Moog Announces Fourth Quarter and Year End Results

EAST AURORA, NY--(Marketwired - Oct 31, 2014) - Moog Inc. (NYSE: MOG.A) (NYSE: MOG.B) announced today fiscal year 2014 sales of $2.65 billion, up 1% year over year. Net earnings of $158 million were up 31% and EPS of $3.52 were 34% higher. For the fourth quarter, sales of $671 million were down 1%. Net earnings of $40 million and earnings per share of $.93 were both higher than a year ago. The 2014 results include a fourth quarter restructuring charge of $13 million, the equivalent of $.19 per share.

It should be noted that in FY'13, the Company had a $.52 per share goodwill impairment charge in Medical Devices in the fourth quarter and a third quarter $.11 per share loss on the divestiture of the Buffalo Ethox operations. Exclusive of these charges, FY'13 earnings per share were $3.26, which compares with FY'14 earnings per share of $3.52, an 8% increase.

Aircraft Controls sales for the year of $1.1 billion were 5% higher year over year. Commercial aircraft sales were up 18%, at $546 million, on increases in hardware deliveries for new aircraft programs. Commercial aftermarket sales of $130 million were 16% higher, the result of initial provisioning of spares for the 787 program. Total military aircraft sales were $572 million, down 4%, on a decrease in V-22 tilt rotor production and a 4% decrease in military aftermarket sales.

In the fourth quarter, Aircraft Controls sales of $283 million increased 3% from the same quarter last year. Commercial revenues were 6% higher, at $138 million, which included very strong commercial aftermarket sales, up 16%. Military aircraft sales were steady at $146 million, with slightly higher OEM sales offsetting lower military aftermarket sales.

Space and Defense segment sales of $395 million for the year were flat compared to last year, with both the space and the defense markets level with a year ago. Within defense, increased missile controls and security product sales offset a decline for ground vehicle systems.

For the fourth quarter, sales in the Space and Defense segment were $97 million, down 6% from last year. Space sales were 16% lower on components for satellites. Defense sales were 9% higher in the quarter, again the result of increased volume in missile controls and security products.

Industrial Systems had revenues for the year of $591 million, in line with last year. Industrial automation sales were up 5%, with most of the underlying markets showing improvement. Wind energy sales were up 9% from a year ago as demand in China and Brazil was higher. Sales for simulation and test equipment were weaker, down 13%, as an OEM simulation customer adjusted their inventory. Industrial Systems sales in the fourth quarter were down 3% at $148 million.

Components segment sales were $425 million for the year, up 2% over 2013 on higher industrial sales which were helped by the Aspen Motion Technologies acquisition a year ago. Sales in the fourth quarter were $111 million, led by strong energy sales.

Medical Devices generated sales of $120 million, a decrease of 18% from a year ago. The decrease is partly due to the divestiture of the Ethox Buffalo operation. Pump sales were down 8% and sales of administration sets were down 27%. For the fourth quarter, Medical Devices sales of $32 million were down 17%, as last year's fourth quarter included a large order for administration sets.

Year-end backlog of $1.3 billion was 3% higher than the prior year.

The Company also affirmed its EPS projection for fiscal 2015 at $4.25. The Company's forecast for sales is $2.66 billion.

"Fiscal '14 was a very respectable year for our company, given the challenging market conditions we faced," said John Scannell, Chairman and CEO. "Earnings were up and cash flow was very strong. Our financial position allowed us to buy back 4 million shares of stock. In a year with little top-line growth, our employees put in a tremendous effort to deliver on our commitments to both our customers and our investors and I thank them for their hard work and dedication. As we look forward, we are projecting a stronger fiscal '15 with earnings per share of $4.25, up 21% from fiscal '14 on sales growth of about 1%."

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, 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 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;

• 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 Boeing as a customer or a significant reduction in sales to Boeing 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 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 could 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; and

• our operations are subject to environmental laws, and complying with those laws may cause us to incur significant costs.

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							Twelve Months Ended
			September 27, 2014				September 28, 2013			September 27, 2014			September 28, 2013
NET SALES			$	671,424			$	675,853		$	2,648,385		$	2,610,311
COST OF SALES				472,242				480,495			1,850,809			1,826,561
GROSS PROFIT				199,182				195,358			797,576			783,750
	Research and development			33,984				31,102			139,462			134,652
	Selling, general and administrative			96,138				94,216			403,487			396,636
	Interest			2,725				5,840			12,513			26,962
	Restructuring			12,913				7,079			12,913			14,075
	Goodwill impairment			--				38,200			--			38,200
	Other			(378	)			572			10,278			8,219
EARNINGS BEFORE INCOME TAXES				53,800				18,349			218,923			165,006
INCOME TAXES				13,546				2,724			60,725			44,509
NET EARNINGS			$	40,254			$	15,625		$	158,198		$	120,497
NET EARNINGS PER SHARE
	Basic		$	0.94			$	0.34		$	3.57		$	2.66
	Diluted		$	0.93			$	0.34		$	3.52		$	2.63
AVERAGE COMMON SHARES OUTSTANDING
	Basic			42,610,409				45,337,373			44,362,412			45,335,336
	Diluted			43,185,066				45,923,800			44,952,437			45,823,720

Moog Inc.

