PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Moog Inc.'s unaudited Q1 FY2024 consolidated financial statements, including earnings, balance sheets, cash flows, and notes [Consolidated Condensed Statements of Earnings](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Earnings) For the three months ended December 30, 2023, Moog Inc. reported an increase in net sales and net earnings compared to the prior year period, with gross profit also showing improvement | Metric (in thousands) | Dec 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Net sales | $856,850 | $760,103 | | Cost of sales | $623,651 | $556,417 | | Gross profit | $233,199 | $203,686 | | Net earnings | $47,812 | $46,016 | | Basic EPS | $1.50 | $1.45 | | Diluted EPS | $1.48 | $1.44 | [Consolidated Condensed Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended December 30, 2023, decreased compared to the prior year, primarily due to a lower foreign currency translation adjustment, despite an increase in net earnings | Metric (in thousands) | Dec 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Net earnings | $47,812 | $46,016 | | Foreign currency translation adjustment | $31,013 | $50,735 | | Other comprehensive income, net of tax | $33,009 | $53,853 | | Comprehensive income | $80,821 | $99,869 | [Consolidated Condensed Balance Sheets](index=6&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of December 30, 2023, total assets and total liabilities increased compared to September 30, 2023, with significant increases in cash and cash equivalents, unbilled receivables, and inventories. Shareholders' equity also saw an increase | Metric (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Total current assets | $2,116,615 | $1,985,332 | | Total assets | $3,987,955 | $3,808,036 | | Total current liabilities | $1,009,831 | $965,473 | | Total liabilities | $2,280,738 | $2,171,949 | | Total shareholders' equity | $1,707,217 | $1,636,087 | - Cash and cash equivalents increased from **$68,959 thousand** to **$126,398 thousand**[18](index=18&type=chunk) - Unbilled receivables increased from **$706,601 thousand** to **$760,561 thousand**[18](index=18&type=chunk) [Consolidated Condensed Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased to $1,707,217 thousand as of December 30, 2023, driven by net earnings and increases in additional paid-in capital and retained earnings, partially offset by adjustments to treasury shares and trusts | Metric (in thousands) | Dec 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Total Shareholders' Equity | $1,707,217 | $1,525,181 | | Retained Earnings (End of period) | $2,536,172 | $2,397,814 | | Net earnings | $47,812 | $46,016 | | Dividends | $(8,619) | $(8,257) | - Cash dividends were **$0.27 per share** for the three months ended **December 30, 2023**, up from **$0.26 per share** in the prior year[21](index=21&type=chunk) [Consolidated Condensed Statements of Shareholders' Equity, Shares](index=8&type=section&id=Consolidated%20Condensed%20Statements%20of%20Shareholders'%20Equity,%20Shares) The number of Class A common shares outstanding increased, while Class B common shares decreased due to conversions. Treasury shares for both classes saw minor changes, reflecting compensation-related issuances and purchases | Share Class | Dec 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Common Stock - Class A (End of period) | 43,825,917 | 43,806,835 | | Common Stock - Class B (End of period) | 7,453,796 | 7,472,878 | | Treasury Shares - Class A (End of period) | (14,647,019) | (14,666,508) | | Treasury Shares - Class B (End of period) | (2,891,694) | (2,991,901) | [Consolidated Condensed Statements of Cash Flows](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to $60,391 thousand for the three months ended December 30, 2023, compared to $8,083 thousand in the prior year, primarily driven by changes in receivables. Investing activities used more cash due to acquisitions and increased capital expenditures, while financing activities provided less cash due to lower net borrowings | Cash Flow Activity (in thousands) | Dec 30, 2023 | Dec 31, 2022 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by operating activities | $60,391 | $8,083 | | Net cash used by investing activities | $(43,107) | $(25,293) | | Net cash provided by financing activities | $38,905 | $59,396 | | Increase in cash, cash equivalents and restricted cash | $57,684 | $46,678 | | Cash, cash equivalents and restricted cash at end of period | $126,828 | $164,006 | - Receivables provided **$58,887 thousand** in cash in Q1 **2024**, a significant improvement from using **$(27,387) thousand** in Q1 **2023**[26](index=26&type=chunk) - Acquisitions of businesses, net of cash acquired, used **$5,212 thousand** in Q1 **2024**, compared to none in Q1 **2023**[26](index=26&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies, significant transactions, and financial statement line items, including changes in segment reporting, revenue recognition methods, acquisitions, debt, and employee benefit plans [Note 1 - Basis of Presentation](index=10&type=section&id=Note%201%20-%20Basis%20of%20Presentation) The unaudited consolidated condensed financial statements are prepared in accordance with U.S. GAAP for interim financial information. Effective October 1, 2023, the company changed its segment reporting structure, separating the former Aircraft Controls segment into Military Aircraft and Commercial Aircraft, with restatements applied to relevant footnotes - Segment reporting structure changed effective **October 1, 2023**, separating Aircraft Controls into Military Aircraft and Commercial Aircraft[29](index=29&type=chunk) - No new accounting pronouncements were adopted for the three months ended **December 30, 2023**[31](index=31&type=chunk) Recent Accounting Pronouncements Not Yet Adopted | Standard | Description | Planned Date of Adoption | | :--------- | :---------- | :----------------------- | | ASU 2023-07 (Segment Reporting) | Requires disclosure of significant segment expenses and other segment items, CODM title/position, and CODM's use of segment profit/loss measures. | FY **2025** | | ASU 2023-09 (Income Taxes) | Expands annual income tax disclosures, requiring specific categories in rate reconciliation table using percentages and currency amounts, and additional info for reconciling items. | FY **2026** | [Note 2 - Revenue from Contracts with Customers](index=11&type=section&id=Note%202%20-%20Revenue%20from%20Contracts%20with%20Customers) The company recognizes revenue using the five-step model of ASC 606, with a significant portion recognized over time, particularly in Space and Defense, Military Aircraft, and Commercial Aircraft segments, using the cost-to-cost method. Revenue recognized at a point in time is more frequent in the Industrial segment - Revenue is recognized using either the over-time or point-in-time method, with the over-time method predominantly used in Space and Defense, Military Aircraft, and Commercial Aircraft segments for U.S. Government contracts and repair/overhaul[39](index=39&type=chunk) - The point-in-time method is most frequently used in the Industrial segment for commercial contracts where the asset has an alternative use[40](index=40&type=chunk) - For the three months ended **December 30, 2023**, the company recognized lower revenue of **$95 thousand** due to adjustments to performance obligations satisfied in previous periods[41](index=41&type=chunk) [Contract Assets and Liabilities](index=13&type=section&id=Contract%20Assets%20and%20Liabilities) Contract assets (unbilled receivables) increased, while net contract assets decreased due to a larger increase in contract