Moog Inc. Reports Strong Performance for Fourth Quarter 2024 and Issues Positive Guidance for Fiscal 2025

EAST AURORA, N.Y.--(BUSINESS WIRE)--November 01, 2024-- 

Moog Inc. (NYSE: MOG.A and MOG.B), a worldwide designer, manufacturer and systems integrator of high-performance precision motion and fluid controls and control systems, today reported strong fiscal fourth quarter 2024 results that marked another record year.

"Our fourth quarter was strong, bringing to a close an exceptional year with record sales and expanded margins," said Pat Roche, CEO. "Our performance reflects the success in pricing and simplification initiatives that continue to build momentum into 2025, with stronger sales, expanded margin and improved cash flow generation."

 
(in millions, 
except per 
share 
results)               Three Months Ended                    Twelve Months Ended 
                ---------------------------------      -------------------------------- 
                 Q4 2024    Q4 2023     Deltas          Q4 2024     Q4 2023     Deltas 
                ---------  ---------  -----------      ----------  ----------  -------- 
Net sales       $ 917      $ 872                5%     $3,609      $3,319             9% 
Operating 
 margin           9.1%      10.1%       (100 bps)        11.0%       10.3%       70 bps 
Adjusted 
 operating 
 margin          12.5%      12.5%           0 bps        12.4%       10.9%      150 bps 
Diluted net 
 earnings per 
 share          $1.33      $1.23                8%     $ 6.40      $ 5.34            20% 
Adjusted 
 diluted net 
 earnings per 
 share          $2.16      $2.10                3%     $ 7.80      $ 6.15            27% 
Net cash 
 provided by 
 operating 
 activities     $ 156      $ 153        $       3      $  202      $  136       $    66 
Free cash flow  $ 109      $ 105        $       5      $   21      $  (37)      $    59 
--------------   ----       ----      ---  ------       -----       -----          ---- 
See the reconciliations of adjusted financial results and free cash flow to reported 
results included in the financial statements herein for the periods ended September 28, 
2024 and September 30, 2023. 
 

Quarter Highlights

   -- Net sales increased driven by growth in defense businesses. 
 
   -- Operating margin declined due to higher levels of charges related to 
      simplification initiatives. 
 
   -- Adjusted operating margin improved within Military Aircraft, Industrial 
      and Space and Defense, while Commercial Aircraft declined from a strong 
      quarter a year ago. 
 
   -- Diluted net earnings per share increased due to improved operational 
      performance, partially offset by the net of prior and current year 
      one-time charges and benefits. 
 
   -- Adjusted diluted net earnings per share increased due to incremental 
      profit from higher sales and the benefit of capitalizing interest, 
      partially offset by the absence of last year's favorable litigation 
      settlement. 
 
   -- Twelve-month backlog increased 3%, reaching a record level of $2.5 
      billion. 

Year Highlights

   -- Net sales increased due to higher demand across our aerospace and defense 
      businesses. 
 
   -- Operating margin increased within Space and Defense and Military Aircraft, 
      while Industrial and Commercial Aircraft declined. 
 
   -- Adjusted operating margin expanded in Military Aircraft, Space and 
      Defense and Industrial reflecting the benefits of pricing and 
      simplification initiatives, while Commercial Aircraft declined from a 
      strong prior year. 
 
   -- Diluted net earnings per share increased due to largely the same factors 
      as the fourth quarter. 
 
   -- Adjusted diluted net earnings per share increased driven by operating 
      margin expansion and incremental profit from higher sales. 

Quarter Results

"We had a great quarter," said Jennifer Walter, CFO. "Sales were very strong, adjusted operating margin was robust and on plan, and adjusted earnings per share exceeded the high end of our guidance range. In addition, we generated a substantial amount of free cash flow."

Sales in the fourth quarter of 2024 increased compared to the fourth quarter of 2023, with notable growth in Military Aircraft and Space and Defense. Military Aircraft sales increased 17% to $216 million due to the ramp of the FLRAA and other production programs. Space and Defense sales increased 9% to $263 million driven by strong European defense demand and launch vehicle activity. Commercial Aircraft sales increased 2% to $197 million due to increased production volume, muted by the absence of last year's retroactive pricing benefit and inventory sale from exiting a mature product line. Industrial segment sales decreased 5% to $242 million due to a slowdown in orders for industrial automation applications, partially offset by higher medical product and automotive test business demand.

