MOGB Vaneck Esg Moat

Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter ended January 1, 2022.

First Quarter Highlights

• Sales of $724 million were up 6% from a year ago;
• GAAP diluted earnings per share of $1.44;
• Portfolio shaping activities, primarily related to the divestiture of the NAVAIDS business, contributed a $0.33 net gain;
• Non-GAAP diluted adjusted earnings per share of $1.11 were in line with the company’s guidance of 90 days ago;
• GAAP operating margins of 11.1% with adjusted operating margins of 9.1%;
• $157 million GAAP cash flow from operating activities;
• Amended the securitization facility such that certain receivables, up to $100 million, may be derecognized from the balance sheet; $90 million was derecognized as of the end of Q1;
• $68 million adjusted cash flow from operating activities;
• GAAP effective tax rate of 24.7% and adjusted effective tax rate of 24.0%; and
• Today announced a 4% increase in the quarterly dividend, to $0.26.

Segment Results

Aircraft Controls segment revenues in the quarter were $303 million, 6% higher year over year. Commercial aircraft revenues were $117 million, a 45% increase from a year ago. Sales to commercial OEM customers were up 47%. Commercial aftermarket sales increased 38% on repair and overhaul activity, particularly on the 787 aircraft.

Military aircraft sales were $186 million, down 10% year over year. Military OEM sales were down 9%, to $136 million, tied to lower foreign military sales and lower F-35 Joint Strike Fighter sales. Military aftermarket sales were 12% lower, on weaker sales across multiple programs.

Space and Defense segment revenues were $208 million, an increase of 10% from last year. Space sales were up 13%, to $88 million, the result of increased sales for space vehicles and avionics. Defense sales of $120 million increased 9% year over year. Sales of the RIwP® turret were very strong and offset a decrease in sales of tactical missile components.

Industrial Systems segment sales in the quarter were $213 million, up 2% from a year ago. Energy sales were up 10%, the result of strengthening oil prices and associated offshore exploration activity. Sales of simulation and test products were 10% higher, tied to test projects in China. Sales of products for industrial automation applications increased 7%, with strength seen across the core portfolio. Medical product sales were down 12% compared to a very strong quarter a year ago.

Consolidated 12-month backlog was $2.2 billion, up 14% from a year ago.

“It was a solid quarter for our business, in line with our guidance of 90 days ago,” said John Scannell, Chairman and CEO. “The emergence of the Omicron variant made this quarter more challenging than we had projected, but we still achieved our plan. We had an exciting quarter for program successes and product announcements tied to our organic investments. Overall, business sentiment in our markets remains positive and our outlook is optimistic 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 $5.83, and adjusted diluted earnings per share of $5.50, both plus or minus $0.20;
• Forecasted GAAP operating margins of 10.8% and adjusted operating margins of 10.3%;
• Forecasted cash flow from operating activities of $338 million and adjusted cash flow from operating activities of $238 million; and
• Forecasted GAAP effective tax rate of 25.5% 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

 

 

January 1, 2022

 

January 2, 2021

Net sales

 

$

724,086

 

 

$

683,954

Cost of sales

 

 

529,706

 

 

 

494,311

Inventory write-down

 

 

1,500

 

 

 

—

Gross profit

 

 

192,880

 

 

 

189,643

Research and development

 

 

27,708

 

 

 

28,008

Selling, general and administrative

 

 

111,797

 

 

 

99,603

Interest

 

 

7,982

 

 

 

8,420

(Gain) loss on sale of business

 

 

(16,146

)

 

 

—

Other

 

 

116

 

 

 

3,241

Earnings before income taxes

 

 

61,423

 

 

 

50,371

Income taxes

 

 

15,158

 

 

 

12,529

Net earnings

 

$

46,265

 

 

$

37,842

 

 

 

 

 

Net earnings per share

 

 

 

 

Basic

 

$

1.44

 

 

$

1.18

Diluted

 

$

1.44

 

 

$

1.17

 

 

 

 

 

Average common shares outstanding

 

 

 

 

Basic

 

 

32,057,399

 

 

 

32,074,873

Diluted

 

 

32,188,158

 

 

 

32,237,212

 

 

 

 

 

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 related to portfolio shaping activities. 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

 

 

January 1, 2022

 

January 2, 2021

As Reported:

 

 

 

 

Earnings before income taxes

 

$

61,423

 

 

$

50,371

 

Income taxes

 

 

15,158

 

 

 

12,529

 

Effective income tax rate

 

 

24.7

%

 

 

24.9

%

Net earnings

 

 

46,265

 

 

 

37,842

 

Diluted net earnings per share

 

$

1.44

 

 

$

1.17

 

