MOG-A 10-Q

Moog Inc. (MOG-A)

10-Q 2023-07-28 For: 2023-07-01

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Added on April 04, 2026

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	MOG.A	New York Stock Exchange
Class B common stock	MOG.B	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	Three Months Ended				Nine Months Ended
(dollars in thousands, except share and per share data)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	850,176	$	772,911	$	2,447,071	$	2,267,784
Cost of sales	627,543		560,966		1,799,437		1,646,742
Inventory write-down	—		202		—		3,407
Gross profit	222,633		211,743		647,634		617,635
Research and development	26,502		25,890		77,107		84,318
Selling, general and administrative	121,935		113,886		351,795		336,702
Interest	17,256		9,131		45,351		25,376
Asset impairment	435		692		1,654		15,928
Restructuring	1,642		576		4,737		8,369
Gain on sale of business	—		—		—		(16,146)
Gain on sale of buildings	—		—		(10,030)		—
Other	4,525		1,759		10,077		3,143
Earnings before income taxes	50,338		59,809		166,943		159,945
Income taxes	7,951		9,400		35,527		34,184




Net earnings	$	42,387	$	50,409	$	131,416	$	125,761

Net earnings per share
Basic	$	1.33	$	1.58	$	4.13	$	3.93
Diluted	$	1.32	$	1.57	$	4.11	$	3.91

Average common shares outstanding
Basic	31,838,961		31,922,377		31,811,034		31,988,150
Diluted	32,067,391		32,067,431		31,995,340		32,125,438
See accompanying Notes to Consolidated Condensed Financial Statements.


	Three Months Ended				Nine Months Ended
(dollars in thousands)	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net earnings	$	42,387	$	50,409	$	131,416	$	125,761
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	5,470		(43,954)		67,749		(68,797)
Retirement liability adjustment	2,028		5,438		5,259		14,066
Change in accumulated income on derivatives	201		(1,533)		3,200		(1,693)
Other comprehensive income (loss), net of tax	7,699		(40,049)		76,208		(56,424)



Comprehensive income	$	50,086	$	10,360	$	207,624	$	69,337
See accompanying Notes to Consolidated Condensed Financial Statements.


(dollars in thousands)	July 1, 2023		October 1, 2022
ASSETS
Current assets
Cash and cash equivalents	$	122,512	$	103,895
Restricted cash	2,892		15,338
Receivables, net	1,168,186		990,262
Inventories, net	710,252		588,466
Prepaid expenses and other current assets	52,833		60,349
Total current assets	2,056,675		1,758,310
Property, plant and equipment, net	795,994		668,908
Operating lease right-of-use assets	63,259		69,072
Goodwill	829,220		805,320
Intangible assets, net	79,680		85,410
Deferred income taxes	9,549		8,630
Other assets	47,866		36,191
Total assets	$	3,882,243	$	3,431,841
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities

Current installments of long-term debt	$	696	$	916
Accounts payable	245,458		232,104
Accrued compensation	83,628		93,141
Contract advances and progress billings	366,766		296,899

Accrued liabilities and other	206,903		215,376
Total current liabilities	903,451		838,436
Long-term debt, excluding current installments	1,012,080		836,872
Long-term pension and retirement obligations	150,953		140,602
Deferred income taxes	42,239		63,527
Other long-term liabilities	152,336		115,591
Total liabilities	2,261,059		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	594,022		516,123
Retained earnings	2,466,012		2,360,055
Treasury shares	(1,058,558)		(1,047,012)
Stock Employee Compensation Trust	(109,759)		(73,602)
Supplemental Retirement Plan Trust	(86,979)		(58,989)
Accumulated other comprehensive loss	(234,834)		(311,042)
Total shareholders’ equity	1,621,184		1,436,813


Total liabilities and shareholders’ equity	$	3,882,243	$	3,431,841
See accompanying Notes to Consolidated Condensed Financial Statements.


