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EAST AURORA, N.Y.--(BUSINESS WIRE)--Feb 3, 2023--
Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and controls systems, today reported first quarter 2023 diluted earnings per share of $1.44 and adjusted diluted earnings per share of $1.25.
(in millions, except per share results) |
|
|
| |||||||||
| Q1 2023 | Q1 2022 | Deltas | |||||||||
Net sales | $ | 760 |
| $ | 724 |
|
| 5 | % | |||
Operating margin |
| 11.4 | % |
| 11.1 | % | 30 bps | |||||
Adjusted operating margin |
| 10.4 | % |
| 9.1 | % | 130 bps | |||||
Diluted earning per share | $ | 1.44 |
| $ | 1.44 |
|
| 0 | % | |||
Adjusted diluted earnings per share | $ | 1.25 |
| $ | 1.10 |
|
| 14 | % | |||
Adjusted free cash flow | $ | (22 | ) | $ | 31 |
| $ | (53 | ) | |||
See the reconciliations of adjusted financial results to reported results included in the financial statements herein for the quarters ended December 31, 2022 and January 1, 2022. | ||||||||||||
Operating margin in the first quarter of 2023 includes 100 basis points of adjustments, primarily associated with gain on sale of buildings. | ||||||||||||
Quarter Highlights
“I’m pleased by our strong financial performance and how our employees, together, overcame many constraints to meet our increased customer demand,” said Pat Roche, Chief Executive Officer. “As the new CEO, I am very excited for the future of Moog. We have a solid core business with positive growth drivers, and we are creating new opportunities by entering new markets and redefining our position in existing markets. My focus will be on organic growth and simplifying our business to enhance margins. I’m confident this will drive shareholder value.”
Segment Results
Aircraft Controls’ sales in the first quarter of 2023 increased 2%. Sales for commercial aftermarket programs increased significantly, driven by market recovery in widebody programs including the 787 and A350 programs. Partially offsetting this growth was lower military sales in both OEM and aftermarket programs due to the timing of activity. Adjusted operating margin increased 110 basis points to 9.6% resulting from a favorable sales mix along with lower research and development expenses.
Space and Defense Controls’ sales increased 5% in the first quarter of 2023 compared to the first quarter of 2022, driven primarily by the production ramp of the reconfigurable turret program. Adjusted operating margin decreased 160 basis points to 9.4% as charges on space vehicle programs and supply chain pressures continued.
Industrial Systems’ sales increased 17%, excluding both the impacts of weaker foreign currencies and the prior year’s sales associated with a divested business. The underlying sales growth was most significant in industrial automation products and in simulation and test products. Adjusted operating margin increased more than 400 basis points to 12.3% due to incremental margin from stronger sales as well as a favorable sales mix.
Free Cash Flow Results
Free cash flow in the first quarter of 2023 was a $22 million use of cash. Working capital increased in the first quarter of 2023 due to continued supply chain pressures, higher production rates on the 787 program and delayed milestones for billings. Capital expenditures of $30 million in the first quarter of 2023 was $7 million lower than the first quarter of 2022.
2023 Financial Guidance
“It was a great start to the year from an operational perspective. We achieved our adjusted earnings per share guidance of $1.25 despite the negative impact from the storms in Western New York,” said Jennifer Walter, Chief Financial Officer. “We are reiterating our fiscal year 2023 guidance for sales, adjusted operating margin and adjusted earnings per share. Our backlog is strong, and our performance is on track to achieve these results.”
(in millions, except per share results) |
|
| ||||||
| FY 2023 Guidance | |||||||
| Current | Previous | ||||||
Net sales | $ | 3,175 |
| $ | 3,175 |
| ||
Operating margin |
| 11.2 | % |
| 11.0 | % | ||
Adjusted operating margin |
| 11.0 | % |
| 11.0 | % | ||
Diluted earnings per share | $ | 5.89 |
| $ | 5.70 |
| ||
Adjusted diluted earnings per share | $ | 5.70 |
| $ | 5.70 |
| ||
Free cash flow | $ | 100 |
| $ | 130 |
| ||
Earnings per share figures are forecasted to be within range of +/- $0.20. |
The company lowered its fiscal year 2023 free cash flow guidance due to an assumption change related to the previously anticipated repeal of the R&D expense amortization law.
