Moog's Third Quarter Earnings Increase 16%
27 July 2012
East Aurora, NY - Moog Inc. (NYSE: MOG.A and MOG.B) announced today third quarter earnings of $39 million, or $.85 a share, an increase of 16% over last year’s $.73 per share. Sales in the quarter of $611 million were up 5% from last year’s $583 million.
Aircraft sales in the quarter of $242 million were up 10%, or $22 million, from a year ago. Stronger military aircraft sales of $142 million included F-35 sales of $21 million, up 9%, and higher sales for V-22, up 6%. Aftermarket sales of $49 million were down 10% from a very strong third quarter a year ago. The decline in military aftermarket was partly due to lower V-22 activity related to the timing of shipments.
Commercial aircraft sales of $100 million were up $14 million, or 16%. Sales of OEM products to Boeing were unchanged at $34 million while Airbus sales were up 20%. Sales of controls for business jets were $11 million, or 6% higher than last year. Commercial aftermarket revenue, at $30 million, was 25% higher in the quarter due in part to initial provisioning of 787 spares.
Space and Defense sales of $87 million were 9% higher in the quarter. Space market sales were up 19% from last year on strength in commercial programs. The recent acquisition of Bradford Engineering added $2 million in sales. Defense sales were stronger, up 15%, on increased sales of components for tactical missiles and work on a Light Armored Vehicle program.
The Industrial Systems segment contributed sales of $158 million. Real sales growth of $10 million was largely offset by currency effects. Energy sales were up slightly at $47 million on increased sales of gas and steam turbine controls while wind energy sales were close to last year’s level. Industrial automation sales were softer, down 7%, primarily due to currency effects. Sales of test and simulation products were up $5 million, or 16%, as demand grows globally for flight simulators.
The Components segment had sales in the quarter of $90 million, up 3% from last year. Products sold into marine applications were higher at $12 million and industrial sales were 22% higher. Sales into the aerospace and defense markets were down 6%. Space and medical sales were unchanged.
The Medical Devices segment had sales of $34 million, down 12% from a record quarter a year ago but in line with the average for the year.
The current backlog of $1.3 billion was unchanged from the same quarter a year ago.
The Company affirmed its earnings per share guidance of $3.31, up 12% for the year ending September 2012. Sales are now forecast at $2.45 billion, with net earnings unchanged at $152 million.
The Company also provided its initial projections for fiscal 2013. Given the uncertain global industrial economic outlook, the Company’s initial forecast includes a sales range of $2.56 billion to $2.61 billion. The result would be net earnings in a range of $161 million to $170 million, and earnings per share of $3.50 to $3.70, a 6% increase at the low end and a 12% increase at the high end.
"The third quarter was another great quarter for the company with earnings up nicely from 12 months ago,” said John Scannell, CEO. “We are on track for a good finish to the year and planning to meet our target of $3.31 per share, a 12% increase over fiscal 2011. Each of our segments is contributing to this strong performance. As we look out to fiscal 2013, we are forecasting further growth in sales and earnings for the company. The economic turmoil in Europe and the potential cuts in US defense spending may present us with some challenges in the year ahead. However, our global presence and market diversity should serve us well as we manage our way through whatever challenges the macro environment may throw at us."
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.
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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 or Lockheed Martin as a customer or a significant reduction in sales to either company could adversely impact our operating results;
• if we are unable to adapt to technological change, demand for our products may be reduced;
• our new product and research and development efforts may not be successful, which would result in a reduction in our sales and earnings;
• our inability to adequately enforce our intellectual property rights or defend against assertions of infringement could prevent or restrict our ability to compete;
• 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, equity and 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 growth may be reduced if we cannot implement our acquisition strategy;
• we may incur losses and liabilities as a result of our acquisition strategy;
• our operations in foreign countries expose us to political and currency risks and adverse changes in local, legal, tax and regulatory schemes;
• government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
• the failure or misuse or 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 or other civil disturbances could negatively impact our business;
• our facilities could be damaged by catastrophes which could reduce our production capacity and result in a loss of customers;
• 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.
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