New York | 1-5129 | 16-0757636 |
(State or Other Jurisdiction | (Commission | (I.R.S. Employer |
of Incorporation) | File Number) | Identification No.) |
East Aurora, New York | 14052-0018 |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
Item 2.05 | Costs Associated with Exit or Disposal Activities |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits. |
99.1 | Press release dated April 27, 2018, announcing Moog Inc.’s results of operations for the quarter ended March 31, 2018. |
MOOG INC. | |||
Dated: April 27, 2018 | By: | /s/ Jennifer Walter | |
Name: | Jennifer Walter | ||
Vice President - Finance | |||
Controller |
Exhibit | Description |
Press release dated April 27, 2018, announcing Moog Inc.’s results of operations for the quarter ended March 31, 2018. |
Release date | Immediate | Contact | Ann Marie Luhr |
April 27, 2018 | 716-687-4225 |
• | Sales of $689 million, up 9% from a year ago; |
• | Decision to wind down the pitch control portion of the wind energy business in 2018, while continuing to support current customer needs; |
• | GAAP diluted earnings per share of $.39 includes restructuring expenses of $0.72 per share related to the wind energy pitch control business and $0.05 per share charge related to the Tax Cuts and Jobs Act; |
• | Non-GAAP adjusted earnings per share from operations of $1.16, up from $0.88 a year ago; |
• | Announcement of a quarterly cash dividend of $0.25 per share, starting in June; |
• | Acquisition of VUES Brno s.r.o, a customized motion controls manufacturer in the Czech Republic; |
• | Cash flow from operations of $1 million, including $81 million of pension contributions. |
• | Sales of $2.69 billion, up 8% over last year and increased $70 million from 90 days ago; |
• | GAAP earnings per share of $2.67, plus or minus $0.20, including the impact of wind energy restructuring and one-time tax reform effects; |
• | Non-GAAP diluted earnings per share of $4.40, plus or minus $0.20; |
• | Adjusted operating margins of 10.9% and GAAP margins of 9.7%; |
• | Cash flow from operating activities of $170 million. |
• | 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; |
• | 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. |
Moog Inc. |
CONSOLIDATED STATEMENTS OF EARNINGS |
(dollars in thousands, except per share data) |
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | |||||||||||||
Net sales | $ | 689,049 | $ | 632,403 | $ | 1,316,584 | $ | 1,222,073 | ||||||||
Cost of sales | 489,071 | 447,323 | 932,497 | 864,487 | ||||||||||||
Inventory write-down - restructuring | 7,329 | — | 7,329 | — | ||||||||||||
Gross profit | 192,649 | 185,080 | 376,758 | 357,586 | ||||||||||||
Research and development | 34,085 | 36,950 | 66,505 | 71,514 | ||||||||||||
Selling, general and administrative | 99,999 | 87,064 | 195,949 | 172,127 | ||||||||||||
Interest | 9,089 | 8,649 | 17,735 | 17,135 | ||||||||||||
Restructuring | 24,058 | — | 24,058 | — | ||||||||||||
Other | (251 | ) | 4,214 | (992 | ) | 12,119 | ||||||||||
Earnings before income taxes | 25,669 | 48,203 | 73,503 | 84,691 | ||||||||||||
Income taxes | 11,704 | 16,541 | 58,239 | 22,971 | ||||||||||||
Net earnings attributable to Moog and noncontrolling interest | 13,965 | 31,662 | 15,264 | 61,720 | ||||||||||||
Net earnings (loss) attributable to noncontrolling interest | — | (364 | ) | — | (870 | ) | ||||||||||
Net earnings attributable to Moog | $ | 13,965 | $ | 32,026 | $ | 15,264 | $ | 62,590 | ||||||||
Net earnings per share attributable to Moog | ||||||||||||||||
Basic | $ | 0.39 | $ | 0.89 | $ | 0.43 | $ | 1.74 | ||||||||
Diluted | $ | 0.39 | $ | 0.88 | $ | 0.42 | $ | 1.73 | ||||||||
Dividends declared per share | $ | 0.25 | $ | — | $ | 0.25 | $ | — | ||||||||
Average common shares outstanding | ||||||||||||||||
Basic | 35,770,089 | 35,888,053 | 35,771,247 | 35,878,552 | ||||||||||||
Diluted | 36,179,858 | 36,236,838 | 36,190,455 | 36,254,802 |
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | |||||||||||||
As Reported: | ||||||||||||||||
Earnings before income taxes | $ | 25,669 | $ | 48,203 | $ | 73,503 | $ | 84,691 | ||||||||