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended		Nine Months Ended
(share data)	July 1, 2023	July 2, 2022	July 1, 2023	July 2, 2022
COMMON STOCK - CLASS A
Beginning of period	43,806,835	43,803,861	43,806,835	43,803,236
Conversion of Class B to Class A	604	2,004	604	2,629
End of period	43,807,439	43,805,865	43,807,439	43,805,865
COMMON STOCK - CLASS B
Beginning of period	7,472,878	7,475,852	7,472,878	7,476,477
Conversion of Class B to Class A	(604)	(2,004)	(604)	(2,629)
End of period	7,472,274	7,473,848	7,472,274	7,473,848
TREASURY SHARES - CLASS A COMMON STOCK
Beginning of period	(14,663,116)	(14,377,074)	(14,614,444)	(14,157,721)

Class A shares issued related to compensation	3,130	8,678	44,749	37,707
Class A shares purchased	(1,130)	(53,291)	(91,421)	(301,673)
End of period	(14,661,116)	(14,421,687)	(14,661,116)	(14,421,687)
TREASURY SHARES - CLASS B COMMON STOCK
Beginning of period	(2,946,838)	(3,082,267)	(3,020,291)	(3,179,055)
Class B shares issued related to compensation	41,192	26,530	243,723	225,702
Class B shares purchased	(27,787)	(160)	(156,865)	(102,544)
End of period	(2,933,433)	(3,055,897)	(2,933,433)	(3,055,897)
SECT - CLASS A COMMON STOCK



Beginning and end of period	(425,148)	(425,148)	(425,148)	(425,148)
SECT - CLASS B COMMON STOCK
Beginning of period	(577,327)	(632,060)	(611,942)	(600,880)
Issuance of shares	680	136	113,105	93,899
Purchase of shares	(28,023)	(12,827)	(105,833)	(137,770)
End of period	(604,670)	(644,751)	(604,670)	(644,751)
SERP - CLASS B COMMON STOCK



Beginning and end of period	(826,170)	(826,170)	(826,170)	(826,170)
See accompanying Notes to Consolidated Condensed Financial Statements.


	July 1, 2023		October 1, 2022
Unbilled receivables	$	721,860	$	614,760
Contract advances and progress billings	366,766		296,899
Net contract assets	$	355,094	$	317,861


	July 1, 2023		October 1, 2022
Accounts receivable	$	433,525	$	363,137


Unbilled receivables	721,860		614,760

Other	16,361		16,973
Less allowance for credit losses	(3,560)		(4,608)
Receivables, net	$	1,168,186	$	990,262


	July 1, 2023		October 1, 2022
Raw materials and purchased parts	$	272,813	$	219,893
Work in progress	351,804		305,328
Finished goods	85,635		63,245
Inventories, net	$	710,252	$	588,466


	July 1, 2023		October 1, 2022
Land	$	31,799	$	32,164
Buildings and improvements	606,175		502,050
Machinery and equipment	847,545		786,562
Computer equipment and software	221,509		201,960
Property, plant and equipment, at cost	1,707,028		1,522,736
Less accumulated depreciation and amortization	(911,034)		(853,828)
Property, plant and equipment, net	$	795,994	$	668,908


	July 1, 2023			October 1, 2022
Operating Leases:
Operating lease right-of-use assets	$	63,259		$	69,072

Accrued liabilities and other	$	11,157		$	13,002
Other long-term liabilities	61,862			66,167
Total operating lease liabilities	$	73,019		$	79,169

Finance Leases:
Property, plant, and equipment, at cost	$	83,204		$	30,614
Accumulated depreciation	(9,379)			(5,606)
Property, plant, and equipment, net	$	73,825		$	25,008

Accrued liabilities and other	$	5,066		$	3,244
Other long-term liabilities	70,670			23,529
Total finance lease liabilities	$	75,736		$	26,773

Weighted average remaining lease term in years:
Operating leases	7.7			7.7
Finance leases	24.4			16.7

Weighted average discount rates:
Operating leases	5.2		%	5.0		%
Finance leases	6.4		%	4.8		%


	July 1, 2023
	Operating Leases		Finance Leases
2023	$	3,887	$	2,316
2024	14,145		9,255
2025	12,171		9,070
2026	11,501		8,777
2027	10,420		8,018
Thereafter	39,061		149,452
Total lease payments	91,185		186,888
Less: imputed interest	(18,166)		(111,152)
Total	$	73,019	$	75,736