In conjunction with today’s release, Moog Inc. will host a conference call today beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. Pat Roche, 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.
Cautionary Statement
Information included or incorporated by reference in this press release 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 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. In evaluating these forward-looking statements, you should carefully consider the factors set forth below.
Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A “Risk Factors” of our Annual Report on Form 10-K and in our other periodic filings with the SEC and include the following:
Strategic risks
Market condition risks
Operational risks
Financial risks
Legal and compliance risks
General risks
While we believe we have identified and discussed above the material risks affecting our business, there may be additional factors, risks and uncertainties not currently known to us or that we currently consider immaterial 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. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to update any forward-looking statement made in this report, except as required by law.
Moog Inc. CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (dollars in thousands, except per share data) | ||||||||
Three Months Ended | ||||||||
| December 31, |
| January 1, | |||||
Net sales | $ | 760,103 |
|
| $ | 724,086 |
| |
Cost of sales |
| 556,417 |
|
|
| 529,706 |
| |
Inventory write-down |
| — |
|
|
| 1,500 |
| |
Gross profit |
| 203,686 |
|
|
| 192,880 |
| |
Research and development |
| 23,862 |
|
|
| 27,708 |
| |
Selling, general and administrative |
| 113,165 |
|
|
| 111,797 |
| |
Interest |
| 13,132 |
|
|
| 7,982 |
| |
Restructuring |
| 1,078 |
|
|
| — |
| |
Gain on sale of businesses |
| — |
|
|
| (16,146 | ) | |
Gain on sale of buildings |
| (9,503 | ) |
|
| — |
| |
Other |
| 1,651 |
|
|
| 116 |
| |
Earnings before income taxes |
| 60,301 |
|
|
| 61,423 |
| |
Income taxes |
| 14,285 |
|
|
| 15,158 |
| |
Net earnings | $ | 46,016 |
|
| $ | 46,265 |
| |
|
|
|
| |||||
Net earnings per share |
|
|
| |||||
Basic | $ | 1.45 |
|
| $ | 1.44 |
| |
Diluted | $ | 1.44 |
|
| $ | 1.44 |
| |
|
|
|
| |||||
Average common shares outstanding |
|
|
| |||||
Basic |
| 31,746,001 |
|
|
| 32,057,399 |
| |
Diluted |
| 31,874,718 |
|
|
| 32,188,158 |
| |
|
|
|
|
Moog Inc. RECONCILIATION TO ADJUSTED NET EARNINGS BEFORE TAXES, INCOMES TAXES, NET EARNINGS AND DILUTIVE NET EARNINGS PER SHARE (UNAUDITED) (dollars in thousands) | ||||||||
Three Months Ended | ||||||||
| December 31, |
| January 1, | |||||
As Reported: |
|
|
| |||||
Earnings before income taxes | $ | 60,301 |
|
| $ | 61,423 |
| |
Income taxes |
| 14,285 |
|
|
| 15,158 |
| |
Effective income tax rate |
| 23.7 | % |
|
| 24.7 | % | |
Net earnings |
| 46,016 |
|
|
| 46,265 |
| |
Diluted net earnings per share | $ | 1.44 |
|
| $ | 1.44 |
| |
|
|
|
| |||||
Gain on Sale of Business: |
|
|
| |||||
Earnings before income taxes | $ | — |
|
| $ | (16,146 | ) | |
Income taxes |
| — |
|
|
| (4,273 | ) | |
Net earnings |
| — |
|
|
| (11,873 | ) | |
Diluted net earnings per share | $ | — |
|
| $ | (0.37 | ) | |
|
|
|
| |||||
Gain on Sale of Buildings: |
|
|
| |||||
Earnings before income taxes | $ | (9,503 | ) |
| $ | — |
| |
Income taxes |
| (1,986 | ) |
|
| — |
| |
Net earnings |
| (7,517 | ) |
|
| — |
| |
Diluted net earnings per share | $ | (0.24 | ) |
| $ | — |
| |
|
|
|
| |||||
Other Charges: |
|
|
| |||||
Earnings before income taxes | $ | 1,533 |
|
| $ | 1,500 |
| |
Income taxes |
| 274 |
|
|
| 354 |
| |
Net earnings |
| 1,259 |
|
|
| 1,146 |
| |
Diluted net earnings per share | $ | 0.04 |
|
| $ | 0.04 |
| |
|
|
|
| |||||
As Adjusted: |
|
|
| |||||
Earnings before income taxes | $ | 52,331 |
|
| $ | 46,777 |
| |
Income taxes |
| 12,573 |
|
|
| 11,239 |
| |
Effective income tax rate |
| 24.0 | % |
|
| 24.0 | % | |
Net earnings |
| 39,758 |
|
|
| 35,538 |
| |
Diluted net earnings per share | $ | 1.25 |
|
| $ | 1.10 |
| |
The diluted net earnings per share associated with the adjustments in the table above may not reconcile when totaled due to rounding. |
Results shown above have been adjusted to exclude impacts associated with the sale of the NavAids business in Aircraft Controls, sale of buildings formerly used in Industrial Systems, as well as, restructuring, inventory write-down and other charges related to the impact of continued portfolio shaping activities and the Ukraine crisis. While management believes that these adjusted financial measures may be useful in evaluating the financial condition and results of operations of the Company, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP.