CONSOLIDATED SALES AND OPERATING PROFIT

(dollars in thousands)

		Three Months Ended								Twelve Months Ended
		September 27, 2014				September 28, 2013				September 27, 2014				September 28, 2013
Net sales:
	Aircraft Controls	$	283,236			$	275,591			$	1,117,656			$	1,059,587
	Space and Defense Controls		97,245				103,721				394,505				395,945
	Industrial Systems		147,973				152,774				590,971				592,112
	Components		110,696				104,803				425,129				415,428
	Medical Devices		32,274				38,964				120,124				147,239
Net sales		$	671,424			$	675,853			$	2,648,385			$	2,610,311
Operating profit (loss) and margins after restructuring costs:
	Aircraft Controls	$	27,746			$	33,104			$	115,726			$	126,751
			9.8	%			12.0	%			10.4	%			12.0	%
	Space and Defense Controls		596				2,740				26,119				25,350
			0.6	%			2.6	%			6.6	%			6.4	%
	Industrial Systems		14,098				16,097				58,108				42,254
			9.5	%			10.5	%			9.8	%			7.1	%
	Components		18,443				16,183				65,150				68,731
			16.7	%			15.4	%			15.3	%			16.5	%
	Medical Devices		3,266				(35,675	)			10,614				(35,542	)
			10.1	%			(91.6	%)			8.8	%			(24.1	%)
Total operating profit			64,149				32,449				275,717				227,544
			9.6	%			4.8	%			10.4	%			8.7	%
Deductions from operating profit:
	Interest expense		2,725				5,840				12,513				26,962
	Equity-based compensation expense		644				947				7,189				6,620
	Corporate expenses and other		6,980				7,313				37,092				28,956
Earnings before income taxes		$	53,800			$	18,349			$	218,923			$	165,006

Moog Inc.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

				September 27, 2014			September 28, 2013
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	231,292		$	157,090
	Receivables				780,874			811,376
	Inventories				517,056			551,674
	Other current assets				134,842			127,235
		TOTAL CURRENT ASSETS			1,664,064			1,647,375
PROPERTY, PLANT AND EQUIPMENT					555,348			562,363
GOODWILL					757,852			766,924
INTANGIBLE, net					178,070			208,756
OTHER ASSETS					53,118			51,677
TOTAL ASSETS				$	3,208,452		$	3,237,095
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Short-term borrowings			$	103,660		$	105,088
	Current installments of long-term debt				5,262			3,382
	Accounts payable				162,667			181,893
	Customer advances				145,500			145,854
	Contract loss reserves				35,984			44,228
	Other accrued liabilities				269,731			242,785
		TOTAL CURRENT LIABILITIES			722,804			723,230
LONG-TERM DEBT, excluding current installments
	Senior debt				765,114			409,125
	Senior subordinated notes				--			191,562
LONG-TERM PENSION AND RETIREMENT OBLIGATIONS					288,216			269,751
DEFERRED INCOME TAXES					83,931			104,377
OTHER LONG-TERM LIABILITIES					972			3,285
		TOTAL LIABILITIES			1,861,037			1,701,330
COMMITMENTS AND CONTINGENCIES					--			--
SHAREHOLDERS' EQUITY
	Common stock				51,280			51,280
	Other shareholders' equity				1,296,135			1,484,485
		TOTAL SHAREHOLDERS' EQUITY			1,347,415			1,535,765
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	3,208,452		$	3,237,095

Moog Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

					Twelve Months Ended
					September 27, 2014				September 28, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
	Net earnings				$	158,198			$	120,497
	Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
		Depreciation				78,078				75,000
		Amortization				31,181				33,073
		Deferred income taxes				5,021				(8,216	)
		Equity-based compensation expense				7,189				6,620
		Redemption of senior subordinated notes				8,002				--
		Goodwill impairment				--				38,200
		Other				7,260				7,620
	Changes in assets and liabilities providing (using) cash, excluding the effects of acquisitions:
		Receivables				23,707				(58,368	)
		Inventories				23,666				(6,871	)
		Accounts payable				(17,783	)			10,543
		Customer advances				(304	)			32,437
		Accrued expenses				7,685				(2,625	)
		Accrued income taxes				6,273				3,678
		Pension assets and liabilities				(43,612	)			8,174
		Other assets and liabilities				(7,459	)			(8,485	)
			NET CASH PROVIDED BY OPERATING ACTIVITIES			287,102				251,277
CASH FLOWS FROM INVESTING ACTIVITIES
		Acquisitions of businesses, net of acquired cash				--				(69,157	)
		Purchase of property, plant and equipment				(78,771	)			(93,174	)
		Other investing transactions				(8,124	)			(11,067	)
			NET CASH USED BY INVESTING ACTIVITIES			(86,895	)			(173,398	)
CASH FLOWS FROM FINANCING ACTIVITIES
		Net short term (repayments) borrowings				(977	)			16,124
		Net proceeds from revolving lines of credit				361,135				114,545
		Net repayments on long-term debt, other than senior subordinated notes				(3,256	)			(3,113	)
		Payments on senior subordinated notes				(191,575	)			(187,000	)
		Payment of premium on redemption of senior subordinated notes				(6,945	)			--
		Purchase of outstanding shares for treasury				(272,876	)			(11,614	)
		Excess tax benefits from equity-based payment arrangements				2,910				1,089
		Other financing transactions				(6,821	)			(2,119	)
			NET CASH USED BY FINANCING ACTIVITIES			(118,405	)			(72,088	)
Effect of exchange rate changes on cash						(7,600	)			2,458
INCREASE IN CASH AND CASH EQUIVALENTS						74,202				8,249
		Cash and cash equivalents at beginning of period				157,090				148,841
		CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	231,292			$	157,090