Moog Reports Third Quarter Results
July 27, 2018
East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter ended
June 30, 2018.
Third Quarter Highlights
· Sales of $692 million, up 11% from a year ago;
· Earnings before income taxes, up 14% year over year;
· Diluted earnings per share of $1.13, up 2% from a year ago;
· Operating margins of 10.7%, up from 10.2% last year;
· Tax rate at 25.8% versus an unusually low rate in last year’s Q3;
· $1 million cash flow from operating activities, including incremental pension contributions;
· Payment of quarterly cash dividend of $0.25 per share, on June 1st.
Total Aircraft Controls sales in the quarter were $300 million, up 6% year over year. Commercial aircraft revenues increased 2%, to $156 million. Strong aftermarket sales, up 22% to $37 million, offset lower OEM sales. Boeing OEM sales of $60 million were off 3%. Sales of OEM products to Airbus were down 7%, to $37 million, driven by softer A350 program sales.
Military aircraft sales of $144 million were 11% higher than a year ago. Military OEM sales increased 10% on very strong F-35 sales. Military aftermarket sales of $48 million were 12% higher due to an increase in
F-18 and V-22 spares activity.
Space and Defense segment sales were $150 million, up 17% year over year. Space sales were 21% higher, the result of very strong avionics product sales on new DoD platforms and launch vehicle program activity at NASA. Defense sales were up 15% on increased demand for legacy pan and tilt products. Security products for UAV tracking also contributed, the result of a small acquisition completed early in the quarter.
Industrial Systems segment sales in the quarter were $243 million, 13% higher than a year ago. Excluding currency effects and acquisitions, organic sales increased 5%. Industrial automation sales were up a healthy 16%, to $115 million, helped by the recent VUES Brno acquisition in the Czech Republic. Energy sales were up 29% on sales of exploration and power generation products. Medical market sales were 19% higher. Sales for simulation and test products were down 20% as last year’s third quarter was unusually strong.
Consolidated 12-month backlog was $1.5 billion.
Fiscal 2018 Outlook
· Sales of $2.7 billion, up 8% over last year and increased $20 million from 90 days ago;
· GAAP earnings per share of $2.67, plus or minus $0.10;
· Non-GAAP diluted earnings per share increased $0.02 to $4.42, plus or minus $0.10, excluding the impact of previously announced wind energy restructuring and tax reform effects;
· Non-GAAP operating margins of 10.8% and GAAP operating margins of 9.6%;
· Cash flow from operating activities of $150 million, including incremental pension contributions.
“Q3 continues our positive quarterly performance pattern,” said John Scannell, Chairman and CEO. “Today we’re fine tuning our full-year guidance to reflect recent acquisition activity and higher sales in certain product lines. Our major markets of defense, commercial aircraft and industrial are all performing well and we’re optimistic that we’ll continue to see healthy organic growth over the next couple of years.”
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 90 minutes 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.
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 reflect the Company’s current views with respect to certain current and future events and financial performance and are not guarantees of future performance. This includes but is not limited to, the Company’s expectation and ability to pay a quarterly cash dividend on its common stock in the future, subject to the determination by the board of directors, and based on an evaluation of company earnings, financial condition and requirements, business conditions, capital allocation determinations and other factors, risks and uncertainties. The impact or occurrence of these 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;
• 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.
Ann Marie Luhr