MOOG INC. - FORM 8-K - EX-99.1 - July 30, 2021

Attached files

file filename
8-K - 8-K - MOOG INC.mog-20210730.htm
EX-99.2 - EX-99.2 - MOOG INC.ex992-73021.htm
Exhibit 99.1
                            
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000

Press Information
Release Date:IMMEDIATEContact:Ann Marie Luhr
 July 30, 2021 716-687-4225
 

MOOG INC. REPORTS THIRD QUARTER 2021 RESULTS


East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter ended July 3, 2021.

Third Quarter Highlights

•Sales of $707 million, up 8% from a year ago;
•GAAP diluted earnings per share of $1.12, up from ($0.39) a year ago;
•GAAP diluted earnings per share of $1.12 were up 20% over adjusted earnings per share of $0.93 a year ago;
•Operating margins of 9.2%;
•Effective tax rate of 25.7%; and
•$93 million cash flow from operating activities.


Segment Results

Aircraft Controls segment sales in the quarter were $272 million, up 9% year over year with higher commercial sales compensating for marginally lower military sales. Total commercial aircraft revenues were $96 million, 34% higher. Sales to commercial OEM customers increased 26% mostly tied to acquired sales from the recent Genesys acquisition. Commercial aftermarket sales were up 56%, to $28 million, the result of aircraft returning to service and repair and overhaul work on legacy components.

Total military aircraft sales were down marginally, to $176 million. Military OEM sales of $128 million were 19% higher, helped by funded development and activity across a range of programs in the portfolio. Military aftermarket sales of $48 million decreased 31%, as our customers adjusted their inventory.

Space and Defense segment sales were $205 million, up 11% year over year. Space sales of $86 million increased 16% on strength across the portfolio, led by integrated space vehicles and work on NASA programs. Defense sales were 8% higher, at $119 million, the result of increased sales of vehicle and naval applications and component products.

Industrial Systems segment sales were $230 million, a 3% increase over last year. Sales of industrial automation products were up 19%, attributed to stronger capital spending globally. Medical product sales, including pumps and components for respirator products, were down 15% as sales moderated from the COVID-driven demand seen a year ago. Energy sales and sales into simulation and test applications were mostly unchanged.

Consolidated 12-month backlog was $2.0 billion, up 21% from a year ago.

Exhibit 99.1
“It was solid quarter for our business with strong cash flow and earnings per share in line with our projections,” said John Scannell, Chairman and CEO. “For the full year, we’re tweaking our sales outlook slightly and keeping our earnings per share forecast unchanged at $5.00, plus or minus $0.15. All in all, steady as she goes.”


Fiscal 2021 Outlook

The Company updated its fiscal 2021 projections of 90 days ago.

•Forecast sales of $2.82 billion;
•Forecast diluted earnings per share of $5.00, plus or minus $0.15;
•Forecast full year operating margins of 10.0%;
•Forecast effective tax rate of 24.2%; and
•Forecast cash flow from operations of $292 million.

In conjunction with today’s release, Moog will host a conference call on Friday, July 30, 2021 beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. John Scannell, Chairman and CEO, and Jennifer Walter, 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 approximately 90 minutes prior to the conference call.

About Moog Inc.
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, 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 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:

COVID-19 Pandemic Risks
•We face various risks related to health pandemics such as the global COVID-19 pandemic, which may have material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers.

Strategic Risks
•We operate in highly competitive markets with competitors who may have greater resources than we possess;
•Our new products and technology research and development efforts are substantial and 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; and
•Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures.







Exhibit 99.1
Market Condition Risks
•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 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;
•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; and
•We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects.

Operational Risks
•Our business operations may be adversely affected by information systems interruptions, intrusions or new software implementations;
•We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings;
•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; and
•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.

Financial Risks
•We make estimates in accounting for over-time 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;
•Our indebtedness and restrictive covenants under our credit facilities could limit our operational and financial flexibility;
•The phase out of LIBOR may negatively impact our debt agreements and financial position, results of operations and liquidity;
•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; and
•Unforeseen exposure to additional income tax liabilities may affect our operating results.

Legal and Compliance Risks
•Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment;
•Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and regulatory environments;
•Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
•We are involved in various legal proceedings, the outcome of which may be unfavorable to us; and
•Our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.

General Risks
•The United Kingdom's decision to exit the European Union may result in short-term and long-term adverse impacts on our results of operations;
•Escalating tariffs, restrictions on imports or other trade barriers between the United States and various countries may impact our results of operations;
•Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and
•Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.

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.

