(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Item 2.02 | Results of Operations and Financial Condition |
Item 8.01 | Other Events |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits. |
MOOG INC. | |||
Dated: | November 1, 2019 | By: | /s/ Michael J. Swope |
Name: | Michael J. Swope | ||
Controller |
Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr |
November 1, 2019 | 716-687-4225 |
• | Sales of $765 million, up 9% from a year ago; |
• | Diluted earnings per share of $1.31; |
• | Operating margins of 10.4%; |
• | Tax rate of 21.3%; |
• | $52 million cash flow from operating activities. |
• | Sales of $2.9 billion, up 7% from a year ago; |
• | Diluted earnings per share of $5.11; |
• | Operating margins of 11.1%; |
• | Tax rate of 23.1%; |
• | $181 million cash flow from operating activities. |
• | Forecast sales of $3.0 billion, up 4%; |
• | Forecast diluted earnings per share of $5.55, plus or minus $0.20; |
• | Forecast full year operating margins of 11.5%; |
• | Forecast tax rate of 25.3%; |
• | Forecast $275 million cash flow from operating activities. |
▪ | 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 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; |
▪ | 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; |
▪ | 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; |
▪ | Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks, and any false claims or non-compliance could subject us to fines, 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 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; |
▪ | 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; |
▪ | The United Kingdom's decision to exit the European Union may bring 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; |
▪ | 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; |
▪ | We are involved in various legal proceedings, the outcome of which may be unfavorable to us; |
▪ | 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. |
Moog Inc. |
CONSOLIDATED STATEMENTS OF EARNINGS |
(dollars in thousands, except per share data) |
Three Months Ended | Twelve Months Ended | |||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||
Net sales | $ | 765,207 | $ | 700,866 | $ | 2,904,663 | $ | 2,709,468 | ||||||||
Cost of sales | 558,197 | 499,282 | 2,088,831 | 1,923,179 | ||||||||||||
Inventory write-down - restructuring | — | 2,471 | — | 12,198 | ||||||||||||
Gross profit | 207,010 | 199,113 | 815,832 | 774,091 | ||||||||||||
Research and development | 31,935 | 32,556 | 126,453 | 129,838 | ||||||||||||
Selling, general and administrative | 104,812 | 93,428 | 404,653 | 388,434 | ||||||||||||
Interest | 9,868 | 9,653 | 39,269 | 36,238 | ||||||||||||
Restructuring | — | 6,285 | — | 28,794 | ||||||||||||
Other | 2,159 | 1,812 | 11,699 | 6,950 | ||||||||||||
Earnings before income taxes | 58,236 | 55,379 | 233,758 | 183,837 | ||||||||||||
Income taxes | 12,381 | 14,765 | 54,010 | 87,209 | ||||||||||||
Net earnings attributable to Moog and noncontrolling interest | 45,855 | 40,614 | 179,748 | 96,628 | ||||||||||||
Net earnings attributable to noncontrolling interest | — | 54 | — | 121 | ||||||||||||
Net earnings attributable to Moog | $ | 45,855 | $ | 40,560 | $ | 179,748 | $ | 96,507 | ||||||||
Net earnings per share attributable to Moog | ||||||||||||||||
Basic | $ | 1.32 | $ | 1.15 | $ | 5.16 | $ | 2.71 | ||||||||
Diluted | $ | 1.31 | $ | 1.14 | $ | 5.11 | $ | 2.68 | ||||||||
Average common shares outstanding | ||||||||||||||||
Basic | 34,811,076 | 35,341,139 | 34,854,614 | 35,661,638 | ||||||||||||
Diluted | 35,107,997 | 35,684,949 | 35,178,968 | 36,052,307 |
Three Months Ended | Twelve Months Ended | |||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||
As Reported: | ||||||||||||||||
Earnings before income taxes | $ | 58,236 | $ | 55,379 | $ | 233,758 | $ | 183,837 | ||||||||
Income taxes | 12,381 | 14,765 | 54,010 | 87,209 | ||||||||||||
Effective income tax rate | 21.3 | % | 26.7 | % | 23.1 | % | 47.4 | % | ||||||||
Net earnings attributable to Moog and noncontrolling interest | 45,855 | 40,614 | 179,748 | 96,628 | ||||||||||||
Net earnings attributable to Moog | 45,855 | 40,560 | 179,748 | 96,507 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 1.31 | $ | 1.14 | $ | 5.11 | $ | 2.68 | ||||||||
Non-GAAP Adjustments - Due to Restructuring - Wind pitch controls business: | ||||||||||||||||
Earnings before income taxes | $ | — | $ | 4,446 | $ | — | $ | 36,682 | ||||||||
Income taxes | — | 790 | — | 6,275 | ||||||||||||
Net earnings attributable to Moog | — | 3,656 | — | 30,407 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | — | $ | 0.10 | $ | — | $ | 0.84 | ||||||||
