EX-99.1 2 ex991-042817.htm EXHIBIT 99.1 Exhibit


                            Press Information
 
MOOGINC., EAST AURORA, NEW YORK 14052 TEL-716/652-2000
 
Release date
Immediate
Contact
Ann Marie Luhr
 
April 28, 2017
 
716-687-4225
 

MOOG REPORTS SECOND QUARTER RESULTS

East Aurora, NY -- Moog Inc. (NYSE: MOG.A and MOG.B) announced today financial results for the quarter ended April 1, 2017.

Second Quarter Highlights

•
Diluted earnings per share of $0.88, up 4% from a year ago;
•
Pre-tax earnings were up 19% from a year ago;
•
Sales of $632 million, up 3% from a year ago;
•
Operating margins of 10.3%, up from 9.3% a year ago;
•
Strong cash flow from operating activities;
•
Announcement of the acquisition of Rotary Transfer Systems, a slip ring business in Europe.

Segment Results

Total Aircraft Controls sales in the quarter were $290 million, up 6% year over year. Military aircraft sales of $137 million were 4% higher, driven by F-35 Joint Strike Fighter sales which were up 26%. Other OEM sales were up 3%, to $59 million. Military aftermarket sales were $48 million, down 5% on lower B-1B spares and C-5 modernization activity.

Commercial aircraft revenues increased 9%, to $153 million. Sales of OEM products to Airbus increased 44%, to $43 million, including a 70% increase in A350 program sales. Boeing OEM sales were marginally higher at $62 million. Commercial aftermarket sales declined $1 million, to $29 million.

Space and Defense segment sales were $106 million, up 14% year over year. Defense sales were up 26% on increased demand for U.S. and European ground vehicle programs, naval and security products. Space sales were 2% higher, attributed to an increase in sales of satellite controls.

Industrial Systems segment sales in the quarter were $115 million, down 10% from a year ago but up 3% from Q1. Energy sales were off 15%, simulation and test sales were down 9% and industrial automation sales were off 8%.

Components segment sales in the quarter were $121 million, up 3% from a year ago, with the strongest sales increase seen in the medical market. Medical market sales of $48 million were up 10% on increased sales of pumps and sensors. Aerospace and defense sales of $41 million were flat while industrial product sales for specialty markets, at $33 million, were down 3%.

Consolidated 12-month backlog was $1.2 billion.

Fiscal 2017 Outlook

•
Forecast sales of $2.45 billion, up 2% over last year and increased $30 million from last quarter’s forecast;
•
Forecast earnings per share of $3.50, plus or minus $0.15;
•
Forecast full year operating margins of 10.0%, with no change from last quarter’s forecast;
•
Another year of solid cash flow from operations.





“Earnings per share of $0.88 was above our guidance from 90 days ago,” said John Scannell, Chairman and CEO. “We’ve had a good first half of the year and we’re on track for our full year guidance. Our premier military and commercial aircraft programs continue their production ramps and we’ve seen sales gains in several of the defense programs in our portfolio.”

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
 
Six Months Ended
 
 
April 1,
2017
 
April 2,
2016
 
April 1,
2017
 
April 2,
2016
Net sales
 
$
632,403

 
$
611,142

 
$
1,222,073

 
$
1,179,599

Cost of sales
 
447,323

 
431,955

 
864,487

 
838,952

Gross profit
 
185,080

 
179,187

 
357,586

 
340,647

Research and development
 
36,950

 
39,731

 
71,514

 
74,529

Selling, general and administrative
 
87,064

 
82,771

 
172,127

 
165,765

Interest
 
8,649

 
8,935

 
17,135

 
17,257

Restructuring
 
—

 
8,069

 
—

 
8,342

Other
 
4,214

 
(936
)
 
