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Moog Inc. Announces Second Quarter Results


/EINPresswire.com/ -- EAST AURORA, NY -- (Marketwired) -- 04/29/16 -- Moog Inc. (NYSE: MOG.A) (NYSE: MOG.B) today announced second quarter earnings per share of $0.85, up 6% from last year on slightly lower sales of $611 million. Cash flow from operating activities was strong, at $79 million, while net earnings of $31 million were down marginally from a year ago.

Total Aircraft Controls sales in the quarter were slightly higher at $276 million. Commercial OEM sales were 3% higher, at $114 million. Increased sales to Airbus, up 36%, offset slightly weaker Boeing sales, down 5%, and business jet sales, down 20%. Commercial aftermarket sales were $30 million, up 2%, on initial provisioning spares for the A350 program.

Military aircraft sales were down 2%, to $132 million. OEM sales were slightly higher, at $81 million, with higher foreign military sales offsetting lower V-22 tilt rotor sales. Military aftermarket sales were down 6%, to $51 million, as the C-5 modernization program continues to wind down.

Space and Defense segment sales were $89 million, 4% lower than a year ago. Space sales were $43 million, a decrease of 12% due to lower sales of controls for satellites. Defense sales of $46 million were up 4% on improved military vehicle sales.

Sales in the Company's Industrial Systems segment were flat at $128 million. Sales of simulation and test products, including motion bases for flight training simulators, were 11% higher, at $31 million. Excluding currency effects, industrial automation sales of $66 million were stable and in line with the broader industrial economy. Sales into energy markets were down 6% from last year, to $31 million.

Components segment sales at $94 million, were 18% lower than last year but up nicely from the first quarter. Sales of aerospace and defense products were $40 million, down 13%, partly due to softer helicopter program and aftermarket sales. Sales into energy, industrial and medical markets experienced slowdowns across a range of programs.

The Medical Devices segment had sales of $24 million in the quarter, mostly unchanged from a year ago. Through the first six months of the year, excluding previously divested life sciences sales, organic sales are up 11%.

The Company incurred $8 million in restructuring during the quarter, mostly associated with the Aircraft Controls segment.

The twelve month consolidated backlog is $1.2 billion compared to $1.3 billion a year ago.

The Company maintained its previous guidance for 2016 to include sales for the year at $2.47 billion and earnings per share of $3.35, plus or minus $0.15 per share.

"We're pleased with the results of the quarter," said John Scannell, Chairman and CEO. "We came in at the high end of our guidance, had strong cash flow and we're maintaining our sales and EPS forecast for the full 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 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;
  • 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         Six Months Ended
                          ------------------------  ------------------------
                            April 2,     April 4,     April 2,     April 4,
                              2016         2015         2016         2015
----------------------------------------------------------------------------
Net sales                 $   611,142  $   637,246  $ 1,179,599  $ 1,267,769
Cost of sales                 431,955      463,696      838,952      910,301
                          -----------  -----------  -----------  -----------
Gross profit                  179,187      173,550      340,647      357,468
  Research and
   development                 39,731       31,404       74,529       62,725
  Selling, general and
   administrative              82,771       92,158      165,765      189,985
  Interest                      8,935        7,669       17,257       13,037
  Restructuring                 8,069            -        8,342            -
  Other                          (936)         921       (1,518)         885
                          -----------  -----------  -----------  -----------
Earnings before income
 taxes                         40,617       41,398       76,272       90,836
Income taxes                    9,710        9,305       19,205       23,478
                          -----------  -----------  -----------  -----------
Net earnings attributable
 to common shareholders
 and noncontrolling
 interest                 $    30,907  $    32,093  $    57,067  $    67,358
                          -----------  -----------  -----------  -----------

Net earnings (loss)
 attributable to
 noncontrolling interest         (143)           -         (224)           -

                          -----------  -----------  -----------  -----------
Net earnings attributable
 to common shareholders   $    31,050  $    32,093  $    57,291  $    67,358
                          -----------  -----------  -----------  -----------

Net earnings per share
 attributable to common
 shareholders
  Basic                   $      0.85  $      0.81  $      1.57  $      1.68
  Diluted                 $      0.85  $      0.80  $      1.55  $      1.66
                          -----------  -----------  -----------  -----------


Average common shares
 outstanding
  Basic                    36,481,996   39,601,795   36,597,972   40,116,731
  Diluted                  36,693,190   39,984,668   36,860,760   40,550,814
----------------------------------------------------------------------------



                                  Moog Inc.
                   CONSOLIDATED SALES AND OPERATING PROFIT
                           (dollars in thousands)

----------------------------------------------------------------------------
                                Three Months Ended      Six Months Ended
                               -------------------  -----------------------
                               April 2,   April 4,   April 2,     April 4,
                                 2016       2015       2016         2015
----------------------------------------------------------------------------
Net sales:
  Aircraft Controls            $275,769   $274,396  $  530,604   $  540,764
  Space and Defense Controls     89,175     93,256     171,815      193,211
  Industrial Systems            128,244    129,145     253,423      262,511
  Components                     93,813    115,062     173,388      222,766
  Medical Devices                24,141     25,387      50,369       48,517
----------------------------------------------------------------------------
Net sales                      $611,142   $637,246  $1,179,599   $1,267,769
----------------------------------------------------------------------------
Operating profit:
  Aircraft Controls            $ 19,042   $ 22,336  $   37,173   $   46,794
                                    6.9%*      8.1%        7.0%*        8.7%
  Space and Defense Controls     13,357      4,909      25,173       13,635
                                   15.0%       5.3%       14.7%         7.1%
  Industrial Systems             13,270     12,685      26,903       25,904
                                   10.3%       9.8%       10.6%         9.9%
  Components                      8,385     15,900      13,085       32,862
                                    8.9%      13.8%        7.5%        14.8%
  Medical Devices                 2,554        716       5,833        3,052
                                   10.6%       2.8%       11.6%         6.3%
----------------------------------------------------------------------------
Total operating profit           56,608     56,546     108,167      122,247
                                    9.3%       8.9%        9.2%         9.6%
Deductions from operating
 profit:
  Interest expense                8,935      7,669      17,257       13,037
  Equity-based compensation
   expense                          983        568       1,919        3,966
  Corporate and other
   expenses, net                  6,073      6,911      12,719       14,408
----------------------------------------------------------------------------
Earnings before income taxes   $ 40,617   $ 41,398  $   76,272   $   90,836
----------------------------------------------------------------------------
 * Included $5,923 of restructuring charges. Adjusted operating margin is
9.1% and 8.1% for the three and six months ended April 2, 2016,
respectively.