advances and progress billings (contract liabilities). The company recognized $97,705 thousand of revenue from beginning-of-year contract liabilities | Metric (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Unbilled receivables | $760,561 | $706,601 | | Contract advances and progress billings | $445,706 | $377,977 | | Net contract assets | $314,855 | $328,624 | - For the three months ended **December 30, 2023**, **$97,705 thousand** of revenue was recognized from the contract liability balance at the beginning of the year[48](index=48&type=chunk) [Remaining Performance Obligations](index=13&type=section&id=Remaining%20Performance%20Obligations) As of December 30, 2023, the aggregate transaction price allocated to unsatisfied performance obligations was $5.3 billion, with approximately 47% expected to be recognized as sales over the next twelve months - Aggregate transaction price for unsatisfied performance obligations was **$5,300,000 thousand** as of **December 30, 2023**[49](index=49&type=chunk) - Approximately **47%** of the remaining performance obligations are expected to be recognized as sales over the next **twelve months**[49](index=49&type=chunk) [Disaggregation of Revenue](index=13&type=section&id=Disaggregation%20of%20Revenue) Disclosures related to the disaggregation of revenue are provided in Note 20 - Segments - Revenue disaggregation details are provided in Note **20** - Segments[50](index=50&type=chunk) [Note 3 - Acquisitions and Divestitures](index=14&type=section&id=Note%203%20-%20Acquisitions%20and%20Divestitures) On October 20, 2023, Moog Inc. acquired Data Collection Limited (DCL) for $5,882 thousand, net of acquired cash, integrating it into the Military Aircraft segment. The company also noted prior divestitures of a sonar business in 2022 and the NAVAIDS business in 2021 - Acquired Data Collection Limited (DCL) on **October 20, 2023**, for approximately **$5,882 thousand** (net of acquired cash), specializing in pavement surveying equipment, included in the Military Aircraft segment[51](index=51&type=chunk) - Sold a sonar business in the UK on **September 30, 2022**, for net proceeds of **$13,075 thousand**, recording a loss of **$15,246 thousand**[52](index=52&type=chunk) - Sold NAVAIDS business assets on **December 3, 2021**, for net proceeds of **$36,550 thousand**, recording a gain of **$15,242 thousand**[53](index=53&type=chunk) [Note 4 - Receivables](index=15&type=section&id=Note%204%20-%20Receivables) Receivables, net, decreased to $381,609 thousand as of December 30, 2023. The company amended its Receivables Purchase Agreement (RPA), increasing capacity to $125,000 thousand and extending maturity to December 11, 2026, with $125,000 thousand sold to purchasers and derecognized from the balance sheet | Metric (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Accounts receivable | $369,853 | $426,804 | | Receivables, net | $381,609 | $434,723 | | Allowance for credit losses | $(3,711) | $(4,010) | - The Receivables Purchase Agreement (RPA) capacity increased from **$100,000 thousand** to **$125,000 thousand**, and its maturity extended to **December 11, 2026**[55](index=55&type=chunk) - As of **December 30, 2023**, **$125,000 thousand** of receivables were sold to purchasers and derecognized, with **$583,838 thousand** in unsold receivables held as collateral[59](index=59&type=chunk) [Note 5 - Inventories](index=16&type=section&id=Note%205%20-%20Inventories) Inventories, net of reserves, increased to $788,040 thousand as of December 30, 2023, primarily driven by increases in raw materials and work in progress | Metric (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Raw materials and purchased parts | $292,483 | $270,305 | | Work in progress | $405,599 | $368,277 | | Finished goods | $89,958 | $85,420 | | Inventories, net | $788,040 | $724,002 | [Note 6 - Property, Plant and Equipment](index=16&type=section&id=Note%206%20-%20Property,%20Plant%20and%20Equipment) Property, plant and equipment, net, increased to $842,682 thousand as of December 30, 2023, reflecting additions to buildings and improvements, and machinery and equipment | Metric (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Property, plant and equipment, at cost | $1,783,287 | $1,733,037 | | Less accumulated depreciation and amortization | $(940,605) | $(918,341) | | Property, plant and equipment, net | $842,682 | $814,696 | [Note 7 - Leases](index=16&type=section&id=Note%207%20-%20Leases) The company leases manufacturing facilities, office space, and equipment, recognizing ROU assets and lease liabilities for both operating and finance leases. Operating lease costs were $6,970 thousand and total finance lease costs were $3,058 thousand for the three months ended December 30, 2023 Lease Expense (in thousands) | Metric | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :----------- | :----------- | | Operating lease cost | $6,970 | $7,395 | | Amortization of ROU assets | $1,826 | $972 | | Interest on lease liabilities | $1,232 | $364 | | Total finance lease cost | $3,058 | $1,336 | Lease Liabilities (in thousands) | Metric | Dec 30, 2023 (in thousands) | Sep 30, 2023 (in thousands) | | :-------------------------- | :----------- | :----------- | | Total operating lease liabilities | $70,993 | $67,681 | | Total finance lease liabilities | $79,629 | $76,846 | - Weighted average remaining lease term for operating leases is **6.7 years** and for finance leases is **23.0 years** as of **December 30, 2023**[69](index=69&type=chunk) [Note 8 - Goodwill and Intangible Assets](index=19&type=section&id=Note%208%20-%20Goodwill%20and%20Intangible%20Assets) Goodwill increased to $833,413 thousand as of December 30, 2023, primarily due to foreign currency translation and the DCL acquisition. Following the segment reporting change, goodwill was reassigned and impairment tests showed no impairment. Acquired intangible assets are amortized, with estimated future amortization of $10,900 thousand for 2024 - Goodwill increased to **$833,413 thousand** as of **December 30, 2023**, from **$821,301 thousand** at **September 30, 2023**, driven by foreign currency translation and the DCL acquisition[71](index=71&type=chunk) - Following the segment reporting change, quantitative goodwill impairment tests were performed on the new Military Aircraft and Commercial Aircraft reporting units, showing fair value exceeded carrying value, thus no impairment[70](index=70&type=chunk) Estimated Future Amortization of Acquired Intangible Assets (in thousands) | Year | Estimated Amortization (in thousands) | | :--- | :--------------------- | | **2024** | $10,900 | | **2025** | $9,800 | | **2026** | $9,600 | | **2027** | $8,300 | | **2028** | $7,500 | [Note 9 - Equity Method Investments and Joint Ventures](index=20&type=section&id=Note%209%20-%20Equity%20Method%20Investments%20and%20Joint%20Ventures) Net investment balances for equity method investments and joint ventures totaled $3,093 thousand as of December 30, 2023, including interests in Moog Aircraft Service Asia (MASA), NOVI LLC, and Suffolk Technologies Fund 1, L.P. Losses from these investments were $67 thousand for the three months ended December 30, 2023 | Investment (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :------------------------ | :----------- | :----------- | | Moog Aircraft Service Asia | $1,511 | $1,302 | | NOVI LLC | $325 | $325 | | Suffolk Technologies Fund 1, L.P. | $1,257 | $1,180 | | Net investment balance | $3,093 | $2,807 | - Losses from equity method investments and joint ventures were **$67 thousand** for the three months ended **December 30, 2023**, down from **$204 thousand** in the prior year[74](index=74&type=chunk) - The