Moog Results Reflect Impact

Impacted by the effects of the global economic recession, particularly on its Industrial Systems business, Moog Inc. (MOG.A - Snapshot Report) reported a down -- albeit still nicely profitable -- fiscal 2009 second quarter with EPS of 55¢ versus 66¢, on sales of $453.3 million as compared to $466.8 million.

Overall Net Sales were down by 3.3%. By segment: Aircraft Controls Sales of $162.0 million and Components Sales of $84.5 million were both up marginally by 0.3%; Space & Defense Controls Sales of $68.3 million were off by 2.5%; Industrial Controls Sales were down significantly by 19.7% to $104.5 million; and Medical Devices Sales of $34.0 million were up a whopping 49.5%, primarily because the recent AITECS and Ethox acquisitions contributed $6.7 million to Sales this year and nothing last year.

Within Aircraft Controls, Military Aircraft Sales of $106.8 million were up by 9.2%, while Commercial Aircraft Sales declined by 16.5% to 53.3 million. Looking at Military Aircraft, Sales of $18.3 million for the combination of the F-18 and V-22 programs increased by 18.1%, while F-35 Sales were down by 8.3% to $24.4 million; Aftermarket Sales of $40.4 million rose by 33.8% (excluding Navigation Aids, they were up 25.6% to $35.8 million) and Other Sales of $23.7 million were off by 7.6%.

Switching to Commercial Aircraft, Boeing (BA - Analyst Report) OEM sales of $8.1 million were off by 39.1%, while 787 Revenues of $2.3 million declined by 54.9% as that aircraft nears first flight in June. Business Jet Sales of $13.1 million were up marginally by 2.3%, while Aftermarket Sales of $18.8 million were off by 16.1% and Other Sales of $11.0 million (which includes Sales to Airbus) rose by 7.8%.

Pushing further into Space & Defense Sales -- Satellites, Launchers & Missiles Sales of $30.8 million were up by 18.0%, Defense Controls (including DVE) of $18.4 million was off by 33.3%, Homeland Security & Naval Systems Sales of $7.2 million was down a smidgeon by 4.0% Constellation-Ares 1 & Orion sales crashed by 49.3% to 3.4 million and Other (including CSA) soared by 286.4% to $8.5 million.

Drilling down into Industrial Controls Sales, Plastics Sales declined by 59.0% to $8.2 million, Metal Forming Sales were down by 44.5% to $7.6 million, Steel Mills Sales were almost flat at $9.3 million and Simulators Sales decreased 16.9% to $14.3 million; however, Power Generation Sales rose 31.1% to $15.6 million and Test Equipment Sales increased 15.6% to $8.9 million, while Aftermarket Sales dropped by 15.5% to $10.6 million and the broad category of Other Sales was off by 20.8% to $30.0 million.

Separating Components Sales into its components, Aircraft soared by 20.3% to $32.0 million, Space & Defense advanced by 9.5% to $18.4 million, Marine sank by 3.6% to $11.1 million, Medical drained down 14.1% to $12.8 million and Industrial sagged by 29.7% to $10.2 million.

Finally, examining Medical Devices Sales, Pumps were up by 30.5% to $10.7 million, Sets improved by 24.4% to $9.7 million, Sensors/Handpieces dropped by 31.3% to $3.3 million and Other was up by 89.5% to $3.6 million. As indicated above, the Ethox and AITECS acquisitions added $6.7 million to Q2-09 Sales; if these acquisitions are excluded, Medical Devices Sales were up 20.3% to $27.3 million.

Looking beyond the Sales details, the Gross Margin declined from 31.9% to 29.9%, R,D,T&E Expense dropped on both an absolute and relative basis by 5.7% to 5.3% of Sales from 5.6%, S,G&A Expense was down 5.7% from 15.6% to 15.2% of sales, Interest rose by 2.2%  and Other (Income) was up by 178.5%. The Tax Rate went from 32.7% to 35.1%. The number of fully-diluted shares dropped by 1.0%.

Backlog of ~ $913 million was up about 4% from Q1-09 and 6% from Q2-08.

The number of days in Accounts receivable stood at 105 versus 99 in Q1-09 and the number of days in Inventory was 125 as compared to 126 in Q1-09. Goodwill and Intangibles rose to 74.9% of Equity from 63.2% in Q1-09, while Net Long-Term Debt in relation to Equity stood at 71.1% versus 58.0% in Q1-09. The Current Ratio was a constant 2.9:1.

For Fiscal Year 2009, the Company’s guidance is Sales of $1.8405 billion and Net earnings of $83.5 million, which would translate into EPS of $1.95 ± 20¢, if you please. The Sales number is composed of Aircraft = $646.0 million, Space & defense = $270.5 million, Industrial Systems = $469.5 million, Components = $330.0 million and Medical Devices = $124.5 million. Operating Margins are projected at Aircraft = 8.8%, Space & Defense = 13.3%, Industrial Systems = 7.1%, Components = 17.5% and Medical Devices = 2.7%, with the Overall Operating Margin at 10.2%.

Additional ’09 guidance consists of Free Cash Flow of $8 million, D&A of $77 million Cap Ex of $95 million and Interest Expense of $38 million, with a Tax rate of 27.2%.

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