EAST AURORA, N.Y., Jan. 27, 2017 (GLOBE NEWSWIRE) -- Moog Inc. (NYSE:MOG.A) (NYSE:MOG.B) announced today financial results for the quarter ended December 31, 2016.

First Quarter Highlights
  • Diluted earnings per share of $0.84, up 18% from a year ago;
  • Sales of $590 million, up 4% from a year ago;
  • Progress in selling four small European space businesses resulting in a net $0.07 per share loss on the divestitures (including $0.18 per share tax benefit);
  • Operating margins (excluding the $9 million pretax loss from selling the European space businesses) were 10.4%, up from 9.1% a year ago;
  • Strong cash flow from operating activities.

Segment Results

Total Aircraft Controls sales in the quarter were $268 million, up 6% year over year. Military aircraft sales of $128 million were 6% higher. F-35 Joint Strike Fighter sales were up 26%, to $27 million. Other OEM sales were up 8%, to $53 million. Military aftermarket sales were $48 million, down slightly on lower B-2 spares and C-5 modernization activity.

Commercial aircraft revenues increased 5%, to $141 million. Sales of OEM products to Airbus increased 40%, to $35 million, including a 72% increase in A350 program sales. Boeing OEM sales were flat at $61 million. Commercial aftermarket sales were off marginally, at $27 million, due to lower initial provisioning of 787 and A350 spares.

Space and Defense segment sales were $93 million, up 11% year over year. Space sales were 13% higher, attributed to strong space avionics and satellite engine sales. Defense sales were up 10% on increased demand for ground vehicle, missile and naval products.

Industrial Systems segment sales in the quarter were $112 million, down 10%. Energy sales were off 6% and industrial automation sales were off 9%. Simulation and test sales were down 16% from last year's strong first quarter.

Components segment sales in the quarter were $116 million, up 10% from a year ago, with sales increases seen in each of the three major markets. Aerospace and defense sales of $39 million were 11% higher largely attributed to sales for Northrop Grumman's Guardian program. Medical market sales of $48 million were up 11% on increased sales of pumps and associated products. Industrial product sales for specialty markets were up 6%.

Consolidated year-end 12-month backlog was $1.2 billion.

Fiscal 2017 Outlook
  • Forecast sales of $2.42 billion, up 1% over last year, down $20 million from last quarter's forecast;
  • Forecast earnings per share of $3.50, plus or minus $0.20, unchanged from last quarter's forecast;
  • Forecast full year operating margins of 10.0%, down slightly from last quarter's forecast due to loss on divestitures;
  • Another year of solid cash flow from operations.

"Earnings per share before specials of $0.91 were above our guidance from 90 days ago," said John Scannell, Chairman and CEO. "It was a good start to the year and it puts us on track for our full year guidance. Most of our businesses have stabilized since this time last year and we are seeing positive results from restructuring and our portfolio reviews of the past few years."

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
    December 31,  2016   January 2,  2016
Net sales   $ 589,670     $ 568,457  
Cost of sales   417,164     406,997  
Gross profit   172,506     161,460  
Research and development   34,564     34,798  
Selling, general and administrative   85,063     82,994  
Interest   8,486     8,322  
Other   7,905     (309 )
Earnings before income taxes   36,488     35,655  
Income taxes   6,430     9,495  
Net earnings attributable to Moog and noncontrolling interest   30,058     26,160  
         
Net earnings (loss) attributable to noncontrolling interest   (506 )   (81 )
         
Net earnings attributable to Moog   $ 30,564     $ 26,241  
         
Net earnings per share attributable to Moog        
Basic   $ 0.85     $ 0.71  
Diluted   $ 0.84     $ 0.71  
         
Average common shares outstanding        
Basic   35,869,052     36,713,949  
Diluted   36,272,767     37,028,331  
 

Moog Inc.
CONSOLIDATED SALES AND OPERATING PROFIT
(dollars in thousands)
 
    Three Months Ended
    December 31,  2016   January 2,  2016
Net sales:        
Aircraft Controls   $ 268,450     $ 253,957  
Space and Defense Controls   92,930     83,518  
Industrial Systems   112,399     125,179  
Components   115,891     105,803  
Net sales   $ 589,670     $ 568,457  
Operating profit:        
Aircraft Controls   $ 23,111     $ 18,432  
    8.6 %   7.3 %
Space and Defense Controls   7,096     11,515  
    7.6 %   13.8 %
Industrial Systems   10,701     13,633  
    9.5 %   10.9 %
Components   11,454     7,979  
    9.9 %   7.5 %
Total operating profit   52,362     51,559  
    8.9 %   9.1 %
Deductions from operating profit:        
Interest expense   8,486     8,322  
Equity-based compensation expense   2,168     936  
Corporate and other expenses, net   5,220     6,646  
Earnings before income taxes   $ 36,488     $ 35,655  
 