Exhibit 99.1

Moog Inc.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)
(dollars in thousands, except per share data)
 
 Three Months EndedNine Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net sales$707,352 $657,539 $2,127,708 $2,177,659 
Cost of sales516,750 486,760 1,547,554 1,587,569 
Inventory write-down— 18,795 — 18,795 
Gross profit190,602 151,984 580,154 571,295 
Research and development33,095 27,407 91,556 82,303 
Selling, general and administrative100,597 96,899 305,331 302,517 
Interest8,239 9,440 25,288 29,923 
Long-lived asset impairment — 31,871 — 31,871 
Restructuring— 5,306 — 5,306 
Other76 4,415 (3,115)14,294 
Earnings (loss) before income taxes48,595 (23,354)161,094 105,081 
Income taxes (benefit)12,473 (10,764)38,442 17,899 
Net earnings (loss)$36,122 $(12,590)$122,652 $87,182 
Net earnings (loss) per share  
Basic$1.12 $(0.39)$3.82 $2.60 
Diluted$1.12 $(0.39)$3.80 $2.59 
Average common shares outstanding  
Basic32,125,524 32,601,481 32,115,400 33,515,584 
Diluted32,355,238 32,601,481 32,305,834 33,722,723 
 






















Exhibit 99.1

Results shown in the previous table include charges associated with the COVID-19 pandemic. These impacts include inventory write-down, long-lived asset impairment and restructuring charges. The table below adjusts the income taxes (benefit), net earnings (loss) and diluted net earnings (loss) per share to exclude these impacts.

Reconciliation to non-GAAP adjusted income taxes (benefit), net earnings (loss) and diluted net earnings (loss) per share are as follows:
Three Months EndedNine Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
As Reported:
Earnings (loss) before income taxes$48,595 $(23,354)$161,094 $105,081 
Income taxes (benefit)12,473 (10,764)38,442 17,899 
Effective income tax rate25.7 %46.1 %23.9 %17.0 %
Net earnings (loss)36,122 (12,590)122,652 87,182 
Diluted net earnings (loss) per share$1.12 $(0.39)$3.80 $2.59 
COVID-19 Pandemic Charges:
Earnings before income taxes$— $55,972 $— $55,972 
Income taxes— 13,012 — 13,012 
Net earnings— 42,960 — 42,960 
Diluted net earnings per share$— $1.32 $— $1.32 
As Adjusted:
Earnings before income taxes$48,595 $32,618 $161,094 $161,053 
Income taxes12,473 2,248 38,442 30,911 
Effective income tax rate25.7 %6.9 %23.9 %19.2 %
Net earnings36,122 30,370 122,652 130,142 
Diluted net earnings per share$1.12 $0.93 $3.80 $3.91 
The diluted net earnings per share associated with the charges have been calculated using the quarterly average outstanding shares in the period in which the charges were incurred.
















Exhibit 99.1
Moog Inc.
CONSOLIDATED SALES AND OPERATING PROFIT (LOSS) (UNAUDITED)
(dollars in thousands)
 
Three Months EndedNine Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net sales:
Aircraft Controls$272,131 $249,388 $863,266 $930,749 
Space and Defense Controls204,887 183,906 599,217 563,156 
Industrial Systems230,334 224,245 665,225 683,754 
Net sales$707,352 $657,539 $2,127,708 $2,177,659 
Operating profit (loss):
Aircraft Controls$20,545 $(42,053)$70,485 $31,240 
7.5 %(16.9)%8.2 %3.4 %
Space and Defense Controls21,339 22,290 71,037 72,224 
10.4 %12.1 %11.9 %12.8 %
Industrial Systems23,004 17,903 66,715 69,477 
10.0 %8.0 %10.0 %10.2 %
Total operating profit (loss)64,888 (1,860)208,237 172,941 
9.2 %(0.3)%9.8 %7.9 %
Deductions from operating profit:
Interest expense8,239 9,440 25,288 29,923 
Equity-based compensation expense1,791 1,390 6,420 4,661 
Non-service pension expense (income)928 4,241 (3,053)11,440 
Corporate and other expenses, net5,335 6,423 18,488 21,836 
Earnings (loss) before income taxes$48,595 $(23,354)$161,094 $105,081 


