company holds a **51%** ownership in MASA (Commercial Aircraft segment) and a **20%** interest in NOVI LLC (Space and Defense segment)[75](index=75&type=chunk) [Note 10 - Indebtedness](index=21&type=section&id=Note%2010%20-%20Indebtedness) Long-term debt increased to $920,103 thousand as of December 30, 2023, primarily due to increased borrowings on the U.S. revolving credit facility. The company remains in compliance with all covenants for its credit facilities and senior notes | Debt Type (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :----------------------- | :----------- | :----------- | | U.S. revolving credit facility | $423,000 | $334,500 | | SECT revolving credit facility | $1,000 | $33,000 | | Senior notes 4.25% | $500,000 | $500,000 | | Long-term debt | $920,103 | $863,092 | - The U.S. revolving credit facility has a capacity of **$1,100,000 thousand**, maturing **October 27, 2027**, and is secured by substantially all U.S. assets[80](index=80&type=chunk) - The company has **$500,000 thousand** in **4.25%** senior notes due **December 15, 2027**, which are unsecured obligations[82](index=82&type=chunk) [Note 11 - Other Accrued Liabilities](index=22&type=section&id=Note%2011%20-%20Other%20Accrued%20Liabilities) Other accrued liabilities increased to $238,871 thousand as of December 30, 2023, primarily due to increases in employee benefits, contract reserves, and accrued income taxes | Liability (in thousands) | Dec 30, 2023 | Sep 30, 2023 | | :----------------------- | :----------- | :----------- | | Employee benefits | $57,677 | $47,653 | | Contract reserves | $54,553 | $45,257 | | Warranty accrual | $24,096 | $22,939 | | Accrued income taxes | $42,011 | $29,631 | | Other accrued liabilities | $238,871 | $211,769 | - Warranty accrual activity for the three months ended **December 30, 2023**, included **$3,319 thousand** in new warranties issued and **$(1,876) thousand** in reductions for settling warranties[84](index=84&type=chunk) [Note 12 - Derivative Financial Instruments](index=22&type=section&id=Note%2012%20-%20Derivative%20Financial%20Instruments) The company uses derivative financial instruments, primarily foreign currency contracts, to manage foreign exchange risk. As of December 30, 2023, outstanding foreign currency contracts designated as cash flow hedges had notional amounts of $2,792 thousand, while those not designated as hedges had notional amounts of $149,110 thousand - Outstanding foreign currency contracts designated as cash flow hedges had notional amounts of **$2,792 thousand** at **December 30, 2023**, maturing through **March 1, 2024**[86](index=86&type=chunk) - Foreign currency contracts not designated as hedging instruments had notional amounts of **$149,110 thousand** at **December 30, 2023**, with a net gain of **$4,452 thousand** recorded in earnings[90](index=90&type=chunk) Fair Value and Classification of Derivatives (in thousands) | Derivative Type | Balance Sheets location | Dec 30, 2023 (in thousands) | Sep 30, 2023 (in thousands) | | :------------------------ | :---------------------- | :----------- | :----------- | | Designated foreign currency contracts | Other current assets | $123 | $295 | | Designated foreign currency contracts | Accrued liabilities and other | $176 | $581 | | Non-designated foreign currency contracts | Other current assets | $968 | $93 | | Non-designated foreign currency contracts | Accrued liabilities and other | $145 | $324 | [Note 13 - Fair Value](index=24&type=section&id=Note%2013%20-%20Fair%20Value) The company's financial assets and liabilities measured on a recurring basis are primarily classified as Level 2, with acquisition contingent consideration classified as Level 3. The fair value of long-term debt was $893,656 thousand, differing from its carrying value of $924,000 thousand as of December 30, 2023 - Derivatives are valued using pricing models or discounted cash flow analyses, classified as **Level 2** within the valuation hierarchy[93](index=93&type=chunk) - Acquisition contingent consideration is classified as **Level 3**, with a balance of **$3,172 thousand** at **December 30, 2023**[93](index=93&type=chunk) - The fair value of long-term debt was **$893,656 thousand** at **December 30, 2023**, compared to its carrying value of **$924,000 thousand**[93](index=93&type=chunk) [Note 14 - Restructuring](index=25&type=section&id=Note%2014%20-%20Restructuring) Restructuring activities initiated in 2023, primarily for portfolio shaping, resulted in a total accrual of $9,978 thousand as of December 30, 2023. Charges to expense for the 2023 plan were $1,889 thousand for the three months ended December 30, 2023 - Restructuring actions initiated in **2023** are expected to incur additional costs of up to approximately **$10,400 thousand** through **2027**[95](index=95&type=chunk) Restructuring Accrual by Segment (in thousands) | Segment | Balance at Oct 1, 2023 (in thousands) | Charged to expense - 2023 plan (in thousands) | Cash payments - 2023 plan (in thousands) | Balance at Dec 30, 2023 (in thousands) | | :---------------- | :--------------------- | :----------------------------- | :------------------------ | :---------------------- | | Space and Defense | $1,622 | — | $(727) | $740 | | Military Aircraft | $347 | — | $(72) | $275 | | Industrial | $8,208 | $1,889 | $(1,238) | $8,963 | | Total | $10,177 | $1,889 | $(2,037) | $9,978 | [Note 15 - Employee Benefit Plans](index=25&type=section&id=Note%2015%20-%20Employee%20Benefit%20Plans) Total expense for defined contribution plans increased to $14,350 thousand for the three months ended December 30, 2023. Net periodic benefit costs for U.S. defined benefit plans were $5,922 thousand, and for non-U.S. plans were $1,038 thousand Defined Contribution Plan Expense (in thousands) | Plan Type | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :----------- | :----------- | | U.S. defined contribution plans | $12,052 | $10,185 | | Non-U.S. defined contribution plans | $2,298 | $2,065 | | Total expense for defined contribution plans | $14,350 | $12,250 | Net Periodic Benefit Costs for Defined Benefit Plans (in thousands) | Plan Type | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :----------- | :----------- | | Expense for U.S. defined benefit plans | $5,922 | $6,471 | | Expense for non-U.S. defined benefit plans | $1,038 | $1,037 | [Note 16 - Income Taxes](index=26&type=section&id=Note%2016%20-%20Income%20Taxes) The effective tax rate for the three months ended December 30, 2023, was 23.6%, slightly lower than the 23.7% in the prior year, and higher than the U.S. federal statutory rate due to taxes on foreign earnings | Metric | Dec 30, 2023 | Dec 31, 2022 | | :---------------- | :----------- | :----------- | | Effective tax rate | **23.6%** | **23.7%** | - The effective tax rate was higher than the U.S. federal statutory tax rate of **21%** due to tax on earnings generated outside the U.S[98](index=98&type=chunk) [Note 17 - Accumulated Other Comprehensive Income (Loss)](index=26&type=section&id=Note%2017%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive loss (AOCIL) decreased to $(221,600) thousand as of December 30, 2023, primarily due to a positive foreign currency translation adjustment and retirement liability adjustment Changes in AOCIL (in thousands) | Component | AOCIL at Sep 30, 2023 (in thousands) | OCI, net of tax (in thousands) | AOCIL at Dec 30, 2023 (in thousands) | | :-------------------------------- | :-------------------- | :-------------- | :-------------------- | | Accumulated foreign currency translation | $(140,486) | $31,013 | $(109,473) | | Accumulated retirement liability | $(113,605) | $1,678 | $(111,927) | | Accumulated gain (loss) on derivatives | $(518) | $318 | $(200) | | Total | $(254,609) | $33,009 | $(221,600) | Net Reclassification from AOCIL into Earnings (in thousands) | Item | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :----------- | :----------- | | Retirement liability | $2,044 | $2,212 | | Derivatives | $225 | $991 | [Note 18 - Stock Employee Compensation Trust and Supplemental Retirement Plan Trust](index=27&type=section&id=Note%2018%20-%20Stock%20Employee%20Compensation%20Trust%20and%20Supplemental%20Retirement%20Plan%20Trust) The Stock Employee Compensation Trust (SECT) and Supplemental Retirement Plan (SERP) Trust assist in administering equity-based compensation and benefit programs, holding Moog shares as investments that are not considered outstanding for EPS calculations - SECT and SERP Trust hold Moog shares as investments, which are **not considered outstanding** for earnings per share calculations[102](index=102&type=chunk) - The SECT assists in funding equity-based compensation plans (RSP, RSP(+), ESPP), and the SERP Trust funds benefits under the SERP provisions[102](index=102&type=chunk) [Note 19 - Earnings per Share](index=27&type=section&id=Note%2019%20-%20Earnings%20per%20Share) Basic weighted-average shares outstanding increased to 31,902,101 for the three months ended December 30, 2023, with diluted shares at 32,249,313, reflecting the dilutive effect of equity-based awards | Metric | Dec 30, 2023 | Dec 31, 2022 | | :-------------------------------- | :----------- | :----------- | | Basic weighted-average shares outstanding | 31,902,101 | 31,746,001 | | Dilutive effect of equity-based awards | 347,212 | 128,717 | | Diluted weighted-average shares outstanding | 32,249,313 | 31,874,718 | [Note 20 - Segments](index=27&type=section&id=Note%2020%20-%20Segments) Net sales increased across all segments for the three months ended December 30, 2023, compared to the prior year, driven by commercial aircraft recovery and higher product demand. Operating profit also increased across most segments, with Commercial Aircraft showing the largest sales growth Net Sales by Segment (in thousands) | Segment | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------ | :----------- | :----------- | | Space and Defense | $230,128 | $217,785 | | Military Aircraft | $186,244 | $177,800 | | Commercial Aircraft | $194,222 | $132,459 | | Industrial | $246,256 | $232,059 | | Total Net sales | $856,850 | $760,103 | Operating Profit by Segment (in thousands) | Segment | Dec 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------ | :----------- | :----------- | | Space and Defense | $25,297 | $20,294 | | Military Aircraft | $19,589 | $15,201 | | Commercial Aircraft | $20,626 | $14,517 | | Industrial | $29,024 | $36,751 | | Total operating profit | $94,536 | $86,763 | - Effective **October 1, 2023**, the former Aircraft Controls segment was separated into Military Aircraft and Commercial Aircraft, with all prior period amounts restated[106](index=106&type=chunk) [Note 21 - Related Party Transactions](index=30&type=section&id=Note%2021%20-%20Related%20Party%20Transactions) The company engages in ordinary course business with M&T Bank Corporation and M&T Bank, where John Scannell, Moog's Non-Executive Chairman, serves on the Board. Transactions for financing routine purchases and leases totaled $3,707 thousand for the three months ended December 30, 2023 - Transactions with M&T Bank, where Moog's Non-Executive Chairman is a board member, totaled **$3,707 thousand** for the three months ended **December 30, 2023**[108](index=108&type=chunk) - M&T Bank maintains an interest of approximately **12%** in Moog's U.S. revolving credit facility[108](index=108&type=chunk) [Note 22 - Commitments and Contingencies](index=30&type=section&id=Note%2022%20-%20Commitments%20and%20Contingencies) The company is involved in various legal and administrative proceedings, including environmental matters, but management believes these will not have a material adverse effect on financial condition. Contingent liabilities for standby letters of credit totaled $19,285 thousand at December 30, 2023 - Management believes current legal and environmental proceedings will **not result in a material adverse effect** on financial condition, results of operations, or cash flows[109](index=109&type=chunk)[110](index=110&type=chunk) - Contingent liabilities for standby letters of credit amounted to **$19,285 thousand** at **December 30, 2023**[112](index=112&type=chunk) [Note 23 - Subsequent Event](index=30&type=section&id=Note%2023%20-%20Subsequent%20Event) On January 25, 2024, the company declared a quarterly dividend of $0.28 per share, payable on February 27, 2024 - A quarterly dividend of **$0.28 per share** was declared on **January 25, 2024**, payable on **February 27, 2024**[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's discussion of Moog Inc.'s Q1 FY2024 financial condition, operations, outlook, and key risks [OVERVIEW](index=31&type=section&id=OVERVIEW) Moog Inc. is a global designer, manufacturer, and systems integrator of high-performance precision motion and fluid controls for aerospace and defense and industrial markets. The company operates under four segments: Space and Defense, Military Aircraft, Commercial Aircraft, and Industrial, with a focus on strategic growth, operational efficiencies, and capital deployment to maximize shareholder returns - Moog Inc. operates in aerospace and defense (Military Aircraft, Commercial Aircraft, Space, Defense) and industrial markets (Industrial Automation, Simulation and Test, Energy, Medical)[116](index=116&type=chunk)[119](index=119&type=chunk) - **63%** of revenue for the quarter ended **December 30, 2023**, was recognized over time using the cost-to-cost method, primarily in aerospace and defense segments[117](index=117&type=chunk) - Key long-term strategies include pricing initiatives for fair value recognition and simplification initiatives such as utilizing **80/20** processes, portfolio shaping, footprint rationalization, factory focus, and investment in automation[121](index=121&type=chunk)[125](index=125&type=chunk) [Acquisitions and Divestitures](index=32&type=section&id=Acquisitions%20and%20Divestitures) In October 2023, Moog Inc. acquired Data Collection Limited (DCL) for approximately $6 million, integrating it into the Military Aircraft segment. This follows prior divestitures of a sonar business in 2022 and the NAVAIDS business in 2021 - Acquired Data Collection Limited (DCL) on **October 20, 2023**, for approximately **$6 million**, included in the Military Aircraft segment[122](index=122&type=chunk) - Sold a sonar business in the UK on **September 30, 2022**, for net proceeds of **$13 million**, resulting in a **$15 million** loss[123](index=123&type=chunk) - Sold NAVAIDS business assets on **December 3, 2021**, for net proceeds of **$37 million**, resulting in a **$15 million** gain[124](index=124&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=33&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The company regularly evaluates critical accounting policies, including revenue recognition on long-term contracts, contract reserves, inventory valuation, impairment reviews for goodwill and long-lived assets, pension assumptions, and income taxes - Critical accounting policies include revenue recognition on long-term contracts, contract reserves, inventory valuation, goodwill impairment, long-lived asset impairment, pension assumptions, and income taxes[126](index=126&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=33&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) Information regarding recent accounting pronouncements issued by the