Non-GAAP Adjustments - Due to Tax Reform: | ||||||||||||||||
Income taxes | $ | — | $ | (1,398 | ) | $ | — | $ | (38,174 | ) | ||||||
Net earnings attributable to Moog | — | 1,398 | — | 38,174 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | — | $ | 0.04 | $ | — | $ | 1.05 | ||||||||
As Adjusted: | ||||||||||||||||
Earnings before income taxes | $ | 58,236 | $ | 59,825 | $ | 233,758 | $ | 220,519 | ||||||||
Income taxes | 12,381 | 14,157 | 54,010 | 55,310 | ||||||||||||
Effective income tax rate | 21.3 | % | 23.7 | % | 23.1 | % | 25.1 | % | ||||||||
Net earnings attributable to Moog and noncontrolling interest | 45,855 | 45,668 | 179,748 | 165,209 | ||||||||||||
Net earnings attributable to Moog | 45,855 | 45,614 | 179,748 | 165,088 | ||||||||||||
Diluted net earnings per share attributable to Moog | $ | 1.31 | $ | 1.28 | $ | 5.11 | $ | 4.57 |
Moog Inc. |
CONSOLIDATED SALES AND OPERATING PROFIT |
(dollars in thousands) |
Three Months Ended | Twelve Months Ended | |||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||
Net sales: | ||||||||||||||||
Aircraft Controls | $ | 341,565 | $ | 303,926 | $ | 1,302,972 | $ | 1,193,505 | ||||||||
Space and Defense Controls | 189,530 | 154,142 | 683,468 | 580,877 | ||||||||||||
Industrial Systems | 234,112 | 242,798 | 918,223 | 935,086 | ||||||||||||
Net sales | $ | 765,207 | $ | 700,866 | $ | 2,904,663 | $ | 2,709,468 | ||||||||
Operating profit: | ||||||||||||||||
Aircraft Controls | $ | 27,896 | $ | 31,335 | $ | 122,701 | $ | 129,772 | ||||||||
8.2 | % | 10.3 | % | 9.4 | % | 10.9 | % | |||||||||
Space and Defense Controls | 25,880 | 17,411 | 88,990 | 67,615 | ||||||||||||
13.7 | % | 11.3 | % | 13.0 | % | 11.6 | % | |||||||||
Industrial Systems | 26,023 | 25,509 | 109,451 | 64,964 | ||||||||||||
11.1 | % | 10.5 | % | 11.9 | % | 6.9 | % | |||||||||
Total operating profit | 79,799 | 74,255 | 321,142 | 262,351 | ||||||||||||
10.4 | % | 10.6 | % | 11.1 | % | 9.7 | % | |||||||||
Deductions from operating profit: | ||||||||||||||||
Interest expense | 9,868 | 9,653 | 39,269 | 36,238 | ||||||||||||
Equity-based compensation expense | 1,334 | 1,410 | 6,464 | 5,804 | ||||||||||||
Non-service pension expense | 3,183 | 1,685 | 12,745 | 6,778 | ||||||||||||
Corporate and other expenses, net | 7,178 | 6,128 | 28,906 | 29,694 | ||||||||||||
Earnings before income taxes | $ | 58,236 | $ | 55,379 | $ | 233,758 | $ | 183,837 |
Three Months Ended | Twelve Months Ended | |||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||
Industrial Systems operating profit - as reported | $ | 26,023 | $ | 25,509 | $ | 109,451 | $ | 64,964 | ||||||||
Inventory write-down - restructuring | — | 2,471 | — | 12,198 | ||||||||||||
Restructuring - Wind pitch controls business | — | 4,475 | — | 26,984 | ||||||||||||
Wind product sale | — | (2,500 | ) | — | (2,500 | ) | ||||||||||
Industrial Systems operating profit- as adjusted | 26,023 | 29,955 | 109,451 | 101,646 | ||||||||||||
11.1 | % | 12.3 | % | 11.9 | % | 10.9 | % | |||||||||
Total operating profit - as adjusted | $ | 79,799 | $ | 78,701 | $ | 321,142 | $ | 299,033 | ||||||||
10.4 | % | 11.2 | % | 11.1 | % | 11.0 | % |
Moog Inc. |
CONSOLIDATED BALANCE SHEETS |
(dollars in thousands) |
September 28, 2019 | September 29, 2018 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 92,548 | $ | 125,584 | ||||
Receivables | 957,287 | 793,911 | ||||||
Inventories | 534,974 | 512,522 | ||||||
Prepaid expenses and other current assets | 44,164 | 44,404 | ||||||
Total current assets | 1,628,973 | 1,476,421 | ||||||
Property, plant and equipment, net | 586,767 | 552,865 | ||||||
Goodwill | 784,240 | 797,217 | ||||||
Intangible assets, net | 79,646 | 95,537 | ||||||
Deferred income taxes | 19,992 | 17,328 | ||||||
Other assets | 14,619 | 24,680 | ||||||
Total assets | $ | 3,114,237 | $ | 2,964,048 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Short-term borrowings | $ | — | $ | 3,623 | ||||
Current installments of long-term debt | 249 | 365 | ||||||
Accounts payable | 257,677 | 207,422 | ||||||
Accrued compensation | 143,765 | 147,765 | ||||||
Contract advances | 137,242 | 151,687 | ||||||
Other accrued liabilities | 188,725 | 169,762 | ||||||
Total current liabilities | 727,658 | 680,624 | ||||||
Long-term debt, excluding current installments | 832,984 | 858,836 | ||||||
Long-term pension and retirement obligations | 160,034 | 117,471 | ||||||
Deferred income taxes | 40,528 | 46,477 | ||||||
Other long-term liabilities | 30,552 | 35,654 | ||||||
Total liabilities | 1,791,756 | 1,739,062 | ||||||
Shareholders’ equity | ||||||||