Moog Inc. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (UNAUDITED) (dollars in thousands) | ||||||||
Three Months Ended | ||||||||
| December 31, |
| January 1, | |||||
Net cash provided by operating activities | $ | 8,083 |
|
| $ | 157,185 |
| |
Purchase of property, plant and equipment |
| (30,125 | ) |
|
| (37,059 | ) | |
Free cash flow |
| (22,042 | ) |
|
| 120,126 |
| |
Securitization |
| — |
|
|
| (89,600 | ) | |
Adjusted free cash flow | $ | (22,042 | ) |
| $ | 30,526 |
| |
Amounts may not reconcile when totaled due to rounding. |
Free cash flow is defined as net cash provided by operating activities less capital expenditures. Adjusted free cash flow is defined as free cash flow adjusted for securitization activity. The securitization under GAAP reduced Q1 2022 receivables and net debt and increased cash flow from operations. Adjusted free cash flow is not a measure determined in accordance with GAAP and may not be comparable with the measures as used by other companies, however management believes this adjusted financial measure may be useful in evaluating the financial condition and results of operations of the Company. This information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP.
Moog Inc. CONSOLIDATED SALES AND OPERATING PROFIT (UNAUDITED) (dollars in thousands) | ||||||||
Three Months Ended | ||||||||
| December 31, |
| January 1, | |||||
Net sales: |
|
|
| |||||
Aircraft Controls | $ | 310,259 |
|
| $ | 303,317 |
| |
Space and Defense Controls |
| 217,785 |
|
|
| 207,856 |
| |
Industrial Systems |
| 232,059 |
|
|
| 212,913 |
| |
Net sales | $ | 760,103 |
|
| $ | 724,086 |
| |
Operating profit: |
|
|
| |||||
Aircraft Controls | $ | 29,718 |
|
| $ | 41,915 |
| |
|
| 9.6 | % |
|
| 13.8 | % | |
Space and Defense Controls |
| 20,294 |
|
|
| 21,299 |
| |
|
| 9.3 | % |
|
| 10.2 | % | |
Industrial Systems |
| 36,751 |
|
|
| 17,191 |
| |
|
| 15.8 | % |
|
| 8.1 | % | |
Total operating profit |
| 86,763 |
|
|
| 80,405 |
| |
|
| 11.4 | % |
|
| 11.1 | % | |
Deductions from operating profit: |
|
|
| |||||
Interest expense |
| 13,132 |
|
|
| 7,982 |
| |
Equity-based compensation expense |
| 2,974 |
|
|
| 2,658 |
| |
Non-service pension expense |
| 3,099 |
|
|
| 1,485 |
| |
Corporate and other expenses, net |
| 7,257 |
|
|
| 6,857 |
| |
Earnings before income taxes | $ | 60,301 |
|
| $ | 61,423 |
| |
Moog Inc. RECONCILIATION TO ADJUSTED OPERATING PROFIT AND MARGINS (UNAUDITED) (dollars in thousands) | ||||||||
Three Months Ended | ||||||||
| December 31, |
| January 1, | |||||
Aircraft Controls operating profit - as reported | $ | 29,718 |
|
| $ | 41,915 |
| |
Gain on sale of business |
| — |
|
|
| (16,146 | ) | |
Aircraft Controls operating profit - as adjusted | $ | 29,718 |
|
| $ | 25,769 |
| |
|
| 9.6 | % |
|
| 8.5 | % | |
|
|
|
| |||||
Space and Defense Controls operating profit - as reported | $ | 20,294 |
|
| $ | 21,299 |
| |
Inventory write-down |
| — |
|
|
| 1,500 |
| |
Restructuring |
| 176 |
|
|
| — |
| |
Space and Defense Controls operating profit - as adjusted | $ | 20,470 |
|
| $ | 22,799 |
| |