Financial Accounting Standards Board (FASB) is detailed in Note 1 - Basis of Presentation - Further information on recent accounting pronouncements is available in Note **1** - Basis of Presentation[127](index=127&type=chunk) [CONSOLIDATED RESULTS OF OPERATIONS](index=34&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) For the first quarter of 2024, consolidated net sales increased by 13% to $857 million, driven by commercial aircraft recovery and higher demand across all segments. Gross margin improved to 27.2%, and diluted EPS increased by 3% to $1.48. The twelve-month backlog also grew by 9% to $2.5 billion | Metric (in millions, except per share) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | % Variance | | :------------------------------------- | :----------- | :----------- | :--------- | :--------- | | Net sales | $857 | $760 | $97 | **13%** | | Gross margin | **27.2%** | **26.8%** | | | | Research and development expenses | $31 | $24 | $7 | **28%** | | Interest expense | $17 | $13 | $4 | **27%** | | Net earnings | $48 | $46 | $2 | **4%** | | Diluted earnings per share | $1.48 | $1.44 | $0.04 | **3%** | | Twelve-month backlog | $2,500 | $2,300 | $200 | **9%** | - Net sales increased across all segments due to continued commercial aircraft recovery and higher product demand[129](index=129&type=chunk) - Research and development expenses increased by **28%** due to higher activity supporting new growth programs in Space and Defense and Industrial[130](index=130&type=chunk) [SEGMENT RESULTS OF OPERATIONS](index=35&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) Segment operating profit is calculated as net sales less cost of sales and other operating expenses, excluding interest, equity-based compensation, non-service pension, and other corporate expenses. All segments, except Industrial, saw an increase in operating profit for the first quarter of 2024 compared to the prior year [Space and Defense](index=35&type=section&id=Space%20and%20Defense) Space and Defense net sales increased by 6% to $230 million, driven by higher demand in both defense and space applications. Operating profit grew by 25% to $25 million, with operating margin improving to 11.0% due to production efficiencies and pricing initiatives, partially offset by higher R&D expenses | Metric (in millions) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | % Variance | | :------------------- | :----------- | :----------- | :--------- | :--------- | | Net sales | $230 | $218 | $12 | **6%** | | Operating profit | $25 | $20 | $5 | **25%** | | Operating margin | **11.0%** | **9.3%** | | | - Sales increased **$9 million** in defense programs and **$4 million** in space programs[137](index=137&type=chunk) - Operating margin benefited from production efficiencies and pricing initiatives, but was partially offset by **$3 million** higher R&D expense[138](index=138&type=chunk) [Military Aircraft](index=35&type=section&id=Military%20Aircraft) Military Aircraft net sales increased by 5% to $186 million, primarily due to expanding demand in OEM programs, particularly the V-280 program. Operating profit rose by 29% to $20 million, with operating margin improving to 10.5% due to increased activity and a more favorable sales mix | Metric (in millions) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | % Variance | | :------------------- | :----------- | :----------- | :--------- | :--------- | | Net sales | $186 | $178 | $8 | **5%** | | Operating profit | $20 | $15 | $4 | **29%** | | Operating margin | **10.5%** | **8.5%** | | | - Military OEM sales increased **$9 million**, driven by higher activity on the V-280 program, partially offset by lower funded development program activity[140](index=140&type=chunk) - Operating margin increased due to increased activity on the V-280 program as staffing levels approached full capacity, and a more favorable sales mix[140](index=140&type=chunk) [Commercial Aircraft](index=36&type=section&id=Commercial%20Aircraft) Commercial Aircraft net sales surged by 47% to $194 million, driven by market recoveries across all programs, with significant increases in commercial OEM and aftermarket sales. Operating profit increased by 42% to $21 million, though operating margin slightly decreased to 10.6% due to the absence of prior year's favorable retrofit activity | Metric (in millions) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | % Variance | | :------------------- | :----------- | :----------- | :--------- | :--------- | | Net sales | $194 | $132 | $62 | **47%** | | Operating profit | $21 | $15 | $6 | **42%** | | Operating margin | **10.6%** | **11.0%** | | | - Commercial OEM sales increased **$49 million**, with over half from Boeing and Airbus widebody programs, and aftermarket sales increased **$13 million**[142](index=142&type=chunk) - Operating margin decreased due to the non-recurrence of favorable retrofit activity from the prior year, offsetting pricing initiative benefits[143](index=143&type=chunk) [Industrial](index=36&type=section&id=Industrial) Industrial net sales increased by 6% to $246 million, driven by higher demand in simulation and test, and industrial automation markets. However, operating profit decreased by 21% to $29 million, and operating margin fell to 11.8%, primarily due to a $10 million gain from building sales in the prior year and restructuring charges | Metric (in millions) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | % Variance | | :------------------- | :----------- | :----------- | :--------- | :--------- | | Net sales | $246 | $232 | $14 | **6%** | | Operating profit | $29 | $37 | $(8) | (**21%**) | | Operating margin | **11.8%** | **15.8%** | | | - Sales increased **$9 million** in simulation and test, and **$5 million** in industrial automation[145](index=145&type=chunk) - Operating margin decreased due to a **$10 million** gain from building sales in the prior year and restructuring charges (**$2 million** in Q1 **2024** vs. **$1 million** in Q1 **2023**)[146](index=146&type=chunk) [CONSOLIDATED SEGMENT OUTLOOK](index=37&type=section&id=CONSOLIDATED%20SEGMENT%20OUTLOOK) Moog Inc. projects higher consolidated sales in 2024, driven by aerospace and defense market recovery, but anticipates a slowdown in Industrial. Overall operating margin is expected to increase due to pricing and simplification initiatives, with adjusted diluted EPS projected between $6.70 and $7.10 | Metric (in millions, except per share) | 2024 Outlook | 2023 | $ Variance | % Variance | | :------------------------------------- | :----------- | :--- | :--------- | :--------- | | Net sales | $3,500 | $3,319 | $181 | **5%** | | Operating profit | $418 | $343 | $75 | **22%** | | Operating margin | **12.0%** | **10.3%** | | | | Net earnings | $222 | $171 | | | | Diluted earnings per share | $6.86 | $5.34 | | | - Overall **2024 sales growth** is expected to be **5%**, driven by aerospace and defense, but offset by anticipated lower sales in Industrial[147](index=147&type=chunk) - Adjusted diluted earnings per share for **2024** are expected to range between **$6.70** and **$7.10**, with a midpoint of **$6.90**[147](index=147&type=chunk) [2024 Outlook – Overall](index=37&type=section&id=2024%20Outlook%20%E2%80%93%20Overall) The company expects higher sales in 2024, driven by aerospace and defense market recovery, but anticipates reduced sales in Industrial due to an expected slowdown in orders. Operating margin is projected to increase due to pricing and simplification initiatives, despite higher interest expense and tax rates - Higher sales expected in **2024**, driven by aerospace and defense market recovery, but Industrial sales will reduce due to anticipated slowdown