EX-99.1 2 ex991-020323.htm EX-99.1 Document
Exhibit 99.1
Moog Inc. ▪ East Aurora, New York ▪ 14052 ▪ 716-652-2000

Press Information
Release Date:IMMEDIATE
 February 3, 2023 
Reports an increase in adjusted diluted earnings per share
Reiterates full year adjusted 2023 earnings guidance

East Aurora, NY -- 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 2023Q1 2022Deltas
Net sales$760 $724 %
Operating margin11.4 %11.1 %30 bps
Adjusted operating margin10.4 %9.1 %130 bps
Diluted earning per share$1.44 $1.44 %
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
Net sales were $760 million in the first quarter of 2023, an increase of 5% compared to the first quarter of 2022, reflecting higher sales across all three segments. Net sales increased 9% excluding the impacts of weaker foreign currencies and the lost sales associated with divested operations.

Adjusted operating margin of 10.4% in the first quarter of 2023 increased compared to adjusted operating margin of 9.1% in the first quarter of 2022. The increase reflects higher sales volumes in Industrial Systems and improved sales mix in both Aircraft Controls and Industrial Systems.

Adjusted diluted earnings per share increased 14% in the first quarter of 2023 compared to the first quarter of 2022. Stronger operating margin drove the higher earnings, partially offset by higher interest expense.

Consolidated twelve-month backlog was $2.3 billion, an 8% increase from a year ago, and a 3% increase from the previous quarter.
“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.”

Exhibit 99.1

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 margin11.2 %11.0 %
Adjusted operating margin11.0 %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.

Exhibit 99.1
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
We operate in highly competitive markets with competitors who may have greater resources than we possess;
Our research and development and innovation efforts are substantial and may not be successful, which could reduce our sales and earnings;
If we are unable to adequately enforce and protect our intellectual property or defend against assertions of infringement, our business and our ability to compete could be harmed; 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 or Lockheed Martin as a customer or a significant reduction in sales to either 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
A reduced supply, as well as inflated prices, across various raw materials and third-party provided components and sub-assemblies within our supply chain could have a material impact on our ability to manufacture and ship our products, in addition to adversely impacting our operating profit and balance sheet;
We face various risks related to health pandemics, such as the COVID-19 pandemic, which have had material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers;
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 face, and may continue to face, risks related to information systems interruptions, intrusions or new software implementations, which may adversely affect our business operations;
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; 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.

Exhibit 99.1
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 and indenture governing our senior notes 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; 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 currency, political and trade risks and adverse changes in local legal and regulatory environments could impact our results of operations;
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;
Our operations are subject to environmental laws and complying with those laws may cause us to incur significant costs; and
We may face reputational, regulatory or financial risks from a perceived, or an actual, failure to achieve our sustainability goals.

General risks
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.

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.

Investor Relations - 716.687.4225

Exhibit 99.1
Moog Inc.
(dollars in thousands, except per share data)
 Three Months Ended
December 31,
January 1,
Net sales$760,103 $724,086 
Cost of sales556,417 529,706 
Inventory write-down 1,500 
Gross profit203,686 192,880 
Research and development23,862 27,708 
Selling, general and administrative113,165 111,797 
Interest13,132 7,982 
Restructuring1,078 — 
Gain on sale of businesses (16,146)
Gain on sale of buildings(9,503)— 
Other1,651 116 
Earnings before income taxes60,301 61,423 
Income taxes14,285 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 
Basic31,746,001 32,057,399 
Diluted31,874,718 32,188,158 

Exhibit 99.1
Moog Inc.
(dollars in thousands)

Three Months Ended
December 31,
January 1,
As Reported:
Earnings before income taxes$60,301 $61,423 
Income taxes14,285 15,158 
Effective income tax rate23.7 %24.7 %
Net earnings46,016 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 taxes274 354 
Net earnings1,259 1,146 
Diluted net earnings per share$0.04 $0.04 
As Adjusted:
Earnings before income taxes$52,331 $46,777 
Income taxes12,573 11,239 
Effective income tax rate24.0 %24.0 %
Net earnings39,758 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.

Exhibit 99.1
Moog Inc.
(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.