Moog Inc.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
    December 31,  2016   October 1,  2016
ASSETS        
Current assets        
Cash and cash equivalents   $ 331,664     $ 325,128  
Receivables   677,841     688,388  
Inventories   464,402     479,040  
Prepaid expenses and other current assets   39,659     34,688  
Total current assets   1,513,566     1,527,244  
Property, plant and equipment, net   508,656     522,369  
Goodwill   730,271     740,162  
Intangible assets, net   104,940     113,560  
Deferred income taxes   69,039     75,800  
Other assets   26,707     25,839  
Total assets   $ 2,953,179     $ 3,004,974  
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities        
Short-term borrowings   $ 1,366     $ 1,379  
Current installments of long-term debt   144     167  
Accounts payable   148,253     144,450  
Accrued salaries, wages and commissions   115,081     126,319  
Customer advances   171,530     167,514  
Contract loss reserves   30,045     32,543  
Other accrued liabilities   99,843     116,577  
Total current liabilities   566,262     588,949  
Long-term debt, excluding current installments   1,000,338     1,004,847  
Long-term pension and retirement obligations   385,962     401,747  
Deferred income taxes   10,157     11,026  
Other long-term liabilities   4,454     4,343  
Total liabilities   1,967,173     2,010,912  
Commitment and contingencies        
Redeemable noncontrolling interest   5,145     5,651  
Shareholders' equity        
Common stock - Class A   43,688     43,667  
Common stock - Class B   7,592     7,613  
Additional paid-in capital   469,971     465,762  
Retained earnings   1,737,103     1,706,539  
Treasury shares   (740,838 )   (741,700 )
Stock Employee Compensation Trust   (59,307 )   (49,463 )
Supplemental Retirement Plan Trust   (9,924 )   (8,946 )
Accumulated other comprehensive loss   (467,424 )   (435,061 )
Total Moog shareholders' equity   980,861     988,411  
Total liabilities and shareholders' equity   $ 2,953,179     $ 3,004,974  
 

Moog Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 
    Three Months Ended
    December 31,  2016   January 2,  2016
CASH FLOWS FROM OPERATING ACTIVITIES        
Net earnings attributable to Moog and noncontrolling interest   $ 30,058     $ 26,160  
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:        
Depreciation   17,918     19,208  
Amortization   4,541     5,877  
Deferred income taxes   1,371     3,532  
Equity-based compensation expense   2,168     936  
Other   9,868     804  
Changes in assets and liabilities providing (using) cash:        
Receivables   (11,012 )   5,221  
Inventories   6,996     (11,131 )
Accounts payable   6,737     (22,522 )
Customer advances   8,287     (498 )
Accrued expenses   (17,479 )   (17,114 )
Accrued income taxes   (8,885 )   (2,685 )
Net pension and post retirement liabilities   (1,295 )   (5,709 )
Other assets and liabilities   1,309     (2,534 )
Net cash provided (used) by operating activities   50,582     (455 )
CASH FLOWS FROM INVESTING ACTIVITIES        
Acquisitions of businesses, net of cash acquired       (11,016 )
Purchase of property, plant and equipment   (14,849 )   (12,305 )
Other investing transactions   (976 )   1,021  
Net cash (used) by investing activities   (15,825 )   (22,300 )
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from revolving lines of credit   62,400     148,605  
Payments on revolving lines of credit   (67,400 )   (93,605 )
Payments on long-term debt   (50 )   (9,540 )
Proceeds from sale of treasury stock   2,135     2,230  
Purchase of outstanding shares for treasury   (5,211 )   (3,034 )
Proceeds from sale of stock held by SECT   867      
Purchase of stock held by SECT   (5,709 )   (1,020 )
Excess tax benefits from equity-based payment arrangements       580  
Net cash provided (used) by financing activities   (12,968 )   44,216  
Effect of exchange rate changes on cash   (15,253 )   (7,996 )
Increase in cash and cash equivalents   6,536     13,465  
Cash and cash equivalents at beginning of period   325,128     309,853  
Cash and cash equivalents at end of period   $ 331,664     $ 323,318  

Contact:Ann Marie Luhr716-687-4225

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