of orders[147](index=147&type=chunk) - Operating margin is expected to increase due to pricing and simplification initiatives, partially offset by higher interest expense and tax rate[147](index=147&type=chunk) [2024 Outlook for Space and Defense](index=37&type=section&id=2024%20Outlook%20for%20Space%20and%20Defense) Space and Defense expects 7% sales growth in 2024, driven by increased defense spending. Operating margin is projected to increase significantly to 13.5% due to the absence of prior year charges and benefits from pricing initiatives | Metric (in millions) | 2024 Outlook | 2023 | $ Variance | % Variance | | :------------------- | :----------- | :--- | :--------- | :--------- | | Net sales | $1,015 | $947 | $68 | **7%** | | Operating profit | $137 | $96 | $41 | **43%** | | Operating margin | **13.5%** | **10.1%** | | | - Sales growth expected across both space and defense markets, primarily driven by increased investment in defense spending[147](index=147&type=chunk) - Operating margin increase due to absence of prior year's charges associated with space vehicle programs and benefits of pricing initiatives[147](index=147&type=chunk) [2024 Outlook for Military Aircraft](index=37&type=section&id=2024%20Outlook%20for%20Military%20Aircraft) Military Aircraft anticipates 3% sales growth in 2024, driven by OEM programs, particularly the V-280, but expects a decline in aftermarket sales due to a shift in defense funding. Operating margin is projected to increase significantly to 11.6% due to full-year V-280 activity and winding down of funded development contracts | Metric (in millions) | 2024 Outlook | 2023 | $ Variance | % Variance | | :------------------- | :----------- | :--- | :--------- | :--------- | | Net sales | $745 | $720 | $25 | **3%** | | Operating profit | $87 | $60 | $26 | **43%** | | Operating margin | **11.6%** | **8.4%** | | | - Sales growth expected in OEM programs, especially **V-280**, but offset by expected sales decline in military aftermarket programs[148](index=148&type=chunk) - Operating margin increase due to full year of **V-280** program activity and lower charges from winding down funded development contracts[148](index=148&type=chunk) [2024 Outlook for Commercial Aircraft](index=37&type=section&id=2024%20Outlook%20for%20Commercial%20Aircraft) Commercial Aircraft forecasts 22% sales growth in 2024, primarily from widebody OEM programs as build rates increase. However, lower aftermarket sales due to non-recurring retrofit activity from the prior year are expected to reduce operating margin to 10.2% | Metric (in millions) | 2024 Outlook | 2023 | $ Variance | % Variance | | :------------------- | :----------- | :--- | :--------- | :--------- | | Net sales | $815 | $669 | $146 | **22%** | | Operating profit | $83 | $84 | $(1) | (**2%**) | | Operating margin | **10.2%** | **12.6%** | | | - Sales growth expected from widebody OEM programs as build rates ramp up[149](index=149&type=chunk) - Lower sales in commercial aftermarket due to non-recurring prior year retrofit activity will reduce operating margin[149](index=149&type=chunk) [2024 Outlook for Industrial](index=37&type=section&id=2024%20Outlook%20for%20Industrial) Industrial expects a 6% decrease in sales in 2024 due to lower orders in industrial automation and lost sales from footprint and portfolio initiatives. Despite this, operating margin is projected to increase to 12.1% due to pricing initiatives and savings from simplified operations | Metric (in millions) | 2024 Outlook | 2023 | $ Variance | % Variance | | :------------------- | :----------- | :--- | :--------- | :--------- | | Net sales | $925 | $983 | $(58) | (**6%**) | | Operating profit | $112 | $102 | $10 | **9%** | | Operating margin | **12.1%** | **10.4%** | | | - Sales decrease expected due to lower orders in industrial automation market and lost sales from footprint and portfolio initiatives[150](index=150&type=chunk) - Operating margin increase due to benefits of pricing initiatives and savings from simplified operations[150](index=150&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is supported by cash flows from operations and various financing arrangements, which are deemed sufficient for current and future cash requirements. Net cash provided by operating activities significantly increased in Q1 2024, while investing activities used more cash due to acquisitions and capital expenditures, and financing activities provided less cash [Consolidated Statement of Cash Flows](index=38&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash provided by operating activities increased significantly to $60 million in Q1 2024. Investing activities used $43 million, primarily for acquisitions and capital expenditures. Financing activities provided $39 million, mainly from net borrowings on credit facilities | Cash Flow Activity (in millions) | Dec 30, 2023 | Dec 31, 2022 | $ Variance | | :------------------------------- | :----------- | :----------- | :--------- | | Net cash provided by operating activities | $60 | $8 | $52 | | Net cash used by investing activities | $(43) | $(25) | $(18) | | Net cash provided by financing activities | $39 | $59 | $(20) | [Operating activities](index=38&type=section&id=Operating%20activities) Net cash provided by operating activities increased by $52 million in Q1 2024, primarily due to an $86 million increase from accounts receivable collections, partially offset by increased cash usage from inventories and unbilled receivables - Net cash provided by operating activities increased by **$52 million** in Q1 **2024** compared to Q1 **2023**[152](index=152&type=chunk) - Accounts receivable provided **$86 million** more cash, driven by strong collections, primarily in aircraft segments[152](index=152&type=chunk) - Inventories and unbilled receivables combined used **$27 million** more cash to support business growth in aerospace and defense[152](index=152&type=chunk) [Investing activities](index=38&type=section&id=Investing%20activities) Net cash used by investing activities increased by $18 million in Q1 2024, totaling $43 million, due to $37 million in capital expenditures and $5 million for the DCL acquisition - Net cash used by investing activities was **$43 million** in Q1 **2024**, including **$37 million** for capital expenditures and **$5 million** for the DCL acquisition[153](index=153&type=chunk) - In Q1 **2023**, investing activities used **$30 million** for capital expenditures, partially offset by proceeds from a building sale[153](index=153&type=chunk) [Financing activities](index=38&type=section&id=Financing%20activities) Net cash provided by financing activities decreased by $20 million in Q1 2024, totaling $39 million, primarily from $57 million in net borrowings on credit facilities and $9 million in cash dividends - Net cash provided by financing activities was **$39 million** in Q1 **2024**, including **$57 million** of net borrowings on credit facilities and **$9 million** of cash dividends[154](index=154&type=chunk) - In Q1 **2023**, financing activities provided **$59 million**, including **$81 million** of net borrowings, **$8 million** of share repurchases, and **$8 million** of cash dividends[154](index=154&type=chunk) [General](index=39&type=section&id=General) The company believes its cash flows from operations and financing arrangements are sufficient to meet cash requirements for the foreseeable future. As of December 30, 2023, cash balances were $127 million, with $106 million held by foreign operations - Cash flows from operations and financing arrangements are expected to be sufficient for cash requirements for the next **12 months** and foreseeable future[155](index=155&type=chunk) - As