Operating margin decreased 100 basis points to 9.1% in the fourth quarter of 2024 compared to the fourth quarter of 2023. Commercial Aircraft operating margin declined 680 basis points to 11.0%, driven by the absence of last year's benefits. Operating margins in Space and Defense and in Industrial declined 200 basis points and 130 basis points, respectively, due to incremental charges related to simplification initiatives. Military Aircraft operating margin improved 590 basis points to 11.8%, driven by reduced research and development expense, improved sales mix and cost absorption on the FLRAA program.

Adjusted operating margin in the fourth quarter of 2024 was unchanged at 12.5% compared to the fourth quarter of 2023. We incurred charges primarily in Industrial and in Space and Defense. Adjusted operating margin in Industrial increased 90 basis points to 12.8% as the benefits of pricing more than offset an unfavorable sales mix and planned product transfers. Adjusted operating margin in Space and Defense increased 70 basis points to 13.5% associated with improved performance across the business.

Non-operating expenses in the fourth quarter of 2024 declined compared to the fourth quarter of 2023. The fourth quarter of 2024 included a $10 million adjustment to capitalize interest for 2023 and 2024. Non-operating expenses in the fourth quarter of 2023 included a pension settlement charge and a favorable litigation settlement.

Free cash flow in the fourth quarter was driven by strong customer collections and by timing of vendor payments.

Year Results

Sales in 2024 increased compared to 2023 with notable growth in Commercial Aircraft, Military Aircraft and Space and Defense. Commercial Aircraft sales increased 18% to $788 million due to increased production ramps on widebody, narrowbody and business jet programs. Military Aircraft sales increased 13% to $812 million due largely to having a full year's worth FLRAA sales. Space and Defense sales increased 7% to $1 billion due to strong, broad-based, defense demand. Industrial sales increased slightly at 1% to $991 million, as softening industrial automation sales were compensated by growth in other sub-markets.

Operating margin in 2024 increased compared to 2023, reflecting the benefits of pricing and simplification efforts, partially offset by higher amounts of charges related to simplifying our operations. Operating margin increased in Space and Defense and Military Aircraft, while Commercial Aircraft operating margin decreased, all due to the same factors as the fourth quarter. Also, Industrial operating margin decreased due to higher amounts of simplification charges.

Adjusted operating margin increased in 2024 compared to 2023, inclusive of a 40 basis-point contribution from the Employee Retention Credit, and increased in all of our segments except for Commercial Aircraft. Adjusted operating margin in Military Aircraft increased 300 basis points to 12.0% due to cost absorption on the FLRAA program and due to lower research and development expense. Adjusted operating margin in Space and Defense increased 290 basis points to 13.4% due to strong operational performance, including improved performance on space vehicle programs. Adjusted operating margin in Industrial increased 90 basis points to 12.4% due largely to pricing initiatives. Adjusted operating margin in Commercial Aircraft decreased 90 basis points to 11.8% due to the absence of the prior year's one-time benefits, partially offset by efficiencies from the current year's higher production sales volume.

2025 Financial Guidance

 
(in millions, except per share results)           FY 2025          FY 2024 
                                            -------------------  ----------- 
Net sales                                    $       3,700       $ 3,609 
Operating margin                                      13.0%         11.0% 
Adjusted operating margin                             13.0%         12.4% 
Diluted net earnings per share*              $        8.20       $  6.40 
Adjusted diluted net earnings per share*     $        8.20       $  7.80 
Free cash flow conversion                          50 - 75%            8% 
------------------------------------------      ----------        ------ 
*Diluted net earnings per share figures for 2025 are forecasted to be within 
range of +/- $0.20. 
 

When the company provides adjusted, non-GAAP figures on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort.

Conference call information

In conjunction with today's release, Pat Roche, CEO, and Jennifer Walter, CFO, will host a conference call today beginning at 10:00 a.m. ET, which will be simultaneously broadcast live online. Listeners can access the call and supplemental financial materials at www.moog.com/investors/communications.

Cautionary Statement

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November 01, 2024 07:55 ET (11:55 GMT)