|
| 9.4 | % |
|
| 11.0 | % | |
|
|
|
| |||||
Industrial Systems operating profit - as reported | $ | 36,751 |
|
| $ | 17,191 |
| |
Gain on sale of buildings |
| (9,503 | ) |
|
| — |
| |
Restructuring and other |
| 1,357 |
|
|
| — |
| |
Industrial Systems operating profit - as adjusted | $ | 28,605 |
|
| $ | 17,191 |
| |
|
| 12.3 | % |
|
| 8.1 | % | |
|
|
|
| |||||
Total operating profit - as adjusted | $ | 78,793 |
|
| $ | 65,759 |
| |
|
| 10.4 | % |
|
| 9.1 | % | |
Moog Inc. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (dollars in thousands) | ||||||||
| December 31, |
| October 1, | |||||
ASSETS |
|
|
|
| ||||
Current assets |
|
|
|
| ||||
Cash and cash equivalents |
| $ | 143,069 |
|
| $ | 103,895 |
|
Restricted cash |
|
| 22,842 |
|
|
| 15,338 |
|
Receivables, net |
|
| 1,066,340 |
|
|
| 990,262 |
|
Inventories, net |
|
| 648,160 |
|
|
| 588,466 |
|
Prepaid expenses and other current assets |
|
| 52,772 |
|
|
| 60,349 |
|
Total current assets |
|
| 1,933,183 |
|
|
| 1,758,310 |
|
Property, plant and equipment, net |
|
| 689,339 |
|
|
| 668,908 |
|
Operating lease right-of-use assets |
|
| 68,653 |
|
|
| 69,072 |
|
Goodwill |
|
| 822,901 |
|
|
| 805,320 |
|
Intangible assets, net |
|
| 85,396 |
|
|
| 85,410 |
|
Deferred income taxes |
|
| 9,300 |
|
|
| 8,630 |
|
Other assets |
|
| 49,273 |
|
|
| 36,191 |
|
Total assets |
| $ | 3,658,045 |
|
| $ | 3,431,841 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
| ||||
Current liabilities |
|
|
|
| ||||
Current installments of long-term debt |
| $ | 822 |
|
| $ | 916 |
|
Accounts payable |
|
| 226,188 |
|
|
| 232,104 |
|
Accrued compensation |
|
| 76,770 |
|
|
| 93,141 |
|
Contract advances |
|
| 372,262 |
|
|
| 296,899 |
|
Accrued liabilities and other |
|
| 209,624 |
|
|
| 215,376 |
|
Total current liabilities |
|
| 885,666 |
|
|
| 838,436 |
|
Long-term debt, excluding current installments |
|
| 916,058 |
|
|
| 836,872 |
|
Long-term pension and retirement obligations |
|
| 146,919 |
|
|
| 140,602 |
|
Deferred income taxes |
|
| 65,385 |
|
|
| 63,527 |
|
Other long-term liabilities |
|
| 118,836 |
|
|
| 115,591 |
|
Total liabilities |
|
| 2,132,864 |
|
|
| 1,995,028 |
|
Shareholders’ equity |
|
|
|
| ||||
Common stock - Class A |
|
| 43,807 |
|
|
| 43,807 |
|
Common stock - Class B |
|
| 7,473 |
|
|
| 7,473 |
|
Additional paid-in capital |
|
| 550,511 |
|
|
| 516,123 |
|
Retained earnings |
|
| 2,397,814 |
|
|
| 2,360,055 |
|
Treasury shares |
|
| (1,055,735 | ) |
|
| (1,047,012 | ) |
Stock Employee Compensation Trust |
|
| (89,689 | ) |
|
| (73,602 | ) |
Supplemental Retirement Plan Trust |
|
| (71,811 | ) |
|
| (58,989 | ) |
Accumulated other comprehensive loss |
|
| (257,189 | ) |
|
| (311,042 | ) |
Total shareholders’ equity |
|
| 1,525,181 |
|
|
| 1,436,813 |
|
Total liabilities and shareholders’ equity |
| $ | 3,658,045 |
|
| $ | 3,431,841 |
|
Moog Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (dollars in thousands) | ||||||||
| Three Months Ended | |||||||
|
| December 31, |
| January 1, | ||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| ||||
