Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Moog Inc (MOG.A, Financial) reported record sales of $3.6 billion for FY24, representing a 9% increase over the previous year.
- The company achieved a record 12-month backlog, indicating strong future demand.
- Adjusted operating margin expanded by 150 basis points to 12.4%, driven by pricing and simplification initiatives.
- Free cash flow improved compared to the prior year, with a significant generation of $109 million in the fourth quarter.
- Moog Inc (MOG.A) secured significant defense contracts, including a $100 million subcontract for a liquid chemical propulsion system, highlighting growth in the defense sector.
Negative Points
- Extreme weather events caused disruptions at multiple facilities, including severe damage at the Tewkesbury site, impacting production capacity.
- Industrial sales were down 5% in the fourth quarter, reflecting a slowdown in industrial automation orders.
- Commercial aircraft operating margin decreased by 90 basis points due to the absence of one-time benefits from the previous year.
- The company incurred $31 million in restructuring and related charges in the fourth quarter due to portfolio-shaping activities.
- Moog Inc (MOG.A) anticipates a decrease in industrial sales for FY25, partly due to divestitures and market conditions.
Q & A Highlights
Q: Can you provide more specifics on the generational defense wins, particularly in Europe?
A: We are involved in various capture and development activities across defense applications. In Europe, our focus is on armored vehicles, which has been a strength, leading to significant sales growth. We are also pursuing ground-based air defense opportunities. However, some details are classified, and we can't share specifics yet. The demand is strong, and we are well-positioned for future wins. - Patrick Roche, CEO
Q: What is the impact of the Boeing strike on your commercial aircraft business, and how do you view Airbus's delivery targets?
A: We don't expect a direct impact from the Boeing strike as our business is more weighted towards wide-body aircraft, minimizing the effect of the 737 MAX issues. Our projections for 2025 are aligned with Boeing's current plans. Regarding Airbus, we have factored in their targets, though there is industry uncertainty. - Patrick Roche, CEO
Q: Can you provide details on the growth expectations for commercial and military aftermarket sales?
A: In 2025, growth in original equipment (OE) production will outpace aftermarket growth in our commercial business, partly due to capacity constraints at our Tewkesbury site. On the military side, there is no significant change in the mix. - Patrick Roche, CEO
Q: What are your capital expenditure plans for the year, and how do they compare to previous expectations?
A: We plan to spend $180 million on capital expenditures, which is higher than previously anticipated. This increase supports growth opportunities, particularly in defense, and involves facility enhancements and equipment investments. These expenditures are aimed at preparing for future opportunities beyond our Investor Day period. - Jennifer Walter, CFO
Q: How is the recovery progressing at the Tewkesbury facility after the flood, and when do you expect it to return to full capacity?
A: We have resumed operations at over 50% capacity by utilizing development labs for production. The full capacity will be restored once we rebuild the clean room, which we expect to complete during the fiscal year. The business continuity plans have been effective in mitigating the impact. - Patrick Roche, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