12,119

 
(1,518
)
Earnings before income taxes
 
48,203

 
40,617

 
84,691

 
76,272

Income taxes
 
16,541

 
9,710

 
22,971

 
19,205

Net earnings attributable to Moog and noncontrolling interest
 
31,662

 
30,907

 
61,720

 
57,067

 
 
 
 
 
 
 
 
 
Net earnings (loss) attributable to noncontrolling interest
 
(364
)
 
(143
)
 
(870
)
 
(224
)
 
 
 
 
 
 
 
 
 
Net earnings attributable to Moog
 
$
32,026

 
$
31,050

 
$
62,590

 
$
57,291

 
 
 
 
 
 
 
 
 
Net earnings per share attributable to Moog
 
 
 
 

 
 
 
 

Basic
 
$
0.89

 
$
0.85

 
$
1.74

 
$
1.57

Diluted
 
$
0.88

 
$
0.85

 
$
1.73

 
$
1.55

 
 
 
 
 
 
 
 
 
Average common shares outstanding
 
 
 
 

 
 
 
 

Basic
 
35,888,053

 
36,481,996

 
35,878,552

 
36,597,972

Diluted
 
36,236,838

 
36,693,190

 
36,254,802

 
36,860,760

 





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

 
 
Three Months Ended
 
Six Months Ended
 
 
April 1,
2017
 
April 2,
2016
 
April 1,
2017
 
April 2,
2016
Net sales:
 
 
 
 
 
 
 
 
Aircraft Controls
 
$
289,661

 
$
272,073

 
$
558,111

 
$
526,030

Space and Defense Controls
 
105,848

 
92,871

 
198,778

 
176,389

Industrial Systems
 
115,431

 
128,244

 
227,830

 
253,423

Components
 
121,463

 
117,954

 
237,354

 
223,757

Net sales
 
$
632,403

 
$
611,142

 
$
1,222,073

 
$
1,179,599

Operating profit:
 
 
 
 
 
 
 
 
Aircraft Controls
 
$
31,181

 
$
19,742

 
$
54,292

 
$
38,174

 
 
10.8
%
 
7.3
%
 
9.7
%
 
7.3
%
Space and Defense Controls
 
10,488

 
12,657

 
17,584

 
24,172

 
 
9.9
%
 
13.6
%
 
8.8
%
 
13.7
%
Industrial Systems
 
12,318

 
13,270

 
23,019

 
26,903

 
 
10.7
%
 
10.3
%
 
10.1
%
 
10.6
%
Components
 
10,840

 
10,939

 
22,294

 
18,918

 
 
8.9
%
 
9.3
%
 
9.4
%
 
8.5
%
Total operating profit
 
64,827

 
56,608

 
117,189

 
108,167

 
 
10.3
%
 
9.3
%
 
9.6
%
 
9.2
%
Deductions from operating profit:
 
 
 
 
 
 
 
 
Interest expense
 
8,649

 
8,935

 
17,135

 
17,257

Equity-based compensation expense
 
986

 
983

 
3,154

 
1,919

Corporate and other expenses, net
 
6,989

 
6,073

 
12,209

 
12,719

Earnings before income taxes
 
$
48,203

 
$
40,617

 
$
84,691

 
$
76,272

 .





Moog Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 

 
 
