Slowing economy fails to stop Moog as third-quarter profits soar 22 percent
Moog Inc.’s third-quarter profits jumped by 22 percent, topping analyst expectations, as the Elma motion-control equipment maker’s industrial products and components businesses generated strong earnings despite a slowing economy.
The strong earnings, which beat analyst forecasts by 3 cents per share, prompted Moog executives to increase their profit forecast for the full year slightly to $119 million, or $2.75 per share, on sales of $1.9 billion.
The company also said it expects earnings to keep growing strongly next year, forecasting profits of $134 million to $140 million, or between $3.08 and $3.20 per share, on sales of around $2.1 billion.
Moog ”is experiencing remarkable sales growth in every segment,” said Robert T. Brady, the company’s chairman and chief executive officer.
Moog’s profits rose to $31.1 million, or 72 cents per share, from $25.6 million, or 59 cents per share, a year earlier. Sales rose 23 percent to $497 million during the quarter that ended in June from $404 million a year ago.
The strongest earnings growth came from Moog’s components business, where operating profits jumped by 39 percent to $15.2 million, as demand jumped for the company’s products that are used in the booming oil and natural gas drilling industry. Component sales also were strong for the Guardian missile defense system, which is designed to protect aircraft from shoulder-fired missiles. Component sales rose 20 percent to $87 million.
The company’s industrial business also was a beacon of strength in a slowing economy, with profits rising by a third to $21 million as sales of its motion simulators, used in amusement park rides and flight simulators, soared by 92 percent and revenues rose for almost every major product line, Brady said. Sales also were higher for the industrial products that Moog makes for the power generation, steel and plastics industries.
Earnings from Moog’s space and defense business increased by 21 percent to $7.5 million, as sales grew by 33 percent to $63 million. Much of the increase came from the Constellation program, which is developing a replacement for the space shuttle.
Moog’s medical device business rebounded, with operating profits more than tripling to $3 million, as sales grew by 27 percent. But Brady said profit margins in the medical device business, at just shy of 11 percent, remain weaker than company executives expected.
The weak spot in Moog’s quarter was its aircraft controls business, where weakness in the commercial aircraft market offset strength among its military customers. That contributed to a 23 percent drop in operating profits to $12 million, despite a 17 percent rise in overall sales to $175 million.
All of the increase in sales came from Moog’s military aircraft business, which grew by 32 percent, with more than half of the rise coming from the company’s work on the Joint Strike Fighter aircraft, while the V-22 tilt-rotor aircraft also were strong, Brady said.
But Moog’s commercial aircraft business cooled, with flat revenues, as sales to Boeing Co. dropped by $5 million because the company sold fewer products for use on Boeing’s big commercial jets, including the new 787.
Sales of replacement parts fell by 6 percent, and Brady said that business could remain soft as airlines ground more aircraft in an effort to reduce costs. But Brady also said the fleet reductions should have a limited effect on Moog because most of the planes being grounded are older models that have relatively few Moog components.
“If there is a little shrinkage, it’s not going to kill us,” he said.