Income taxes | 11,704 | 16,541 | 58,239 | 22,971 | ||||||||||||
Effective income tax rate | 45.6 | % | 34.3 | % | 79.2 | % | 27.1 | % | ||||||||
Net earnings attributable to Moog | 13,965 | 32,026 | 15,264 | 62,590 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 0.39 | $ | 0.88 | $ | 0.42 | $ | 1.73 | ||||||||
Non-GAAP Adjustments - Due to Restructuring: | ||||||||||||||||
Earnings before income taxes | $ | 31,387 | $ | — | $ | 31,387 | $ | — | ||||||||
Income taxes | 5,485 | — | 5,485 | — | ||||||||||||
Net earnings attributable to Moog | 25,902 | — | 25,902 | — | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 0.72 | $ | — | $ | 0.72 | $ | — | ||||||||
Non-GAAP Adjustments - Due to Tax Reform: | ||||||||||||||||
Income taxes | (1,958 | ) | — | (36,776 | ) | — | ||||||||||
Net earnings attributable to Moog | 1,958 | — | 36,776 | — | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 0.05 | $ | — | $ | 1.02 | $ | — | ||||||||
As Adjusted: | ||||||||||||||||
Earnings before income taxes | $ | 57,056 | $ | 48,203 | $ | 104,890 | $ | 84,691 | ||||||||
Income taxes | 15,231 | 16,541 | 26,948 | 22,971 | ||||||||||||
Effective income tax rate | 26.7 | % | 34.3 | % | 25.7 | % | 27.1 | % | ||||||||
Net earnings attributable to Moog | 41,825 | 32,026 | 77,942 | 62,590 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 1.16 | $ | 0.88 | $ | 2.15 | $ | 1.73 |
Moog Inc. |
CONSOLIDATED SALES AND OPERATING PROFIT |
(dollars in thousands) |
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | |||||||||||||
Net sales: | ||||||||||||||||
Aircraft Controls | $ | 311,439 | $ | 289,661 | $ | 589,973 | $ | 558,111 | ||||||||
Space and Defense Controls | 143,527 | 138,834 | 276,920 | 261,424 | ||||||||||||
Industrial Systems | 234,083 | 203,908 | 449,691 | 402,538 | ||||||||||||
Net sales | $ | 689,049 | $ | 632,403 | $ | 1,316,584 | $ | 1,222,073 | ||||||||
Operating profit (loss): | ||||||||||||||||
Aircraft Controls | $ | 33,480 | $ | 31,181 | $ | 64,248 | $ | 54,292 | ||||||||
10.8 | % | 10.8 | % | 10.9 | % | 9.7 | % | |||||||||
Space and Defense Controls | 16,841 | 11,381 | 33,130 | 20,469 | ||||||||||||
11.7 | % | 8.2 | % | 12.0 | % | 7.8 | % | |||||||||
Industrial Systems | (6,050 | ) | 22,265 | 13,196 | 42,428 | |||||||||||
(2.6 | )% | 10.9 | % | 2.9 | % | 10.5 | % | |||||||||
Total operating profit | 44,271 | 64,827 | 110,574 | 117,189 | ||||||||||||
6.4 | % | 10.3 | % | 8.4 | % | 9.6 | % | |||||||||
Deductions from operating profit: | ||||||||||||||||
Interest expense | 9,089 | 8,649 | 17,735 | 17,135 | ||||||||||||
Equity-based compensation expense | 1,499 | 986 | 3,500 | 3,154 | ||||||||||||
Corporate and other expenses, net | 8,014 | 6,989 | 15,836 | 12,209 | ||||||||||||
Earnings before income taxes | $ | 25,669 | $ | 48,203 | $ | 73,503 | $ | 84,691 |
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, 2018 | April 1, 2017 | March 31, 2018 | April 1, 2017 | |||||||||||||
Industrial Systems operating profit (loss) - as reported | $ | (6,050 | ) | $ | 22,265 | $ | 13,196 | $ | 42,428 | |||||||
Inventory write-down - restructuring | 7,329 | — | 7,329 | — | ||||||||||||
Restructuring | 24,058 | — | 24,058 | — | ||||||||||||
Industrial Systems operating profit- as adjusted | 25,337 | 22,265 | 44,583 | 42,428 | ||||||||||||
10.8 | % | 10.9 | % | 9.9 | % | 10.5 | % | |||||||||
Total operating profit - as adjusted | $ | 75,658 | $ | 64,827 | $ | 141,961 | $ | 117,189 | ||||||||
11.0 | % | 10.3 | % | 10.8 | % | 9.6 | % |
Moog Inc. |
CONSOLIDATED BALANCE SHEETS |
(dollars in thousands) |
March 31, 2018 | September 30, 2017 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 255,536 | $ | 368,073 | ||||
Receivables | 770,731 | 727,740 | ||||||
Inventories | 517,999 | 489,127 | ||||||
Prepaid expenses and other current assets | 41,996 | 41,499 | ||||||
Total current assets | 1,586,262 | 1,626,439 | ||||||
Property, plant and equipment, net | 547,141 | 522,991 | ||||||
Goodwill | 804,652 | 774,268 | ||||||
Intangible assets, net | 114,056 | 108,818 | ||||||
Deferred income taxes | 12,637 | 26,558 | ||||||
Other assets | 38,009 | 31,518 | ||||||