April 1,
2017
 
October 1,
2016
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
305,123

 
$
325,128

Restricted cash
 
37,366

 
—

Receivables
 
688,649

 
688,388

Inventories
 
458,211

 
479,040

Prepaid expenses and other current assets
 
42,274

 
34,688

Total current assets
 
1,531,623

 
1,527,244

Property, plant and equipment, net
 
507,091

 
522,369

Goodwill
 
731,924

 
740,162

Intangible assets, net
 
100,978

 
113,560

Deferred income taxes
 
65,569

 
75,800

Other assets
 
29,117

 
25,839

Total assets
 
$
2,966,302

 
$
3,004,974

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Short-term borrowings
 
$
90

 
$
1,379

Current installments of long-term debt
 
350

 
167

Accounts payable
 
155,519

 
144,450

Accrued salaries, wages and commissions
 
120,808

 
126,319

Customer advances
 
172,583

 
167,514

Contract loss reserves
 
35,743

 
32,543

Other accrued liabilities
 
106,236

 
116,577

Total current liabilities
 
591,329

 
588,949

Long-term debt, excluding current installments
 
956,053

 
1,004,847

Long-term pension and retirement obligations
 
370,037

 
401,747

Deferred income taxes
 
9,721

 
11,026

Other long-term liabilities
 
4,174

 
4,343

Total liabilities
 
1,931,314

 
2,010,912

Commitment and contingencies
 
—

 
—

Redeemable noncontrolling interest
 
—

 
5,651

Shareholders’ equity
 
 
 
 
Common stock - Class A
 
43,692

 
43,667

Common stock - Class B
 
7,588

 
7,613

Additional paid-in capital
 
474,123

 
465,762

Retained earnings
 
1,769,129

 
1,706,539

Treasury shares
 
(739,551
)
 
(741,700
)
Stock Employee Compensation Trust
 
(61,887
)
 
(49,463
)
Supplemental Retirement Plan Trust
 
(10,094
)
 
(8,946
)
Accumulated other comprehensive loss
 
(448,012
)
 
(435,061
)
Total Moog shareholders’ equity
 
1,034,988

 
988,411

Total liabilities and shareholders’ equity
 
$
2,966,302

 
$
3,004,974





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


 
 
Six Months Ended
 
 
April 1,
2017
 
April 2,
2016
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net earnings attributable to Moog and noncontrolling interest
 
$
61,720

 
$
57,067

Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
 
 
 
 
Depreciation
 
35,372

 
38,554

Amortization
 
9,325

 
11,428

Deferred income taxes
 
423

 
2,292

Equity-based compensation expense
 
3,154

 
1,919

Other
 
15,481

 
5,991

Changes in assets and liabilities providing (using) cash:
 
 
 
 
Receivables
 
(20,989
)
 
(5,606
)
Inventories
 
14,327

 
(5,330
)
Accounts payable
 
13,536

 
(13,439
)
Customer advances
 
8,869

 
10,888

Accrued expenses
 
449

 
(5,802
)
Accrued income taxes
 
(858
)
 
2,552

Net pension and post retirement liabilities
 
(9,413
)
 
(13,171
)
Other assets and liabilities
 
(9,690
)
 
(8,920
)
Net cash provided by operating activities
 
121,706

 
78,423

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Acquisitions of businesses, net of cash acquired
 
—

 
(11,016
)
Purchase of property, plant and equipment
 
(30,210
)
 
(27,685
)
Other investing transactions
 
(928
)
 
1,058

Net cash (used) by investing activities
 
(31,138
)
 
(37,643
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Net short-term repayments
 
(1,280
)
 
—

Proceeds from revolving lines of credit
 
94,145

 
210,320

Payments on revolving lines of credit
 
(143,700
)
 
(182,455
)
Payments on long-term debt
 
(97
)
 
(9,660
)
Proceeds from sale of treasury stock
 
2,135

 
2,229

Purchase of outstanding shares for treasury
 
(5,305
)
 
(25,156
)
Proceeds from sale of stock held by SECT
 
867

 
2,897

Purchase of stock held by SECT
 
(7,038
)
 
(1,515
)
Excess tax benefits from equity-based payment arrangements
 
—

 
471

Other financing transactions
 
(1,656
)
 
—

Net cash (used) by financing activities
 
(61,929
)
 
(5,169
)
Effect of exchange rate changes on cash
 
(11,278
)
 
2,858

Increase in cash, cash equivalents and restricted cash
 
17,361

 
38,469

Cash, cash equivalents and restricted cash at beginning of period
 
325,128

 
309,853

Cash, cash equivalents and restricted cash at end of period
 
$
342,489

 
$
348,322