of **December 30, 2023**, cash balances totaled **$127 million**, with **$106 million** held outside the U.S. by foreign operations[156](index=156&type=chunk) [Financing Arrangements](index=39&type=section&id=Financing%20Arrangements) The company utilizes bank credit facilities and an accounts receivable financing program, including a $1.1 billion U.S. revolving credit facility and $500 million in 4.25% senior notes. As of December 30, 2023, the company had $656 million of unused capacity and was in compliance with all financing covenants - The U.S. revolving credit facility has a **$1.1 billion** capacity, matures **October 27, 2027**, and had a weighted-average interest rate of **6.84%** at **December 30, 2023**[160](index=160&type=chunk) - The company has **$500 million** aggregate principal amount of **4.25%** senior notes due **December 15, 2027**[163](index=163&type=chunk) - As of **December 30, 2023**, the company had **$656 million** of unused capacity, including **$622 million** from the U.S. revolving credit facility, and was in compliance with all covenants[164](index=164&type=chunk)[166](index=166&type=chunk) [Dividends and Common Stock](index=40&type=section&id=Dividends%20and%20Common%20Stock) The company aims to create long-term shareholder value through business investments, strategic acquisitions, and returning capital via quarterly cash dividends and a share repurchase program. Approximately 2.2 million common shares remain under the current repurchase authorization - The company expects to continue paying quarterly cash dividends on Class A and Class B common stock[168](index=168&type=chunk) - A share repurchase program authorizes buying up to **3 million** common shares, with approximately **2.2 million** shares remaining under authorization[169](index=169&type=chunk) [Off Balance Sheet Arrangements](index=40&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company does not have any material off-balance sheet arrangements that are reasonably likely to have a material future effect on its financial condition, results of operations, or cash flows - No material off-balance sheet arrangements exist that are reasonably likely to have a material future effect on financial condition, results of operations, or cash flows[171](index=171&type=chunk) [Contractual Obligations and Commercial Commitments](index=40&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) Contractual obligations and commercial commitments have not materially changed from the disclosures in the Annual Report on Form 10-K for the year ended September 30, 2023 - Contractual obligations and commercial commitments have not materially changed from the prior annual report[172](index=172&type=chunk) [ECONOMIC CONDITIONS AND MARKET TRENDS](index=41&type=section&id=ECONOMIC%20CONDITIONS%20AND%20MARKET%20TRENDS) The company's performance is influenced by economic conditions and market trends in aerospace and defense (70% of 2023 sales) and industrial markets (30% of 2023 sales). Aerospace and defense markets are benefiting from increased defense funding and commercial aircraft recovery, while industrial markets see increased demand in automation, simulation, and energy. Foreign currency movements also impact sales [Aerospace and Defense](index=41&type=section&id=Aerospace%20and%20Defense) The aerospace and defense market, representing 70% of 2023 sales, is driven by military spending, commercial aircraft demand, and space investments. Defense spending has increased due to global tensions, commercial OEM aircraft production rates are expected to rise, and the space market benefits from investments in small satellites and launch vehicles - Defense market is dependent on military spending, which has recently increased due to global tensions[179](index=179&type=chunk) - Commercial OEM aircraft market is recovering, with Boeing and Airbus expected to increase widebody aircraft production rates[180](index=180&type=chunk) - Space market is driven by civil, U.S. Department of Defense, and commercial space investments, with growing emphasis on space as a frontier for potential conflicts[182](index=182&type=chunk) [Industrial](index=42&type=section&id=Industrial) The industrial market, comprising 30% of 2023 sales, includes industrial automation, simulation and test, energy, and medical products. This market is influenced by capital investment levels, economic conditions, and technological advancements, with strong order demand in flight simulation and industrial automation - Industrial market is influenced by capital investment levels, product innovation, economic conditions, and technology upgrades[184](index=184&type=chunk) - Stronger order demand observed for flight simulation systems and industrial automation products[185](index=185&type=chunk) - Medical market is influenced by economic conditions, regulatory environments, hospital spending, and patient demands for precision control components[187](index=187&type=chunk) [Foreign Currencies](index=42&type=section&id=Foreign%20Currencies) Foreign currency movements, particularly against the U.S. dollar, impact the company, with about one-sixth of 2023 sales denominated in foreign currencies. In Q1 2024, strengthening foreign currency rates increased sales by $6 million compared to the prior year - Approximately **one-sixth of 2023 sales** were denominated in foreign currencies[188](index=188&type=chunk) - Strengthening foreign currency rates against the U.S. dollar increased sales by **$6 million** in Q1 **2024** compared to the prior year[188](index=188&type=chunk) [Cautionary Statement](index=43&type=section&id=Cautionary%20Statement) Outlines risks and uncertainties that could cause actual results to differ from forward-looking statements, covering strategic, market, operational, financial, legal, and general risks - Forward-looking statements are subject to factors, risks, and uncertainties that could cause actual results to differ materially[189](index=189&type=chunk) - Key risk categories include strategic, market condition, operational, financial, legal and compliance, and general risks[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) [STRATEGIC RISKS](index=43&type=section&id=STRATEGIC%20RISKS) Strategic risks include intense market competition, potential failure of R&D efforts, inability to protect intellectual property, and challenges in identifying, acquiring, or integrating strategic acquisitions or conducting portfolio shaping initiatives - Operating in highly competitive markets with potentially greater-resourced competitors[192](index=192&type=chunk) - Risk that R&D and innovation efforts may not be successful, potentially reducing sales and earnings[192](index=192&type=chunk) - Challenges in identifying, acquiring, or integrating strategic acquisitions, or conducting portfolio shaping and footprint rationalization initiatives[192](index=192&type=chunk) [MARKET CONDITION RISKS](index=43&type=section&id=MARKET%20CONDITION%20RISKS) Market condition risks involve cyclical and sensitive markets, heavy reliance on government contracts that may not be fully funded or terminated, potential adverse impact from the loss of The Boeing Company as a customer, and the possibility of not realizing full backlog amounts as revenue - Markets are cyclical and sensitive to domestic and foreign economic conditions and events[192](index=192&type=chunk) - Heavy dependence on government contracts that may not be fully funded or could be terminated[192](index=192&type=chunk) - Risk of adverse impact from the loss of The Boeing Company as a customer or a significant reduction in sales to them[192](index=192&type=chunk) [OPERATIONAL