EAST AURORA, N.Y., Nov. 03, 2017 (GLOBE NEWSWIRE) -- Moog Inc. (NYSE:MOG.A) (NYSE:MOG.B) announced today financial results for the fourth quarter and fiscal year ended September 30, 2017.

Fourth Quarter Highlights

• Diluted earnings per share of $1.07, up 16% from a year ago;
• Sales of $649 million, up 5%;
• Operating margins of 10.7%;
• Tax rate of 20.8%;
• $48 million cash flow from operating activities.

Full-Year 2017 Highlights

• Earnings per share of $3.90, up 12%;
• Sales of $2.50 billion, up 4%;
• Operating margins of 10.0%;
• Tax rate of 22.7%;
• $218 million cash flow from operating activities, continuing the strong pattern of recent years.

Segment Results

Total Aircraft Controls segment sales in the quarter were $284 million, up 7% year over year. Commercial aircraft revenues increased 13%, to $156 million. Sales of OEM products to Airbus increased 11%. Boeing OEM product sales were 7% higher, at $69 million, driven by strong 787 sales. Commercial aftermarket sales increased 14%, to $32 million.

Military aircraft sales in the quarter were $128 million, marginally higher than a year ago. Military OEM sales were 8% higher, at $83 million, due to F-35 production and funded military development programs. Military aftermarket sales were down 10%, with slower activity seen on several platforms, particularly on the V-22.

Full-year Aircraft Controls sales were $1.1 billion, up 6%. Commercial aircraft sales were 9% higher, at $603 million. Airbus OEM sales, at $155 million, were 33% higher on the A350 ramp. Boeing OEM sales were mostly unchanged, at $253 million, with 787 sales increases offsetting sales decreases in other Boeing legacy programs. Commercial aftermarket sales were up 5%. 

Military aircraft sales for the year were $522 million, up 2%. Growth in funded development programs and an 18% increase in F-35 production sales, to $107 million, offset lower sales on foreign platforms. Military aftermarket sales of $183 million were 8% lower, attributed in-part to the C-5 upgrade and F-35 depot stand-up effort completed last year.

In the quarter, Space and Defense segment sales were $101 million, up 4% year over year. Defense sales were 17% higher on strong sales into military vehicle applications. Space sales were off 9%, due to the divestitures completed during the year. Excluding the effect of the divestitures, organic space sales were up 4% in the quarter on increased sales of satellite avionics products.

Space and Defense sales for the year were $394 million, up 8%. Defense sales were up 15%, to $211 million, and space sales were flat, at $183 million. The results for the year were driven by the same factors as the quarterly results.

Industrial System segment sales in the quarter were $127 million, down 3% from a year ago but up 4% from Q3. Lower sales of energy and industrial automation products were offset by a 14% increase in simulation and test sales.

Full-year Industrial System sales were $477 million, down 7%, attributed to lower wind energy product sales in Brazil and Europe and lower industrial automation sales. The decline was partially offset by a 3% sales increase in simulation and test products.

Components segment sales in the quarter were $137 million, a 10% increase year over year. Industrial sales for specialty markets were up 20%, at $37 million, helped by the acquisition of Rotary Transfer Systems. Higher medical sales, at $52 million, and aerospace and defense sales, at $48 million, also contributed.

For the year, Components sales were $501 million, up 7%, with higher sales seen across all major markets. Medical pumps and associated products were up 8%. The acquisition of Rotary Transfer Systems contributed significantly to a 12% increase in industrial sales.    

Consolidated year-end 12-month backlog was $1.2 billion.

Fiscal 2018 Outlook

The Company provided its initial projections for fiscal 2018.

• Forecast sales of $2.62 billion, up 5%;
• Forecast earnings per share of $4.10, plus or minus $0.20, up 5%;
• Forecast full year operating margins of 11.0%, up 100 basis points;
• Forecast cash flow from operations of $230 million, up 6%;
• Forecast tax rate increase to a more normal 31.0%.