 

 

 

 

 

(Gain) Loss 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

)

 

$

—

 

 

 

 

 

 

Inventory Write-down:

 

 

 

 

Earnings before income taxes

 

$

1,500

 

 

$

—

 

Income taxes

 

 

354

 

 

 

—

 

Net earnings

 

 

1,146

 

 

 

—

 

Diluted net earnings per share

 

$

0.04

 

 

$

—

 

 

 

 

 

 

As Adjusted:

 

 

 

 

Earnings before income taxes

 

$

46,777

 

 

$

50,371

 

Income taxes

 

 

11,239

 

 

 

12,529

 

Effective income tax rate

 

 

24.0

%

 

 

24.9

%

Net earnings

 

 

35,538

 

 

 

37,842

 

Diluted net earnings per share

 

$

1.11

 

 

$

1.17

 

The diluted net earnings per share associated with the adjustments have been calculated using the quarterly average outstanding shares in the period in which the adjustments occurred.  

Moog Inc.

CONSOLIDATED SALES AND OPERATING PROFIT (UNAUDITED)

(dollars in thousands)

 

 

 

Three Months Ended

 

 

January 1, 2022

 

January 2, 2021

Net sales:

 

 

 

 

Aircraft Controls

 

$

303,317

 

 

$

286,774

 

Space and Defense Controls

 

 

207,856

 

 

 

188,162

 

Industrial Systems

 

 

212,913

 

 

 

209,018

 

Net sales

 

$

724,086

 

 

$

683,954

 

Operating profit:

 

 

 

 

Aircraft Controls

 

$

41,915

 

 

$

27,922

 

 

 

 

13.8

%

 

 

9.7

%

Space and Defense Controls

 

 

21,299

 

 

 

23,046

 

 

 

 

10.2

%

 

 

12.2

%

Industrial Systems

 

 

17,191

 

 

 

19,898

 

 

 

 

8.1

%

 

 

9.5

%

Total operating profit

 

 

80,405

 

 

 

70,866

 

 

 

 

11.1

%

 

 

10.4

%

Deductions from operating profit:

 

 

 

 

Interest expense

 

 

7,982

 

 

 

8,420

 

Equity-based compensation expense

 

 

2,658

 

 

 

2,502

 

Non-service pension expense

 

 

1,485

 

 

 

920

 

Corporate and other expenses, net

 

 

6,857

 

 

 

8,653

 

Earnings before income taxes

 

$

61,423

 

 

$

50,371

 

Operating Profit and Margins - as adjusted are as follows:

 

 

 

Three Months Ended

 

 

January 1, 2022

 

January 2, 2021

Aircraft Controls operating profit - as reported

 

$

41,915

 

 

$

27,922

 

(Gain) loss on sale of business

 

 

(16,146

)

 

 

—

 

Aircraft Controls operating profit - as adjusted

 

$

25,769

 

 

$

27,922

 

 

 

 

8.5

%

 

 

9.7

%

 

 

 

 

 

Space and Defense Controls operating profit - as reported

 

$

21,299

 

 

$

23,046

 

Inventory write-down

 

 

1,500

 

 

 

—

 

Space and Defense Controls operating profit - as adjusted

 

$

22,799

 

 

$

23,046

 

 

 

 

11.0

%

 

 

12.2

%

 

 

 

 

 

Industrial Systems operating profit - as reported and adjusted

 

$

17,191

 

 

$

19,898

 

 

 

 

8.1

%

 

 

9.5

%

 

 

 

 

 

Total operating profit - as adjusted

 

$

65,759

 

 

$

70,866

 

 

 

 

9.1

%

 

 

10.4

%

 

Moog Inc.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

 

 

 

January 1, 2022

 

October 2, 2021

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

105,205

 

 

$

99,599

 

Restricted cash

 

 

1,521

 

 

 

1,315

 

Receivables, net

 

 

891,588

 

 

 

945,929

 

Inventories, net

 

 

597,444

 

 

 

613,095

 

Prepaid expenses and other current assets

 

 

63,711

 

 

 

58,842

 

Total current assets

 

 

1,659,469

 

 

 

1,718,780

 

Property, plant and equipment, net

 

 

663,498

 

 

 

645,778

 

Operating lease right-of-use assets

 

 

62,657

 

 

 

60,355

 

Goodwill

 

 

842,042

 

 

 

851,605

 

Intangible assets, net

 

 

102,220

 

 

 

106,095

 

Deferred income taxes

 

 

18,239

 

 

 

17,769

 

Other assets

 

 

36,480

 

 

 

32,787

 

Total assets

 

$

3,384,605

 

 

$

3,433,169

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Current installments of long-term debt

