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

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Exhibit 99.1
                            
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000

Press Information
Release Date:IMMEDIATEContact:Ann Marie Luhr
 April 30, 2021 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 second quarter ended April 3, 2021.

Second Quarter Highlights

▪    Sales of $736 million were down 4% from a year ago;
▪    Diluted earnings per share of $1.51 were up 2% from a year ago;
▪    Diluted earnings per share includes a one-time pension curtailment gain of $0.18;
▪    Operating margins of 9.8% were down from 11.0% a year ago;
▪    Effective tax rate of 21.6% compared to 19.2% a year ago; and
▪    $43 million cash flow from operating activities, up 12% from a year ago.

Fiscal 2021 Outlook

The company is providing projections for fiscal year 2021.

▪    Forecast sales of $2.84 billion;
▪    Forecast diluted earnings per share of $5.00, plus or minus $0.20;
▪    Forecast full year operating margins of 9.9%;
▪    Forecast tax rate of 24.0%; and
▪    Forecast $302 million cash flow from operating activities.

Segment Results

Aircraft Controls segment revenues in the quarter were $304 million, down 11% year over year. Military aircraft sales were $202 million, 15% higher than a year ago. Military OEM sales increased 33%, to $153 million, tied to very strong funded development programs and higher F-35 Joint Strike Fighter sales. Military aftermarket sales were down 20%, at $48 million, on weaker activity across the portfolio.

Commercial aircraft revenues were $103 million, 38% lower than last year’s second quarter. Sales to commercial OEM customers were down 39%, as wide body production at Boeing and Airbus were below last year’s levels. Commercial aftermarket repair and overhaul revenues decreased 34%.

In the quarter, Space and Defense segment revenues were $206 million, an increase of 7% year over year. Space sales were up 19%, to $88 million, the result of increased sales for NASA programs and integrated space vehicle products. Defense sales were mostly unchanged at $118 million. Lower sales of missile steering controls and security applications were offset by increases in sales of military vehicle and naval application products.


Exhibit 99.1
Industrial Systems segment sales in the quarter were $226 million, down 2% from a year ago. Energy product sales were down 23%, the result of a delays in offshore exploration activity. Simulation and test product sales were off 23%, tied to reduced demand for flight simulation pilot training products. Medical product sales increased 7%, to $67 million, tied to higher enteral feeding pump sales. Sales of products for industrial automation applications were up 5% but unchanged after allowing for foreign exchange movements.

Consolidated 12-month backlog was $1.9 billion, up 5% from a year ago.

“We are pleased with our performance in the first half of the year and looking forward to repeating that performance in the second half,” said John Scannell, Chairman and CEO. “We are reinstating guidance today after a 12-month hiatus. The second half of fiscal 2021 will mirror the first half, resulting in full year sales of $2.84 billion and full year earnings per share of $5.00, plus or minus $0.20. Our businesses continue to operate effectively, despite on-going COVID impositions. Market diversity and financial prudence have guided us through the last 12 months and will continue to be the core of our business going forward.”

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 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 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, marine and medical equipment. Additional information about the company can be found at www.moog.com.

Exhibit 99.1
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.

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;

Exhibit 99.1
•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
(dollars in thousands, except per share data)
 
 Three Months EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Net sales$736,402 $765,277 $1,420,356 $1,520,120 
Cost of sales536,493 557,223 1,030,804 1,100,809 
Gross profit199,909 208,054 389,552 419,311 
Research and development30,453 26,688 58,461 54,896 
Selling, general and administrative105,131 107,251 204,734 205,618 
Interest8,629 10,251 17,049 20,483 
Other(6,432)2,333 (3,191)9,879 
Earnings before income taxes62,128 61,531 112,499 128,435 
Income taxes13,440 11,786 25,969 28,663 
Net earnings$48,688 $49,745 $86,530 $99,772 
Net earnings per share  
Basic$1.51 $1.49 $2.69 $2.94 
Diluted$1.51 $1.48 $2.68 $2.91 
Average common shares outstanding  
Basic32,146,247 33,434,420 32,110,365 33,972,635 
Diluted32,325,494 33,685,395 32,281,158 34,236,399 
 


























Exhibit 99.1

Moog Inc.
CONSOLIDATED SALES AND OPERATING PROFIT
(dollars in thousands)
 
