
Other long-term liabilities     371,276     377,413
  Total liabilities     1,649,081     1,701,330
Shareholders' equity     1,577,692     1,535,765
  Total liabilities and shareholders' equity   $ 3,226,773   $ 3,237,095
               
               

Contact Information

  • MOOG INC.
    EAST AURORA, NEW YORK 14052
    TEL-716/652-2000
    FAX -716/687-4457

    Contact
    Ann Marie Luhr
    716-687-4225