 

$

367

 

 

$

80,365

 

Accounts payable

 

 

178,158

 

 

 

200,602

 

Accrued compensation

 

 

90,965

 

 

 

112,703

 

Contract advances

 

 

367,873

 

 

 

263,686

 

Accrued liabilities and other

 

 

207,375

 

 

 

212,005

 

Total current liabilities

 

 

844,738

 

 

 

869,361

 

Long-term debt, excluding current installments

 

 

775,262

 

 

 

823,355

 

Long-term pension and retirement obligations

 

 

161,285

 

 

 

162,728

 

Deferred income taxes

 

 

74,352

 

 

 

64,642

 

Other long-term liabilities

 

 

104,545

 

 

 

112,939

 

Total liabilities

 

 

1,960,182

 

 

 

2,033,025

 

Shareholders’ equity

 

 

 

 

Common stock - Class A

 

 

43,803

 

 

 

43,803

 

Common stock - Class B

 

 

7,477

 

 

 

7,477

 

Additional paid-in capital

 

 

518,857

 

 

 

509,622

 

Retained earnings

 

 

2,276,082

 

 

 

2,237,848

 

Treasury shares

 

 

(1,023,086

)

 

 

(1,007,506

)

Stock Employee Compensation Trust

 

 

(82,721

)

 

 

(79,776

)

Supplemental Retirement Plan Trust

 

 

(66,094

)

 

 

(63,764

)

Accumulated other comprehensive loss

 

 

(249,895

)

 

 

(247,560

)

Total shareholders’ equity

 

 

1,424,423

 

 

 

1,400,144

 

Total liabilities and shareholders’ equity

 

$

3,384,605

 

 

$

3,433,169

 

Moog Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

 

 

 

Three Months Ended

 

 

January 1, 2022

 

January 2, 2021

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net earnings

 

$

46,265

 

 

$

37,842

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

Depreciation

 

 

19,290

 

 

 

18,647

 

Amortization

 

 

3,402

 

 

 

2,841

 

Deferred income taxes

 

 

7,895

 

 

 

(139

)

Equity-based compensation expense

 

 

2,658

 

 

 

2,502

 

(Gain) loss on sale of business

 

 

(16,146

)

 

 

—

 

Inventory write-down

 

 

1,500

 

 

 

—

 

Other

 

 

699

 

 

 

1,544

 

Changes in assets and liabilities providing (using) cash:

 

 

 

 

Receivables

 

 

38,941

 

 

 

3,664

 

Inventories

 

 

7,179

 

 

 

(4,058

)

Accounts payable

 

 

(20,833

)

 

 

(7,510

)

Contract advances

 

 

105,548

 

 

 

29,712

 

Accrued expenses

 

 

(26,914

)

 

 

6,989

 

Accrued income taxes

 

 

5,173

 

 

 

8,831

 

Net pension and post retirement liabilities

 

 

4,501

 

 

 

5,022

 

Other assets and liabilities

 

 

(21,973

)

 

 

(11,792

)

Net cash provided by operating activities

 

 

157,185

 

 

 

94,095

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

—

 

 

 

(77,708

)

Purchase of property, plant and equipment

 

 

(37,059

)

 

 

(20,309

)

Other investing transactions

 

 

37,336

 

 

 

1,604

 

Net cash provided (used) by investing activities

 

 

277

 

 

 

(96,413

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from revolving lines of credit

 

 

215,200

 

 

 

271,700

 

Payments on revolving lines of credit

 

 

(263,476

)

 

 

(235,700

)

Proceeds from long-term debt

 

 

—

 

 

 

25,100

 

Payments on long-term debt

 

 

(80,060

)

 

 

(27,586

)

Payments on finance lease obligations

 

 

(505

)

 

 

(488

)

Payment of dividends

 

 

(8,031

)

 

 

(8,010

)

Proceeds from sale of treasury stock

 

 

2,144

 

 

 

—

 

Purchase of outstanding shares for treasury

 

 

(16,657

)

 

 

(11,674

)

Proceeds from sale of stock held by SECT

 

 

2,075

 

 

 

274

 

Purchase of stock held by SECT

 

 

(2,275

)

 

 

(655

)

Net cash provided (used) by financing activities

 

 

(151,585

)

 

 

12,961

 

Effect of exchange rate changes on cash

 

 

(65

)

 

 

2,619

 

Increase in cash, cash equivalents and restricted cash

 

 

5,812

 

 

 

13,262

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

100,914

 

 

 

85,072

 

Cash, cash equivalents and restricted cash at end of period

 

$

106,726

 

 

$

98,334

 

 

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005062/en/

Ann Marie Luhr 716-687-4225