Total assets | $ | 3,102,757 | $ | 3,090,592 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Short-term borrowings | $ | 94 | $ | 89 | ||||
Current installments of long-term debt | 238 | 295 | ||||||
Accounts payable | 190,631 | 170,878 | ||||||
Accrued compensation | 137,848 | 148,406 | ||||||
Customer advances | 166,390 | 159,274 | ||||||
Contract loss reserves | 42,971 | 43,214 | ||||||
Other accrued liabilities | 130,736 | 107,278 | ||||||
Total current liabilities | 668,908 | 629,434 | ||||||
Long-term debt, excluding current installments | 907,429 | 956,653 | ||||||
Long-term pension and retirement obligations | 189,923 | 271,272 | ||||||
Deferred income taxes | 43,218 | 13,320 | ||||||
Other long-term liabilities | 37,575 | 5,609 | ||||||
Total liabilities | 1,847,053 | 1,876,288 | ||||||
Commitment and contingencies | — | — | ||||||
Shareholders’ equity | ||||||||
Common stock - Class A | 43,736 | 43,704 | ||||||
Common stock - Class B | 7,544 | 7,576 | ||||||
Additional paid-in capital | 490,055 | 492,246 | ||||||
Retained earnings | 1,901,182 | 1,847,819 | ||||||
Treasury shares | (739,091 | ) | (739,157 | ) | ||||
Stock Employee Compensation Trust | (93,330 | ) | (89,919 | ) | ||||
Supplemental Retirement Plan Trust | (12,078 | ) | (12,474 | ) | ||||
Accumulated other comprehensive loss | (342,314 | ) | (335,491 | ) | ||||
Total Moog shareholders’ equity | 1,255,704 | 1,214,304 | ||||||
Total liabilities and shareholders’ equity | $ | 3,102,757 | $ | 3,090,592 |
Moog Inc. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(dollars in thousands) |
Six Months Ended | ||||||||
March 31, 2018 | April 1, 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings attributable to Moog and noncontrolling interest | $ | 15,264 | $ | 61,720 | ||||
Adjustments to reconcile net earnings to net cash provided (used) by operating activities: | ||||||||
Depreciation | 35,536 | 35,372 | ||||||
Amortization | 9,425 | 9,325 | ||||||
Deferred income taxes | 30,709 | 423 | ||||||
Equity-based compensation expense | 3,500 | 3,154 | ||||||
Impairment of long-lived assets and inventory write-down associated with restructuring | 21,811 | — | ||||||
Other | 2,960 | 15,481 | ||||||
Changes in assets and liabilities providing (using) cash: | ||||||||
Receivables | (30,111 | ) | (20,989 | ) | ||||
Inventories | (20,685 | ) | 14,327 | |||||
Accounts payable | 11,351 | 13,536 | ||||||
Customer advances | 5,547 | 8,869 | ||||||
Accrued expenses | 10,558 | 449 | ||||||
Accrued income taxes | 4,953 | (858 | ) | |||||
Net pension and post retirement liabilities | (70,309 | ) | (9,413 | ) | ||||
Other assets and liabilities | 14,721 | (9,690 | ) | |||||
Net cash provided by operating activities | 45,230 | 121,706 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Acquisitions of businesses, net of cash acquired | (42,116 | ) | — | |||||
Purchase of property, plant and equipment | (43,924 | ) | (30,210 | ) | ||||
Other investing transactions | (3,781 | ) | (928 | ) | ||||
Net cash (used) by investing activities | (89,821 | ) | (31,138 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net short-term repayments | — | (1,280 | ) | |||||
Proceeds from revolving lines of credit | 209,500 | 94,145 | ||||||
Payments on revolving lines of credit | (269,610 | ) | (143,700 | ) | ||||
Proceeds from long-term debt | 10,000 | — | ||||||
Payments on long-term debt | (20,614 | ) | (97 | ) | ||||
Proceeds from sale of treasury stock | 2,451 | 2,135 | ||||||
Purchase of outstanding shares for treasury | (5,118 | ) | (5,305 | ) | ||||
Proceeds from sale of stock held by SECT | 1,941 | 867 | ||||||
Purchase of stock held by SECT | (7,914 | ) | (7,038 | ) | ||||
Other financing transactions | — | (1,656 | ) | |||||
Net cash (used) by financing activities | (79,364 | ) | (61,929 | ) | ||||
Effect of exchange rate changes on cash | 11,418 | (11,278 | ) | |||||
Increase (decrease) in cash and cash equivalents | (112,537 | ) | 17,361 | |||||
Cash and cash equivalents at beginning of period | 368,073 | 325,128 | ||||||
Cash and cash equivalents at end of period | $ | 255,536 | $ | 342,489 |