	Aircraft Controls		Space and Defense Controls		Industrial Systems		Total
Balance at October 1, 2022	$	199,519	$	259,407	$	346,394	$	805,320

Adjustments to prior year acquisitions	122		—		—		122

Foreign currency translation	6,233		100		17,445		23,778
Balance at July 1, 2023	$	205,874	$	259,507	$	363,839	$	829,220


	Nine Months Ended
(dollars in thousands)	July 1, 2023		July 2, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	131,416	$	125,761
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Depreciation	56,780		56,169
Amortization	8,725		9,998
Deferred income taxes	(26,680)		7,644
Equity-based compensation expense	8,121		6,747

Gain on sale of business	—		(16,146)
Gain on sale of buildings	(10,030)		—
Asset impairment and inventory write-down	1,654		19,335
Other	5,083		4,960
Changes in assets and liabilities providing (using) cash:
Receivables	(163,259)		(58,668)
Inventories	(102,782)		(6,778)
Accounts payable	8,514		27,184
Contract advances and progress billings	65,746		35,867
Accrued expenses	(30,697)		(24,066)
Accrued income taxes	21,568		7,692
Net pension and post retirement liabilities	11,199		13,490
Other assets and liabilities	(2,455)		(24,925)
Net cash provided (used) by operating activities	(17,097)		184,264
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired	—		(11,837)
Purchase of property, plant and equipment	(125,074)		(106,713)
Net proceeds from businesses sold	959		35,550
Net proceeds from buildings sold	19,702		—
Other investing transactions	(9,482)		(2,267)
Net cash used by investing activities	(113,895)		(85,267)
CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from revolving lines of credit	711,732		661,675
Payments on revolving lines of credit	(536,826)		(629,251)

Payments on long-term debt	(219)		(80,273)


		July 1, 2023				October 1, 2022
	Weighted- Average Life (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer-related	11	$	139,167	$	(94,454)	$	135,899	$	(88,179)
Technology-related	9	71,541		(56,556)		69,856		(52,951)
Program-related	23	38,476		(21,838)		35,305		(18,817)
Marketing-related	8	22,051		(18,909)		21,925		(17,833)
Other	10	1,848		(1,646)		1,693		(1,488)
Intangible assets	12	$	273,083	$	(193,403)	$	264,678	$	(179,268)


	2023		2024		2025		2026		2027
Estimated future amortization of acquired intangible assets	$	11,800	$	10,900	$	9,800	$	9,600	$	8,300


	July 1, 2023
			Income (Loss)
	Net investment balance		Three Months Ended		Nine Months Ended
Moog Aircraft Service Asia	$	1,202	$	10	$	(67)

NOVI LLC	325		34		34

Suffolk Technologies Fund 1, L.P.	1,247		—		105


Total	$	2,774	$	44	$	72


	July 1, 2023		October 1, 2022
U.S. revolving credit facility	$	487,000	$	321,300
SECT revolving credit facility	30,000		20,000
Senior notes 4.25%	500,000		500,000

Other long-term debt	696		916
Senior debt	1,017,696		842,216
Less deferred debt issuance cost	(4,920)		(4,428)
Less current installments	(696)		(916)
Long-term debt	$	1,012,080	$	836,872


	July 1, 2023		October 1, 2022
Employee benefits	$	49,385	$	56,136
Contract reserves	45,771		46,547
Warranty accrual	22,348		23,072
Accrued income taxes	30,546		17,776
Other	58,853		71,845
Other accrued liabilities	$	206,903	$	215,376


		Three Months Ended				Nine Months Ended
	Statements of Earnings location	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net gain (loss)
Foreign currency contracts	Other	$	1,151	$	(2,861)	$	4,256	$	(6,899)


	Balance Sheets location	July 1, 2023		October 1, 2022
Derivatives designated as hedging instruments:
Foreign currency contracts	Other current assets	$	381	$	562
Foreign currency contracts	Other assets	—		165



	Total asset derivatives	$	381	$	727
Foreign currency contracts	Accrued liabilities and other	$	668	$	3,877
Foreign currency contracts	Other long-term liabilities	—		751