Exhibit 99.1
Moog Inc.
(dollars in thousands)
Three Months Ended
December 31,
January 1,
Net sales:
Aircraft Controls$310,259 $303,317 
Space and Defense Controls217,785 207,856 
Industrial Systems232,059 212,913 
Net sales$760,103 $724,086 
Operating profit:
Aircraft Controls$29,718 $41,915 
9.6 %13.8 %
Space and Defense Controls20,294 21,299 
9.3 %10.2 %
Industrial Systems36,751 17,191 
15.8 %8.1 %
Total operating profit86,763 80,405 
11.4 %11.1 %
Deductions from operating profit:
Interest expense13,132 7,982 
Equity-based compensation expense2,974 2,658 
Non-service pension expense3,099 1,485 
Corporate and other expenses, net7,257 6,857 
Earnings before income taxes$60,301 $61,423 

Exhibit 99.1
Moog Inc.
(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 
Restructuring176 — 
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 other1,357 — 
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 %

Exhibit 99.1
Moog Inc.
(dollars in thousands)
December 31,
October 1,
Current assets
Cash and cash equivalents$143,069 $103,895 
Restricted cash22,842 15,338 
Receivables, net1,066,340 990,262 
Inventories, net648,160 588,466 
Prepaid expenses and other current assets52,772 60,349 
Total current assets1,933,183 1,758,310 
Property, plant and equipment, net689,339 668,908 
Operating lease right-of-use assets68,653 69,072 
Goodwill822,901 805,320 
Intangible assets, net85,396 85,410 
Deferred income taxes9,300 8,630 
Other assets49,273 36,191 
Total assets$3,658,045 $3,431,841 
Current liabilities
Current installments of long-term debt$822 $916 
Accounts payable226,188 232,104 
Accrued compensation76,770 93,141 
Contract advances372,262 296,899 
Accrued liabilities and other209,624 215,376 
Total current liabilities885,666 838,436 
Long-term debt, excluding current installments916,058 836,872 
Long-term pension and retirement obligations146,919 140,602 
Deferred income taxes65,385 63,527 
Other long-term liabilities118,836 115,591 
Total liabilities2,132,864 1,995,028 
Shareholders’ equity
Common stock - Class A43,807 43,807 
Common stock - Class B7,473 7,473 
Additional paid-in capital550,511 516,123 
Retained earnings2,397,814 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’ equity1,525,181 1,436,813 
Total liabilities and shareholders’ equity$3,658,045 $3,431,841 

Exhibit 99.1
Moog Inc.
(dollars in thousands)

Three Months Ended
December 31,
January 1,
Net earnings$46,016 $46,265 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation18,392 19,290 
Amortization2,992 3,402 
Deferred income taxes(1,342)7,895 
Equity-based compensation expense2,974 2,658 
Gain on sale of businesses (16,146)
Gain on sale of buildings(9,503)— 
Inventory write-down 1,500 
Other1,145 699 
Changes in assets and liabilities providing (using) cash:
Accounts payable(9,679)(20,833)
Contract advances72,889 105,548 
Accrued expenses(35,186)(26,914)
Accrued income taxes12,632 5,173 
Net pension and post retirement liabilities 3,988 4,501 
Other assets and liabilities1,157 (21,973)
Net cash provided by operating activities8,083 157,185 
Purchase of property, plant and equipment(30,125)(37,059)
Net proceeds from businesses sold1,124 38,611 
Net proceeds from buildings sold7,432 — 
Other investing transactions(3,724)(1,275)
Net cash provided (used) by investing activities(25,293)277 
Proceeds from revolving lines of credit241,000 215,200 
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 stock1,869 2,144 
Purchase of outstanding shares for treasury(12,721)(16,657)
Proceeds from sale of stock held by SECT2,561 2,075 
Purchase of stock held by SECT(1,753)(2,275)
Other financing transactions(2,026)— 
Net cash provided (used) by financing activities59,396 (151,585)
Effect of exchange rate changes on cash4,492 (65)
Increase in cash, cash equivalents and restricted cash46,678 5,812 
Cash, cash equivalents and restricted cash at beginning of period119,233 100,914 
Cash, cash equivalents and restricted cash at end of period$165,911 $106,726