Moog: Moog Inc. Reports Second Quarter 2025 Results With Record Sales and Strong Operational Performance

In This Article: EAST AURORA, N.Y., April 25, 2025 --( BUSINESS WIRE )--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 fiscal second quarter 2025 diluted earnings per share of $1.75 and adjusted diluted earnings per share of $1.92, reflecting strong operational performance. (in millions, except per share results) Three Months Ended Q2 2025 Q2 2024 Deltas Net sales $ 935 $ 930 0 % Operating margin 11.7 % 12.0 % (30) bps Adjusted operating margin 12.5 % 13.6 % (110) bps Diluted net earnings per share $ 1.75 $ 1.86 (6 )% Adjusted diluted net earnings per share $ 1.92 $ 2.19 (12 )% Net cash provided (used) by operating activities $ 39 $ (44 ) $ 83 Free cash flow $ 2 $ (84 ) $ 86 See the reconciliations of adjusted financial results and free cash flow to reported results included in the financial statements herein for the periods ended March 29, 2025, and March 30, 2024. Quarter Highlights Net sales increased primarily in Military Aircraft and Commercial Aircraft, while sales in Industrial declined due to simplification actions. Operating margin declined modestly due to the absence of the prior year's one-time 150 basis point benefit from the Employee Retention Credit (ERC), masking stronger operational performance. Adjusted operating margin declined due to the absence of prior year benefit which offset stronger operational performance, primarily in Industrial and in Military Aircraft. Diluted net earnings per share declined due to last year's ERC, partially offset by lower adjustments and higher operating margin. Adjusted diluted net earnings per share declined due to last year's ERC, partially offset by higher adjusted operating margin. Free cash flow was driven by lower working capital requirements. Twelve-month backlog remained steady at $2.5 billion. Reiterated 2025 guidance, noting potential net tariff risk to operating profit of $10 million to $20 million. "We have delivered another quarter of strong financial results due to our unrelenting focus on operational performance," said Pat Roche, CEO. "We achieved record sales and drove improved operating margin and earnings per share, both net of the prior year's one-time Employee Retention Credit. In addition, we delivered free cash flow in line with our plan." Segment Results Sales in the second quarter of 2025 increased marginally to $935 million compared to the second quarter of 2024. Military Aircraft sales increased 6% to $214 million, driven by the continued ramp-up of the FLRAA program. Commercial Aircraft sales increased 4% to $216 million, reflecting strong aftermarket demand partially offset by production delays on certain business jet and narrow-body programs. Space and Defense sales increased 1% to $270 million, supported by broad-based defense demand. These gains were partially offset by a 7% decline in Industrial sales to $234 million, primarily due to divestitures and purposeful product exits. Operating margin was 11.7% in the second quarter, down 30 basis points compared to the second quarter of 2024, which included a one-time 150 basis point benefit from the ERC. Space and Defense operating margin declined 370 basis points to 12.1%, reflecting the absence of the prior year's ERC benefit. Commercial Aircraft operating margin declined 20 basis points to 11.8%, driven by pressures arising from OEM customers' production delays, partially offset by stronger aftermarket activity. Partially offsetting these margin declines was a Military Aircraft operating margin increase of 280 basis points to 11.1%. Lower amounts of restructuring and other charges, along with stronger operational performance in the current quarter, were partially offset by the prior year's benefits of the mature product line sale and the ERC. Additionally, Industrial operating margin increased 50 basis points to 11.6%, driven by simplification initiatives. Adjusted operating margin excludes $14 million and $7 million in restructuring and other charges in the second quarters of 2024 and 2025, respectively. Excluding these charges, total company adjusted operating margin decreased 110 basis points from 13.6% in 2024 to 12.5% in 2025. However, adjusted operating margin increased 40 basis points from a year ago, excluding the ERC benefit. Adjusted operating margin in Industrial increased 90 basis points to 13.4% driven by simplification initiatives. Commercial Aircraft adjusted operating margin declined 20 basis points to 11.8%, driven by pressures arising from OEM customers' production delays, partially offset by stronger aftermarket activity. Military Aircraft adjusted operating margin decreased 140 basis points as the prior year's benefits of the mature product line sale and the ERC were partially offset by stronger operational performance in the current quarter. Space and Defense adjusted operating margin decreased 330 basis points due to the absence of the prior year's ERC. Free Cash Flow Results Free cash flow in the second quarter was $2 million. This result reflects strong earnings, halted growth in physical inventories and secured customer advances, partially offset by the timing of collections. 2025 Financial Guidance "Our underlying business is strong, and we are reiterating our guidance on sales, adjusted operating margin and adjusted earnings per share," said Jennifer Walter, CFO. "We acknowledge the potential for pressure on our results from tariffs and we are taking appropriate steps to significantly mitigate the impact on our business." FY 2025 Guidance Current (1) Previous Net sales (in billions) $ 3.7 $ 3.7 Operating margin 12.7 % 12.9 % Adjusted operating margin 13.0 % 13.0 % Diluted net earnings per share (2) $ 7.89 $ 8.06 Adjusted diluted net earnings per share (2) $ 8.20 $ 8.20 Free cash flow conversion 50 % 50 - 75 % (1) Current guidance excludes potential net tariff risk. (2) Diluted net earnings per share and Adjusted diluted net earnings per share figures are forecasted to be within range of +/- $0.20. 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 This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which can be identified by words such as: "may," "will," "should," "believes," "expects," "expected," "intends," "plans," "projects," "approximate," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," "assume" and other words and terms of similar meaning (including their negative counterparts or other various or comparable terminology). These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995, are neither historical facts nor guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. Although it is not possible to create a comprehensive list of all factors that may cause our actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties are described in Item 1A "Risk Factors" of our Annual Report on Form 10-K and in our other periodic filings with the Securities and Exchange Commission ("SEC") and include, but are not limited to, risks relating to: (i) our operation in highly competitive markets with competitors who may have greater resources than we possess; (ii) our operation in cyclical markets that are sensitive to domestic and foreign economic conditions and events; (iii) our heavy dependence on government contracts that may not be fully funded or may be terminated; (iv) supply chain constraints and inflationary impacts on prices for raw materials and components used in our products; (v) failure of our subcontractors or suppliers to perform their contractual obligations; and (vi) our accounting estimations for over-time contracts and any changes we need to make thereto. You should evaluate all forward-looking statements made in this press release in the context of these risks and uncertainties. While we believe we have identified and discussed in our SEC filings the material risks affecting our business, there may be additional factors, risks and uncertainties not currently known to us or that we currently consider immaterial that may affect the forward-looking statements we make herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to update any forward-looking statement made in this press release, except as required by applicable law. Moog Inc. CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (dollars in thousands, except per share data) Three Months Ended Six Months Ended March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024 Net sales $ 934,840 $ 930,303 $ 1,845,155 $ 1,787,153 Cost of sales 676,648 663,350 1,344,688 1,287,001 Inventory write-down 2,149 175 2,149 175 Gross profit 256,043 266,778 498,318 499,977 Research and development 24,481 28,382 48,086 58,961 Selling, general and administrative 133,102 124,961 260,883 243,686 Interest 19,548 18,003 36,550 34,697 Asset impairment - 6,750 - 6,750 Restructuring 2,425 6,750 6,209 8,639 Other 2,908 3,183 4,432 5,884 Earn