Three Months EndedSix Months Ended
April 3,
2021		March 28,
2020		April 3,
2021		March 28,
2020
Net sales:
Aircraft Controls$304,361 $341,407 $591,135 $681,361 
Space and Defense Controls206,168 193,010 394,330 379,250 
Industrial Systems225,873 230,860 434,891 459,509 
Net sales$736,402 $765,277 $1,420,356 $1,520,120 
Operating profit:
Aircraft Controls$22,018 $34,701 $49,940 $73,293 
7.2 %10.2 %8.4 %10.8 %
Space and Defense Controls26,652 24,652 49,698 49,934 
12.9 %12.8 %12.6 %13.2 %
Industrial Systems23,813 24,775 43,711 51,574 
10.5 %10.7 %10.1 %11.2 %
Total operating profit 72,483 84,128 143,349 174,801 
9.8 %11.0 %10.1 %11.5 %
Deductions from operating profit:
Interest expense8,629 10,251 17,049 20,483 
Equity-based compensation expense2,127 890 4,629 3,271 
Non-service pension (income) expense(4,901)3,598 (3,981)7,199 
Corporate and other expenses, net4,500 7,858 13,153 15,413 
Earnings before income taxes$62,128 $61,531 $112,499 $128,435 


























Exhibit 99.1
Moog Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
April 3,
2021		October 3,
2020
ASSETS
Current assets
Cash and cash equivalents$90,110 $84,583 
Restricted cash902 489 
Receivables, net922,092 855,535 
Inventories, net636,580 623,043 
Prepaid expenses and other current assets48,278 49,837 
Total current assets1,697,962 1,613,487 
Property, plant and equipment, net628,550 600,498 
Operating lease right-of-use assets65,410 68,393 
Goodwill860,239 821,856 
Intangible assets, net114,820 85,046 
Deferred income taxes18,808 18,924 
Other assets20,051 17,627 
Total assets$3,405,840 $3,225,831 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current installments of long-term debt$71,652 $350 
Accounts payable175,061 176,868 
Accrued compensation99,223 109,510 
Contract advances256,080 203,338 
Accrued liabilities and other225,915 220,488 
Total current liabilities827,931 710,554 
Long-term debt, excluding current installments896,955 929,982 
Long-term pension and retirement obligations180,112 183,366 
Deferred income taxes48,778 40,474 
Other long-term liabilities113,607 118,372 
Total liabilities2,067,383 1,982,748 
Shareholders’ equity
Common stock - Class A43,802 43,799 
Common stock - Class B7,478 7,481 
Additional paid-in capital519,006 472,645 
Retained earnings2,183,218 2,112,734 
Treasury shares(1,000,389)(990,783)
Stock Employee Compensation Trust(85,034)(64,242)
Supplemental Retirement Plan Trust(70,047)(53,098)
Accumulated other comprehensive loss(259,577)(285,453)
Total shareholders’ equity1,338,457 1,243,083 
Total liabilities and shareholders’ equity$3,405,840 $3,225,831 


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

Six Months Ended
April 3,
2021		March 28,
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings$86,530 $99,772 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation37,622 36,962 
Amortization6,436 6,676 
Deferred income taxes(1,187)(1,346)
Equity-based compensation expense4,629 3,271 
Other(3,115)5,674 
Changes in assets and liabilities providing (using) cash:
Receivables(47,697)(42,208)
Inventories9,301 (49,467)
Accounts payable(5,088)(14,891)
Contract advances51,349 46,468 
Accrued expenses(1,799)(9,920)
Accrued income taxes12,691 (14,040)
Net pension and post retirement liabilities 3,846 15,785 
Other assets and liabilities(16,151)(2,032)
Net cash provided by operating activities137,367 80,704 
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired(77,600)(54,265)
Purchase of property, plant and equipment(58,019)(53,463)
Other investing transactions1,895 (3,706)
Net cash used by investing activities(133,724)(111,434)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of credit503,200 829,000 
Payments on revolving lines of credit(467,700)(758,500)
Proceeds from long-term debt39,800 4,300 
Payments on long-term debt(39,903)(4,300)
Proceeds from senior notes, net of issuance costs— 491,769 
Payments on senior notes — (300,000)
Payments on finance lease obligations(1,042)(412)
Payment of dividends (16,046)(17,049)
Proceeds from sale of treasury stock4,230 3,199 
Purchase of outstanding shares for treasury(18,844)(191,961)
Proceeds from sale of stock held by SECT274 14,278 
Purchase of stock held by SECT(2,559)(6,209)
Other financing transactions— (5,877)
Net cash provided by financing activities1,410 58,238 
Effect of exchange rate changes on cash887 (791)
Increase in cash, cash equivalents and restricted cash5,940 26,717 
Cash, cash equivalents and restricted cash at beginning of period85,072 92,548 
Cash, cash equivalents and restricted cash at end of period$91,012 $119,265 

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