The Company also announced that starting in FY’18, segment reporting will change to three segments, Aircraft Controls, Space and Defense Controls and Industrial Systems. The Components segment will be reorganized with A&D products moving to the Space and Defense segment and industrial and medical products moving to the Industrial Systems segment. The change is being made to improve service to customers, leverage capabilities within the markets served and simplify reporting. 

“Q4 was a good quarter financially with sales up 5% and operating margins at their highest for the year,” said John Scannell, Chairman and CEO. “Our FY ’17 EPS, at $3.90, was $0.15 ahead of what we projected 90 days ago. After several years of restructuring and cost-cutting, our business is turning up and our focus has shifted to growth. We’re looking to see growth and related margin expansion trends continue in FY ’18.”

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.

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								Twelve Months Ended
		September 30,  2017				October 1,  2016				September 30,  2017				October 1,  2016
Net sales		$	649,268			$	619,078			$	2,497,524			$	2,411,937
Cost of sales		457,746				431,804				1,766,002				1,700,354
Gross profit		191,522				187,274				731,522				711,583
Research and development		36,818				36,801				144,646				147,336
Selling, general and administrative		94,870				85,643				356,141				339,961
Interest		8,762				8,686				34,551				34,605
Restructuring		—				7,090				—				15,393
Goodwill impairment		—				4,800				—				4,800
Other		2,325				(772		)		14,473				(3,372		)
Earnings before income taxes		48,747				45,026				181,711				172,860
Income taxes		10,145				14,106				41,301				49,227
Net earnings attributable to Moog and noncontrolling interest		38,602				30,920				140,410				123,633
Net earnings (loss) attributable to noncontrolling interest		—				(2,223		)		(870		)		(3,112		)
Net earnings attributable to Moog		$	38,602			$	33,143			$	141,280			$	126,745
Net earnings per share attributable to Moog
Basic		$	1.08			$	0.92			$	3.94			$	3.49
Diluted		$	1.07			$	0.92			$	3.90			$	3.47
Average common shares outstanding
Basic		35,804,845				35,875,495				35,852,448				36,277,445
Diluted		36,197,789				36,127,880				36,230,043				36,529,344

Moog Inc.  CONSOLIDATED SALES AND OPERATING PROFIT  (dollars in thousands)
		Three Months Ended								Twelve Months Ended
		September 30,  2017				October 1,  2016				September 30,  2017				October 1,  2016
Net sales:
Aircraft Controls		$	284,219			$	265,124			$	1,124,885			$	1,063,718
Space and Defense Controls		100,968				97,327				394,264				366,091
Industrial Systems		127,005				131,458				477,325				514,984
Components		137,076				125,169				501,050				467,144
Net sales		$	649,268			$	619,078			$	2,497,524			$	2,411,937
Operating profit:
Aircraft Controls		$	30,644			$	27,311			$	114,016			$	98,509
		10.8		%		10.3		%		10.1		%		9.3		%
Space and Defense Controls		10,002				5,992				37,591				41,419
		9.9		%		6.2		%		9.5		%		11.3		%
Industrial Systems		10,601				10,105				46,091				48,542
		8.3		%		7.7		%		9.7		%		9.4		%
Components		18,121				17,918				52,454				49,772
		13.2		%		14.3		%		10.5		%		10.7		%
Total operating profit		69,368				61,326				250,152				238,242
		10.7		%		9.9		%		10.0		%		9.9		%
Deductions from operating profit:
Interest expense		8,762				8,686				34,551				34,605
Equity-based compensation expense		431				477				4,582				3,271
Corporate and other expenses, net		11,428				7,137				29,308				27,506
Earnings before income taxes		$	48,747			$	45,026			$	181,711			$	172,860