Exhibit 99.1
Operating Profit and Margins - as adjusted are as follows:
Three Months EndedNine Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Aircraft Controls operating profit (loss) - as reported$20,545 $(42,053)$70,485 $31,240 
Inventory write-down— 18,535 — 18,535 
Long-lived asset impairment— 31,530 — 31,530 
Restructuring— 2,896 — 2,896 
Aircraft Controls operating profit - as adjusted$20,545 $10,908 $70,485 $84,201 
7.5 %4.4 %8.2 %9.0 %
Space and Defense Controls operating profit - as reported$21,339 $22,290 $71,037 $72,224 
Long-lived asset impairment— 341 — 341 
Restructuring— 185 — 185 
Space and Defense Controls operating profit - as adjusted$21,339 $22,816 $71,037 $72,750 
10.4 %12.4 %11.9 %12.9 %
Industrial Systems operating profit - as reported$23,004 $17,903 $66,715 $69,477 
Inventory write-down— 260 — 260 
Restructuring— 2,225 — 2,225 
Industrial Systems operating profit - as adjusted$23,004 $20,388 $66,715 $71,962 
10.0 %9.1 %10.0 %10.5 %
Total operating profit - as adjusted$64,888 $54,112 $208,237 $228,913 
9.2 %8.2 %9.8 %10.5 %

Exhibit 99.1
Moog Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
 
July 3,
2021		October 3,
2020
ASSETS
Current assets
Cash and cash equivalents$90,550 $84,583 
Restricted cash1,108 489 
Receivables, net896,998 855,535 
Inventories, net632,359 623,043 
Prepaid expenses and other current assets49,513 49,837 
Total current assets1,670,528 1,613,487 
Property, plant and equipment, net639,202 600,498 
Operating lease right-of-use assets62,507 68,393 
Goodwill860,268 821,856 
Intangible assets, net111,867 85,046 
Deferred income taxes18,467 18,924 
Other assets20,471 17,627 
Total assets$3,383,310 $3,225,831 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current installments of long-term debt$56,062 $350 
Accounts payable162,890 176,868 
Accrued compensation111,159 109,510 
Contract advances259,425 203,338 
Accrued liabilities and other216,625 220,488 
Total current liabilities806,161 710,554 
Long-term debt, excluding current installments863,682 929,982 
Long-term pension and retirement obligations181,400 183,366 
Deferred income taxes54,168 40,474 
Other long-term liabilities110,694 118,372 
Total liabilities2,016,105 1,982,748 
Shareholders’ equity
Common stock - Class A43,802 43,799 
Common stock - Class B7,478 7,481 
Additional paid-in capital519,636 472,645 
Retained earnings2,211,305 2,112,734 
Treasury shares(1,007,754)(990,783)
Stock Employee Compensation Trust(85,314)(64,242)
Supplemental Retirement Plan Trust(69,448)(53,098)
Accumulated other comprehensive loss(252,500)(285,453)
Total shareholders’ equity1,367,205 1,243,083 
Total liabilities and shareholders’ equity$3,383,310 $3,225,831 


Exhibit 99.1
 
Moog Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)

Nine Months Ended
July 3,
2021		June 27,
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings$122,652 $87,182 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation56,806 55,859 
Amortization10,000 9,847 
Deferred income taxes4,161 (10,766)
Equity-based compensation expense6,420 4,661 
Impairment of long-lived assets and inventory write-down— 50,666 
Other(2,781)6,831 
Changes in assets and liabilities providing (using) cash:
Receivables(21,329)63,272 
Inventories9,509 (86,050)
Accounts payable(17,530)(85,136)
Contract advances54,414 73,040 
Accrued expenses3,503 1,827 
Accrued income taxes14,776 (20,555)
Net pension and post retirement liabilities 8,380 24,706 
Other assets and liabilities(18,401)12,463 
Net cash provided by operating activities230,580 187,847 
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired(77,600)(54,265)
Purchase of property, plant and equipment(88,573)(70,423)
Other investing transactions3,615 (3,429)
Net cash used by investing activities(162,558)(128,117)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of credit653,500 977,850 
Payments on revolving lines of credit(651,986)(968,459)
Proceeds from long-term debt42,300 6,935 
Payments on long-term debt(55,891)(52,253)
Proceeds from senior notes, net of issuance costs— 491,769 
Payments on senior notes — (300,000)
Payments on finance lease obligations(1,588)(730)
Payment of dividends (24,081)(17,049)
Proceeds from sale of treasury stock4,603 3,199 
Purchase of outstanding shares for treasury(26,702)(191,961)
Proceeds from sale of stock held by SECT679 17,082 
Purchase of stock held by SECT(3,535)(6,241)
Other financing transactions— (5,879)
Net cash used by financing activities(62,701)(45,737)
Effect of exchange rate changes on cash1,265 (932)
Increase in cash, cash equivalents and restricted cash6,586 13,061 
Cash, cash equivalents and restricted cash at beginning of period85,072 92,548 
Cash, cash equivalents and restricted cash at end of period$91,658 $105,609 

Stock widget

Investing forum

MOOG INC. Reports