Moog Reports Third Quarter Results
/EINPresswire.com/ -- EAST AURORA, NY -- (Marketwired) -- 07/29/16 -- Moog Inc. (NYSE: MOG.A) (NYSE: MOG.B) announced today third quarter earnings per share of $1.00, up 6% from a year ago on slightly lower sales of $613 million. Cash flow from operating activities was strong in the quarter, at $82 million, while net earnings were flat at $36 million.
Total Aircraft Controls sales in the quarter were $274 million, up 1% from a year ago. Commercial aircraft sales of $140 million were up 8%. Sales of OEM products to Airbus increased 45%, to $28 million, on the A350 production ramp up. Boeing OEM product sales were 13% higher, at $66 million, on increased sales across all platforms. Commercial aftermarket revenues of $27 million were down 12% due to lower initial provisioning of 787 spares and softer business jet activity.
Military aircraft sales of $134 million were 5% lower year over year. OEM sales were down 6%, to $84 million, due to declines in V-22 tilt rotor and Black Hawk helicopter sales. F-35 production sales were 7% higher. Military aftermarket sales were down 4%, to $50 million, as the C-5M Super Galaxy upgrade program winds down. F-35 aftermarket sales were higher on increased depot repair activity.
Space and Defense segment sales were $91 million, 5% lower than last year. Space sales were $44 million, a decrease of 8% due to lower sales of avionics and components. Defense sales were $47 million, down marginally due to slower military vehicle sales.
Sales in the Company's Industrial Systems segment were flat at $130 million. Energy market sales were 8% higher, at $33 million, helped by higher sales of wind energy products into Europe and China. Industrial automation sales were $69 million, off 3%. Simulation and test product sales were $28 million, also off 3%, reflecting strong prior year sales of test equipment.
Components segment sales, at $92 million, were 18% lower than last year. Sales of aerospace and defense products were $42 million, down 14%, on softer OEM program and aftermarket sales. Sales into energy, industrial and medical markets continued to experience weakness across a range of products and programs.
The Medical Devices segment had sales of $26 million, up 1%, on increased sales of enteral pumps and administration sets. Through the first nine months of the year, excluding the previously divested life sciences business, organic growth in the segment is 8% year over year.
The current backlog is $1.2 billion.
The Company updated its projections for fiscal 2016, ending October 1, 2016, to include sales of $2.42 billion. The earnings per share midpoint is unchanged, at $3.35, and the range has been narrowed to plus or minus $.10 per share.
"Overall we had a good third quarter," said John Scannell, Chairman and CEO. "Sales were slightly down but EPS was ahead of our guidance and we had strong cash flow. In addition, our aircraft team celebrated the flawless operation of our flight controls as part of the successful first flight of the Embraer E2 jet. With one quarter left to go, we're refining our sales forecast for the year, while keeping our EPS forecast unchanged from 90 days ago."
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. Supplemental financial data will be available on the webcast web page approximately 60 minutes prior to the conference call. Listeners can access the call live or in replay mode at www.moog.com/investors/communications.
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 Nine Months Ended ------------------------ ------------------------ July 2, July 4, July 2, July 4, 2016 2015 2016 2015 ---------------------------------------------------------------------------- Net sales $ 613,260 $ 634,539 $ 1,792,859 $ 1,902,308 Cost of sales 429,598 443,963 1,268,550 1,354,264 ------------ ----------- ------------ ----------- Gross profit 183,662 190,576 524,309 548,044 Research and development 36,006 34,157 110,535 96,882 Selling, general and administrative 88,553 90,733 254,318 280,718 Interest 8,662 7,916 25,919 20,953 Restructuring (39) 6,604 8,303 6,604 Other (1,082) 442 (2,600) 1,327 ------------ ----------- ------------ ----------- Earnings before income taxes 51,562 50,724 127,834 141,560 Income taxes 15,916 14,393 35,121 37,871 ------------ ----------- ------------ ----------- Net earnings attributable to common shareholders and noncontrolling interest $ 35,646 $ 36,331 $ 92,713 $ 103,689 ------------ ----------- ------------ ----------- Net earnings (loss) attributable to noncontrolling interest (665) -- (889) -- ------------ ----------- ------------ ----------- Net earnings attributable to common shareholders $ 36,311 $ 36,331 $ 93,602 $ 103,689 ------------ ----------- ------------ ----------- Net earnings per share attributable to common shareholders Basic $ 1.01 $ 0.95 $ 2.57 $ 2.62 Diluted $ 1.00 $ 0.94 $ 2.55 $ 2.59 ------------ ----------- ------------ ----------- Average common shares outstanding Basic 36,038,340 38,389,629 36,411,428 39,555,423 Diluted 36,267,975 38,744,620 36,663,165 39,963,142 ---------------------------------------------------------------------------- Moog Inc. CONSOLIDATED SALES AND OPERATING PROFIT (dollars in thousands) ---------------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------- ------------------------- July 2, July 4, July 2, July 4, 2016 2015 2016 2015 ---------------------------------------------------------------------------- Net sales: Aircraft Controls $ 274,175 $ 270,339 $ 804,779 $ 811,103 Space and Defense