Moog Inc. CONSOLIDATED BALANCE SHEETS (dollars in thousands)
		September 30,  2017				October 1,  2016
ASSETS
Current assets
Cash and cash equivalents		$	368,073			$	325,128
Receivables		727,740				688,388
Inventories		489,127				479,040
Prepaid expenses and other current assets		41,499				34,688
Total current assets		1,626,439				1,527,244
Property, plant and equipment, net		522,991				522,369
Goodwill		774,268				740,162
Intangible assets, net		108,818				113,560
Deferred income taxes		26,558				75,800
Other assets		31,518				25,839
Total assets		$	3,090,592			$	3,004,974
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings		$	89			$	1,379
Current installments of long-term debt		295				167
Accounts payable		170,878				144,450
Accrued compensation		148,406				126,319
Customer advances		159,274				167,514
Contract loss reserves		43,214				32,543
Other accrued liabilities		107,278				116,577
Total current liabilities		629,434				588,949
Long-term debt, excluding current installments		956,653				1,004,847
Long-term pension and retirement obligations		271,272				401,747
Deferred income taxes		13,320				11,026
Other long-term liabilities		5,609				4,343
Total liabilities		1,876,288				2,010,912
Commitment and contingencies		—				—
Redeemable noncontrolling interest		—				5,651
Shareholders’ equity
Common stock - Class A		43,704				43,667
Common stock - Class B		7,576				7,613
Additional paid-in capital		492,246				465,762
Retained earnings		1,847,819				1,706,539
Treasury shares		(739,157		)		(741,700		)
Stock Employee Compensation Trust		(89,919		)		(49,463		)
Supplemental Retirement Plan Trust		(12,474		)		(8,946		)
Accumulated other comprehensive loss		(335,491		)		(435,061		)
Total Moog shareholders’ equity		1,214,304				988,411
Total liabilities and shareholders’ equity		$	3,090,592			$	3,004,974

Moog Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
		Twelve Months Ended
		September 30,  2017				October 1,  2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings attributable to Moog and noncontrolling interest		$	140,410			$	123,633
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation		71,363				77,407
Amortization		18,804				21,325
Deferred income taxes		10,824				4,248
Equity-based compensation expense		4,582				3,271
Other		17,898				13,440
Changes in assets and liabilities providing (using) cash:
Receivables		(44,558		)		1,672
Inventories		(5,999		)		12,644
Accounts payable		25,740				(21,821		)
Customer advances		(7,054		)		2,903
Accrued expenses		16,901				(727		)
Accrued income taxes		(4,753		)		4,481
Net pension and post retirement liabilities		(29,029		)		(29,708		)
Other assets and liabilities		2,651				3,086
Net cash provided by operating activities		217,780				215,854
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		(40,545		)		(11,016		)
Purchase of property, plant and equipment		(75,798		)		(67,208		)
Other investing transactions		6,733				1,256
Net cash (used) by investing activities		(109,610		)		(76,968		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net short-term repayments		(1,280		)		—
Proceeds from revolving lines of credit		255,622				324,670
Payments on revolving lines of credit		(305,512		)		(409,670		)
Proceeds from long-term debt		—				20,000
Payments on long-term debt		(168		)		(10,098		)
Proceeds from sale of treasury stock		3,797				4,574
Purchase of outstanding shares for treasury		(8,643		)		(44,933		)
Proceeds from sale of stock held by SECT		867				28,048
Purchase of stock held by SECT		(18,685		)		(28,799		)
Purchase of stock held by SERP Trust		—				(2,300		)
Excess tax benefits from equity-based payment arrangements		—				598
Other financing transactions		(1,656		)		(1,950		)
Net cash (used) by financing activities		(75,658		)		(119,860		)
Effect of exchange rate changes on cash		10,433				(3,751		)
Increase in cash and cash equivalents		42,945				15,275
Cash and cash equivalents at beginning of period		325,128				309,853
Cash and cash equivalents at end of period		$	368,073			$	325,128

Contact: 
Ann Marie Luhr
716-687-4225

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