	Total liability derivatives	$	668	$	4,628
Derivatives not designated as hedging instruments:
Foreign currency contracts	Other current assets	$	372	$	679
Foreign currency contracts	Accrued liabilities and other	$	191	$	738


	Aircraft Controls		Space and Defense Controls		Industrial Systems		Total
Balance at October 1, 2022	$	229	$	228	$	6,678	$	7,135

Charged to expense - 2023 plan	275		734		687		1,696
Charged to expense - 2022 plan	—		226		2,815		3,041
Adjustments to provision	(16)		—		36		20
Cash payments - 2023 plan	—		(267)		(166)		(433)
Cash payments - 2022 plan	(213)		(454)		(968)		(1,635)
Cash payments - 2020 plan	—		—		(244)		(244)
Cash payments - 2018 plan	—		—		(717)		(717)
Foreign currency translation	—		—		365		365
Balance at July 1, 2023	$	275	$	467	$	8,486	$	9,228


	Accumulated foreign currency translation		Accumulated retirement liability		Accumulated gain (loss) on derivatives		Total
AOCIL at October 1, 2022	$	(182,024)	$	(125,231)	$	(3,787)	$	(311,042)
OCI before reclassifications	67,190		(1,388)		1,198		67,000
Amounts reclassified from AOCIL	559		6,647		2,002		9,208
OCI, net of tax	67,749		5,259		3,200		76,208
AOCIL at July 1, 2023	$	(114,275)	$	(119,972)	$	(587)	$	(234,834)



Anti-dilutive shares from equity-based awards	4,540	40,679	9,897	52,362


	Three Months Ended				Nine Months Ended
Market Type	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales:
Military	$	170,647	$	180,891	$	518,066	$	558,929
Commercial	184,378		137,126		494,222		373,673
Aircraft Controls	355,025		318,017		1,012,288		932,602
Space	102,520		94,903		310,278		284,642
Defense	139,882		128,741		395,762		370,207
Space and Defense Controls	242,402		223,644		706,040		654,849
Energy	30,667		31,178		91,217		94,960
Industrial Automation	124,400		111,316		361,056		323,870
Simulation and Test	36,668		25,458		89,758		77,258
Medical	61,014		63,298		186,712		184,245
Industrial Systems	252,749		231,250		728,743		680,333
Net sales	$	850,176	$	772,911	$	2,447,071	$	2,267,784


	Three Months Ended				Nine Months Ended
Customer Type	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales:
Commercial	$	184,378	$	137,126	$	494,222	$	373,673
U.S. Government (including OEM)	109,725		141,793		373,570		423,698
Other	60,922		39,098		144,496		135,231
Aircraft Controls	355,025		318,017		1,012,288		932,602
Commercial	28,334		32,001		82,123		84,878
U.S. Government (including OEM)	192,897		177,643		574,914		527,767
Other	21,171		14,000		49,003		42,204
Space and Defense Controls	242,402		223,644		706,040		654,849
Commercial	249,849		227,445		715,878		669,845
U.S. Government (including OEM)	1,301		1,596		3,419		5,535
Other	1,599		2,209		9,446		4,953
Industrial Systems	252,749		231,250		728,743		680,333
Commercial	462,561		396,572		1,292,223		1,128,396
U.S. Government (including OEM)	303,923		321,032		951,903		957,000
Other	83,692		55,307		202,945		182,388
Net sales	$	850,176	$	772,911	$	2,447,071	$	2,267,784


	Three Months Ended				Nine Months Ended
Revenue Recognition Method	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales:
Over-time	$	276,113	$	243,428	$	799,646	$	729,797
Point in time	78,912		74,589		212,642		202,805
Aircraft Controls	355,025		318,017		1,012,288		932,602
Over-time	228,164		204,196		659,327		603,951
Point in time	14,238		19,448		46,713		50,898
Space and Defense Controls	242,402		223,644		706,040		654,849
Over-time	38,814		36,536		99,732		105,848
Point in time	213,935		194,714		629,011		574,485
Industrial Systems	252,749		231,250		728,743		680,333
Over-time	543,091		484,160		1,558,705		1,439,596
Point in time	307,085		288,751		888,366		828,188
Net sales	$	850,176	$	772,911	$	2,447,071	$	2,267,784