Common stock - Class A | 43,795 | 43,785 | ||||||
Common stock - Class B | 7,485 | 7,495 | ||||||
Additional paid-in capital | 510,546 | 502,257 | ||||||
Retained earnings | 2,133,328 | 1,973,514 | ||||||
Treasury shares | (769,569 | ) | (738,494 | ) | ||||
Stock Employee Compensation Trust | (111,492 | ) | (118,449 | ) | ||||
Supplemental Retirement Plan Trust | (71,546 | ) | (72,941 | ) | ||||
Accumulated other comprehensive loss | (420,066 | ) | (372,181 | ) | ||||
Total Moog shareholders’ equity | 1,322,481 | 1,224,986 | ||||||
Total liabilities and shareholders’ equity | $ | 3,114,237 | $ | 2,964,048 |
Moog Inc. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(dollars in thousands) |
Twelve Months Ended | ||||||||
September 28, 2019 | September 29, 2018 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net earnings attributable to Moog and noncontrolling interest | $ | 179,748 | $ | 96,628 | ||||
Adjustments to reconcile net earnings to net cash provided (used) by operating activities: | ||||||||
Depreciation | 71,926 | 71,231 | ||||||
Amortization | 13,334 | 17,341 | ||||||
Deferred income taxes | (4,598 | ) | 30,613 | |||||
Equity-based compensation expense | 6,464 | 5,804 | ||||||
Other | 4,239 | 34,455 | ||||||
Changes in assets and liabilities providing (using) cash: | ||||||||
Receivables | (82,818 | ) | (67,621 | ) | ||||
Inventories | (96,652 | ) | (32,451 | ) | ||||
Accounts payable | 52,499 | 35,980 | ||||||
Contract advances | (14,432 | ) | (10,998 | ) | ||||
Accrued expenses | 3,014 | 14,926 | ||||||
Accrued income taxes | 6,749 | 4,227 | ||||||
Net pension and post retirement liabilities | 27,329 | (123,500 | ) | |||||
Other assets and liabilities | 14,621 | 25,772 | ||||||
Net cash provided by operating activities | 181,423 | 102,407 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Acquisitions of businesses, net of cash acquired | — | (48,382 | ) | |||||
Purchase of property, plant and equipment | (118,422 | ) | (94,517 | ) | ||||
Other investing transactions | 2,702 | 1,257 | ||||||
Net cash used by investing activities | (115,720 | ) | (141,642 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net short-term (repayments) borrowings | (3,653 | ) | 3,618 | |||||
Proceeds from revolving lines of credit | 971,658 | 568,550 | ||||||
Payments on revolving lines of credit | (998,726 | ) | (678,660 | ) | ||||
Proceeds from long-term debt | — | 15,000 | ||||||
Payments on long-term debt | (411 | ) | (25,922 | ) | ||||
Payment of dividends | (34,857 | ) | (17,889 | ) | ||||
Proceeds from sale of treasury stock | 5,268 | 4,560 | ||||||
Purchase of outstanding shares for treasury | (40,955 | ) | (8,218 | ) | ||||
Proceeds from sale of stock held by SECT | 13,990 | 4,714 | ||||||
Purchase of stock held by SECT | (15,288 | ) | (30,358 | ) | ||||
Proceeds from sale of SERP stock | 4,293 | — | ||||||
Other financing transactions | — | (1,964 | ) | |||||
Net cash used by financing activities | (98,681 | ) | (221,569 | ) | ||||
Effect of exchange rate changes on cash | (2,180 | ) | 1,541 | |||||
Decrease in cash, cash equivalents and restricted cash | (35,158 | ) | (259,263 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 127,706 | 386,969 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 92,548 | $ | 127,706 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
Interest paid | $ | 38,864 | $ | 36,689 | ||||
Income taxes paid, net of refunds | $ | 36,474 | $ | 34,214 | ||||
Treasury shares issued as compensation | $ | 11,795 | $ | — | ||||
Equipment acquired through financing | $ | 216 | $ | 297 |
Release Date: | IMMEDIATE | Contact: | Ann Marie Luhr |
November 1, 2019 | 716-687-4225 |
▪ | 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 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; |
▪ | 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; |
▪ | 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; |
▪ | Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks, and any false claims or non-compliance could subject us to fines, 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 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; |
▪ | 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; |
▪ | The United Kingdom's decision to exit the European Union may bring 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; |
▪ | 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; |
▪ | We are involved in various legal proceedings, the outcome of which may be unfavorable to us; |
▪ | 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. |
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