Controls 90,764 95,266 262,579 288,477 Industrial Systems 130,103 130,581 383,526 393,092 Components 92,285 112,630 265,673 335,396 Medical Devices 25,933 25,723 76,302 74,240 ---------------------------------------------------------------------------- Net sales $ 613,260 $ 634,539 $ 1,792,859 $ 1,902,308 ---------------------------------------------------------------------------- Operating profit: Aircraft Controls $ 30,532 $ 28,401 $ 67,705 $ 75,195 11.1% 10.5% 8.4% 9.3% Space and Defense Controls 13,747 6,149 38,920 19,784 15.1% 6.5% 14.8% 6.9% Industrial Systems 11,534 13,068 38,437 38,972 8.9% 10.0% 10.0% 9.9% Components 10,754 14,966 23,839 47,828 11.7% 13.3% 9.0% 14.3% Medical Devices 2,182 3,506 8,015 6,558 8.4% 13.6% 10.5% 8.8% ---------------------------------------------------------------------------- Total operating profit 68,749 66,090 176,916 188,337 11.2% 10.4% 9.9% 9.9% Deductions from operating profit: Interest expense 8,662 7,916 25,919 20,953 Equity-based compensation expense 875 603 2,794 4,569 Corporate and other expenses, net 7,650 6,847 20,369 21,255 ---------------------------------------------------------------------------- Earnings before income taxes $ 51,562 $ 50,724 $ 127,834 $ 141,560 ---------------------------------------------------------------------------- Moog Inc. CONSOLIDATED BALANCE SHEETS (dollars in thousands) ---------------------------------------------------------------------------- July 2, October 3, 2016 2015 ---------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 394,429 $ 309,853 Receivables 647,987 698,419 Inventories 500,734 493,360 Deferred income taxes 93,121 91,210 Prepaid expenses and other current assets 36,415 34,653 ----------- ----------- Total current assets 1,672,686 1,627,495 Property, plant and equipment, net 518,233 536,756 Goodwill 746,590 737,212 Intangible assets, net 119,284 143,723 Other assets 43,932 41,285 ----------- ----------- Total assets $ 3,100,725 $ 3,086,471 ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings $ 1,377 $ 83 Current installments of long-term debt 184 34 Accounts payable 150,091 165,973 Accrued salaries, wages and commissions 124,898 125,270 Customer advances 174,700 167,423 Contract loss reserves 31,413 30,422 Other accrued liabilities 102,432 116,300 ----------- ----------- Total current liabilities 585,095 605,505 Long-term debt, excluding current installments 1,108,438 1,075,067 Long-term pension and retirement obligations 288,732 348,239 Deferred income taxes 77,803 60,209 Other long-term liabilities 3,107 2,919 ----------- ----------- Total liabilities 2,063,175 2,091,939 ----------------------- Commitment and contingencies -- -- Redeemable noncontrolling interest 7,875 -- Shareholders' equity Common stock 51,280 51,280 Other shareholders' equity 978,395 943,252 ----------- ----------- Total shareholders' equity 1,029,675 994,532 ----------- ----------- Total liabilities and shareholders' equity $ 3,100,725 $ 3,086,471 ---------------------------------------------------------------------------- Moog Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) ---------------------------------------------------------------------------- Nine Months Ended ------------------------- July 2, July 4, 2016 2015 ---------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings attributable to common shareholders and noncontrolling interest $ 92,713 $ 103,689 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation 58,674 59,468 Amortization 16,485 19,010 Deferred income taxes 7,765 14,569 Equity-based compensation expense 2,794 4,569 Other 6,967 4,212 Changes in assets and liabilities providing (using) cash: Receivables 43,214 51,547 Inventories (9,959) (4,763) Accounts payable (16,456) 7,332 Customer advances 9,689 (5,008) Accrued expenses (7,106) (21,182) Accrued income taxes 686 (8,205) Net pension and post retirement liabilities (38,828) (23,817) Other assets and liabilities (5,858) 5,407 ------------ ------------ Net cash provided by operating activities 160,780 206,828 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of businesses, net of cash acquired (11,016) -- Purchase of property, plant and equipment (42,605) (57,712) Other investing transactions 1,164 12,597 ------------ ------------ Net cash used by investing activities (52,457) (45,115) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Net short-term repayments -- (3,337) Proceeds from revolving lines of credit 274,670 335,185 Payments on revolving lines of credit (261,570) (425,185) Proceeds from long-term debt 20,000 -- Payments on long-term debt (10,047) (5,250) Proceeds from senior notes, net of issuance costs -- 294,430 Proceeds from sale of treasury stock 2,229 11,437 Purchase of outstanding shares for treasury (42,203) (297,417) Proceeds from sale of stock held by SECT 2,897 7,328 Purchase of stock held by SECT (1,634) (12,121) Purchase of stock held by SERP Trust (2,300) (7,328) Excess tax benefits from equity-based payment arrangements 442 5,973 Other financing transactions (1,909) -- ------------ ------------ Net cash used by financing activities (19,425) (96,285) ------------ ------------ Effect of exchange rate changes on cash (4,322) (19,276) ------------ ------------ Increase in cash and cash equivalents 84,576 46,152 Cash and cash equivalents at beginning of period 309,853 231,292 ------------ ------------ Cash and cash equivalents at end of period $ 394,429 $ 277,444 ----------------------------------------------------------------------------
Contact:
Ann Marie Luhr
716-687-4225