CONSOLIDATED RESULTS OF OPERATIONS

	Three Months Ended										Nine Months Ended
(dollars and shares in millions, except per share data)	July 1, 2023			July 2, 2022			$ Variance		% Variance		July 1, 2023			July 2, 2022			$ Variance		% Variance
Net sales	$	850		$	773		$	77	10	%	$	2,447		$	2,268		$	179	8	%
Gross margin	26.2		%	27.4		%					26.5		%	27.2		%
Research and development expenses	$	27		$	26		$	1	2	%	$	77		$	84		$	(7)	(9	%)
Selling, general and administrative expenses as a percentage of sales	14.3		%	14.7		%					14.4		%	14.8		%
Interest expense	$	17		$	9		$	8	89	%	$	45		$	25		$	20	79	%
Asset impairment	$	—		$	1		$	—	(37	%)	$	2		$	16		$	(14)	(90	%)
Restructuring expense	$	2		$	1		$	1	185	%	$	5		$	8		$	(4)	(43	%)
Gain on sale of business	$	—		$	—		$	—	—	%	$	—		$	(16)		$	16	(100	%)
Gain on sale of buildings	$	—		$	—		$	—	n/a		$	(10)		—			$	(10)	n/a
Other	$	5		$	2		$	3	n/a		$	10		$	3		$	7	n/a
Effective tax rate	15.8		%	15.7		%					21.3		%	21.4		%


Net earnings	$	42		$	50		$	(8)	(16	%)	$	131		$	126		$	6	4	%

Diluted earnings per share	$	1.32		$	1.57		$	(0.25)	(16	%)	$	4.11		$	3.91		$	0.20	5	%

Twelve-month backlog											$	2,300		$	2,200		$	100	5	%


	Three Months Ended										Nine Months Ended
(dollars in millions)	July 1, 2023			July 2, 2022			$ Variance		% Variance		July 1, 2023			July 2, 2022			$ Variance		% Variance
Net sales - military aircraft	$	171		$	181		$	(10)	(6	%)	$	518		$	559		$	(41)	(7	%)
Net sales - commercial aircraft	184			137			47		34	%	494			374			121		32	%
	$	355		$	318		$	37	12	%	$	1,012		$	933		$	80	9	%
Operating profit	$	38		$	34		$	3	10	%	$	99		$	89		$	11	12	%
Operating margin	10.7		%	10.8		%					9.8		%	9.5		%


							2023 vs. 2022
(dollars in millions, except per share data)	2023 Outlook			2022			$ Variance		% Variance
Net sales:
Aircraft Controls	$	1,355		$	1,256		$	99	8	%
Space and Defense Controls	930			872			58		7	%
Industrial Systems	965			907			58		6	%
	$	3,250		$	3,036		$	214	7	%
Operating profit:
Aircraft Controls	$	145		$	124		$	22	17	%
Space and Defense Controls	96			87			9		11	%
Industrial Systems	116			72			44		60	%
	$	358		$	283		$	75	26	%
Operating margin:
Aircraft Controls	10.7		%	9.8		%
Space and Defense Controls	10.3		%	10.0		%
Industrial Systems	12.0		%	8.0		%
	11.0		%	9.3		%

Net earnings	$	186		$	155
Diluted earnings per share	$	5.82		$	4.83


Period	(a) Total Number of Shares Purchased (1) (2)(3)	(b) Average Price Paid Per Share		(c) Total number of Shares Purchased as Part of Publicly Announced Plans or Programs (3)	(d) Maximum Number (or Approx. Dollar Value) of Shares that May Yet Be Purchased Under Plans or Programs (3)
April 2, 2023 - April 29, 2023	10,798	$	97.39	—	2,198,081
April 30, 2023 - June 3, 2023	33,640	92.66		26,000	2,172,081
June 4, 2023 - July 1, 2023	12,502	105.64		—	2,172,081
Total	56,940	$	96.41	26,000	2,172,081