                                  Moog Inc.
                         CONSOLIDATED BALANCE SHEETS
                           (dollars in thousands)

----------------------------------------------------------------------------
                                                    April 2,     October 3,
                                                      2016          2015
----------------------------------------------------------------------------
ASSETS
Current assets
  Cash and cash equivalents                       $    348,322  $    309,853
  Receivables                                          703,022       698,419
  Inventories                                          500,224       493,360
  Deferred income taxes                                 92,127        91,210
  Prepaid expenses and other current assets             38,096        34,653
                                                  ------------  ------------
    Total current assets                             1,681,791     1,627,495
Property, plant and equipment, net                     529,735       536,756
Goodwill                                               752,826       737,212
Intangible assets, net                                 129,350       143,723
Other assets                                            41,943        41,285
                                                  ------------  ------------
Total assets                                      $  3,135,645  $  3,086,471
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Short-term borrowings                           $      1,370  $         83
  Current installments of long-term debt                   434            34
  Accounts payable                                     155,763       165,973
  Accrued salaries, wages and commissions              119,204       125,270
  Customer advances                                    177,557       167,423
  Contract loss reserves                                29,740        30,422
  Other accrued liabilities                            112,738       116,300
                                                  ------------  ------------
    Total current liabilities                          596,806       605,505
Long-term debt, excluding current installments       1,103,342     1,075,067
Long-term pension and retirement obligations           322,407       348,239
Deferred income taxes                                   69,364        60,209
Other long-term liabilities                              3,211         2,919
                                                  ------------  ------------
    Total liabilities                                2,095,130     2,091,939
                                                  ------------  ------------
Commitment and contingencies                                 -             -
Redeemable noncontrolling interest                       8,377             -
Shareholders' equity
Common stock                                            51,280        51,280
Other shareholders' equity                             980,858       943,252
                                                  ------------  ------------
    Total shareholders' equity                       1,032,138       994,532
                                                  ------------  ------------
Total liabilities and shareholders' equity        $  3,135,645  $  3,086,471
----------------------------------------------------------------------------



                                  Moog Inc.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (dollars in thousands)

----------------------------------------------------------------------------
                                                         Six Months Ended
                                                       --------------------
                                                        April 2,   April 4,
                                                          2016       2015
----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net earnings attributable to common shareholders and
   noncontrolling interest                             $  57,067  $  67,358
  Adjustments to reconcile net earnings to net cash
   provided (used) by operating activities:
    Depreciation                                          38,554     40,460
    Amortization                                          11,428     12,946
    Deferred income taxes                                  2,292      9,071
    Equity-based compensation expense                      1,919      3,966
    Other                                                  5,991      3,348
  Changes in assets and liabilities providing (using)
   cash:
    Receivables                                           (5,606)    20,461
    Inventories                                           (5,330)    (7,847)
    Accounts payable                                     (13,439)    18,934
    Customer advances                                     10,888     (3,358)
    Accrued expenses                                      (5,802)   (20,747)
    Accrued income taxes                                   2,552     (7,729)
    Net pension and post retirement liabilities          (13,171)    (7,014)
    Other assets and liabilities                          (8,920)     1,699
                                                       ---------  ---------
      Net cash provided by operating activities           78,423    131,548
                                                       ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisitions of businesses, net of cash acquired       (11,016)         -
  Purchase of property, plant and equipment              (27,685)   (37,921)
  Other investing transactions                             1,058      3,551
                                                       ---------  ---------
      Net cash used by investing activities              (37,643)   (34,370)
                                                       ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net short-term repayments                                    -     (3,237)
  Proceeds from revolving lines of credit                210,320    248,785
  Payments on revolving lines of credit                 (182,455)  (383,785)
  Payments on long-term debt                              (9,660)    (5,241)
  Proceeds from senior notes, net of issuance costs            -    294,430
  Proceeds from sale of treasury stock                     2,229     10,542
  Purchase of outstanding shares for treasury            (25,156)  (204,958)
  Proceeds from sale of stock held by SECT                 2,897          -
  Purchase of stock held by SECT                          (1,515)    (8,440)
  Purchase of stock held by SERP Trust                    (2,300)         -
  Excess tax benefits from equity-based payment
   arrangements                                              471      5,888
                                                       ---------  ---------
      Net cash used by financing activities               (5,169)   (46,016)
                                                       ---------  ---------
Effect of exchange rate changes on cash                    2,858    (20,796)
                                                       ---------  ---------
Increase in cash and cash equivalents                     38,469     30,366
  Cash and cash equivalents at beginning of period       309,853    231,292
                                                       ---------  ---------
  Cash and cash equivalents at end of period           $ 348,322  $ 261,658
----------------------------------------------------------------------------


Contact:
Ann Marie Luhr
716-687-4225