Net earnings |
| $ | 46,016 |
|
| $ | 46,265 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
| ||||
Depreciation |
|
| 18,392 |
|
|
| 19,290 |
|
Amortization |
|
| 2,992 |
|
|
| 3,402 |
|
Deferred income taxes |
|
| (1,342 | ) |
|
| 7,895 |
|
Equity-based compensation expense |
|
| 2,974 |
|
|
| 2,658 |
|
Gain on sale of businesses |
|
| — |
|
|
| (16,146 | ) |
Gain on sale of buildings |
|
| (9,503 | ) |
|
| — |
|
Inventory write-down |
|
| — |
|
|
| 1,500 |
|
Other |
|
| 1,145 |
|
|
| 699 |
|
Changes in assets and liabilities providing (using) cash: |
|
|
|
| ||||
Receivables |
|
| (53,957 | ) |
|
| 38,941 |
|
Inventories |
|
| (44,435 | ) |
|
| 7,179 |
|
Accounts payable |
|
| (9,679 | ) |
|
| (20,833 | ) |
Contract advances |
|
| 72,889 |
|
|
| 105,548 |
|
Accrued expenses |
|
| (35,186 | ) |
|
| (26,914 | ) |
Accrued income taxes |
|
| 12,632 |
|
|
| 5,173 |
|
Net pension and post retirement liabilities |
|
| 3,988 |
|
|
| 4,501 |
|
Other assets and liabilities |
|
| 1,157 |
|
|
| (21,973 | ) |
Net cash provided by operating activities |
|
| 8,083 |
|
|
| 157,185 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| ||||
Purchase of property, plant and equipment |
|
| (30,125 | ) |
|
| (37,059 | ) |
Net proceeds from businesses sold |
|
| 1,124 |
|
|
| 38,611 |
|
Net proceeds from buildings sold |
|
| 7,432 |
|
|
| — |
|
Other investing transactions |
|
| (3,724 | ) |
|
| (1,275 | ) |
Net cash provided (used) by investing activities |
|
| (25,293 | ) |
|
| 277 |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| ||||
Proceeds from revolving lines of credit |
|
| 241,000 |
|
|
| 215,200 |
|
Payments on revolving lines of credit |
|
| (160,300 | ) |
|
| (263,476 | ) |
Payments on long-term debt |
|
| (93 | ) |
|
| (80,060 | ) |
Payments on finance lease obligations |
|
| (884 | ) |
|
| (505 | ) |
Payment of dividends |
|
| (8,257 | ) |
|
| (8,031 | ) |
Proceeds from sale of treasury stock |
|
| 1,869 |
|
|
| 2,144 |
|
Purchase of outstanding shares for treasury |
|
| (12,721 | ) |
|
| (16,657 | ) |
Proceeds from sale of stock held by SECT |
|
| 2,561 |
|
|
| 2,075 |
|
Purchase of stock held by SECT |
|
| (1,753 | ) |
|
| (2,275 | ) |
Other financing transactions |
|
| (2,026 | ) |
|
| — |
|
Net cash provided (used) by financing activities |
|
| 59,396 |
|
|
| (151,585 | ) |
Effect of exchange rate changes on cash |
|
| 4,492 |
|
|
| (65 | ) |
Increase in cash, cash equivalents and restricted cash |
|
| 46,678 |
|
|
| 5,812 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
| 119,233 |
|
|
| 100,914 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 165,911 |
|
| $ | 106,726 |
|
View source version on businesswire.com:https://www.businesswire.com/news/home/20230203005091/en/
Investor Relations - 716.687.4225
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: TECHNOLOGY OTHER DEFENSE CONTRACTS AIR TRANSPORT SATELLITE AEROSPACE MANUFACTURING DEFENSE
SOURCE: Moog Inc.
Copyright Business Wire 2023.
PUB: 02/03/2023 07:55 AM/DISC: 02/03/2023 07:55 AM
http://www.businesswire.com/news/home/20230203005091/en