RISKS](index=43&type=section&id=OPERATIONAL%20RISKS) Operational risks include a constrained supply chain and inflated prices impacting manufacturing and profit, subcontractor/supplier failure, information systems interruptions or new software implementation issues, inability to prevent or detect product/manufacturing process issues, and potential damage to reputation or claims from product failure/misuse - Constrained supply chain and inflated prices for raw materials and components could impact manufacturing, operating profit, and balance sheet[192](index=192&type=chunk) - Risks related to information systems interruptions, intrusions, or new software implementations[192](index=192&type=chunk) - Inability to prevent or timely detect issues with products and manufacturing processes, potentially affecting operations and earnings[192](index=192&type=chunk) [FINANCIAL RISKS](index=44&type=section&id=FINANCIAL%20RISKS) Financial risks encompass significant impacts from changes in estimates for over-time contracts, potential losses from fixed-price contracts due to cost overruns, limitations from indebtedness and restrictive covenants, adverse effects from changes in pension assumptions, goodwill impairment, and unforeseen income tax liabilities - Changes in estimates for over-time contracts may have significant impacts on earnings[197](index=197&type=chunk) - Fixed-price contracts could lead to losses if cost overruns occur[197](index=197&type=chunk) - Indebtedness and restrictive covenants under credit facilities and senior notes could limit operational and financial flexibility[197](index=197&type=chunk) [LEGAL AND COMPLIANCE RISKS](index=44&type=section&id=LEGAL%20AND%20COMPLIANCE%20RISKS) Legal and compliance risks include significant regulation on government programs, exposure to currency/political/trade risks in foreign operations, government regulations limiting product sales outside the U.S., unfavorable outcomes from legal proceedings, environmental compliance costs, sustainability goal failures, and the impact of facility security clearance invalidation - Government programs are subject to significant regulation, with non-compliance potentially leading to fines, penalties, or debarment[197](index=197&type=chunk) - Operations in foreign countries expose the company to currency, political, and trade risks, and adverse changes in local legal/regulatory environments[197](index=197&type=chunk) - The recently received invalidation of facility security clearance by DCSA could impact potential future business and operating results[197](index=197&type=chunk) [GENERAL RISKS](index=44&type=section&id=GENERAL%20RISKS) General risks include potential negative impacts from terror attacks, war, natural disasters, or other catastrophic events beyond control, and the risk of suffering if the company cannot maintain its culture, attract, retain, and engage employees - Future terror attacks, war, natural disasters, or other catastrophic events beyond control could negatively impact the business[197](index=197&type=chunk) - Performance could suffer if the company cannot maintain its culture, attract, retain, and engage employees[197](index=197&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes in the company's quantitative and qualitative disclosures about market risk during the current year, as detailed in the Annual Report on Form 10-K for the year ended September 30, 2023 - No material changes in market risk information during the current year[196](index=196&type=chunk) - Refer to the Annual Report on Form **10-K** for the year ended **September 30, 2023**, for a complete discussion of market risk[196](index=196&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 30, 2023. There have been no material changes in internal control over financial reporting during the most recent fiscal quarter - Disclosure controls and procedures were effective as of **December 30, 2023**[199](index=199&type=chunk) - No material changes in internal control over financial reporting during the most recent fiscal quarter[199](index=199&type=chunk) PART II OTHER INFORMATION [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes in the company's risk factors during the current year, as previously discussed in the Annual Report on Form 10-K for the year ended September 30, 2023 - No material changes in risk factors during the current year[200](index=200&type=chunk) - Refer to the Annual Report on Form **10-K** for the year ended **September 30, 2023**, for a complete discussion of risk factors[200](index=200&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's purchases of common stock for the quarter ended December 30, 2023, totaled 96,425 shares at an average price of $131.53. These purchases were primarily related to the SECT acquiring Class B shares and the company accepting shares for equity-based compensation exercises and tax withholding | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :-------------------------------- | :----------------------------- | :--------------------------- | | **October 1, 2023** - **October 28, 2023** | 6,732 | **$114.38** | | **October 29, 2023** - **December 2, 2023** | 72,498 | **$130.36** | | **December 3, 2023** - **Decembe

Financial Performance - Net sales for the fiscal year ended September 30, 2023, were $3,319.1 million, an increase of 9.4% from $3,035.8 million in the previous year[217]. - Gross profit for the same period was $891.5 million, representing a gross margin of approximately 26.8%, up from $820.8 million in the prior year[217]. - Net earnings increased to $171.0 million, a rise of 10.5% compared to $155.2 million in the previous year, resulting in diluted earnings per share of $5.34[217]. - The company reported comprehensive income of $227.4 million for the fiscal year, significantly higher than $91.7 million in the previous year[219]. - The company reported net cash provided by operating activities of $135,935,000 for the fiscal year ended September 30, 2023, a decrease from $246,802,000 in the prior year[231]. Sales and Market Segmentation - Aerospace and defense OEM customers accounted for 58% of total sales in 2023, while industrial market sales represented 30%[42]. - Sales under U.S. Government contracts constituted 39% of total sales in 2023, primarily within Aircraft Controls and Space and Defense Controls segments[44]. - Net sales to the five largest customers represented approximately 32% of total sales in 2023[43]. - Aftermarket sales accounted for 13% of total sales in 2023[42]. - Sales to The Boeing Company constituted 11% of total sales in 2023, with a significant portion tied to government defense spending[62]. Research and Development - Research and development expenses were at least $107 million in each of the last three years, representing approximately 3% of sales in 2023[21]. - The company has incurred substantial expenses associated with research and development to maintain a leadership position in the high-performance, precision controls market[56]. - Research and development expenses were $106.6 million, slightly down from $109.5 million in the previous year, indicating a focus on cost management[217]. - Research and development costs are expensed as incurred, including salaries, benefits, consulting, material costs, depreciation, and amortization[241]. Backlog and Future Revenue - The twelve-month backlog as of September 30, 2023, was $2.4 billion, reflecting a 4% increase compared to October 1, 2022[17]. - As of September 30, 2023, the total backlog was $5.1 billion, representing confirmed orders expected to be recognized as revenue[63]. - The aggregate amount of transaction price allocated to unsatisfied performance obligations was $5,100,000, with an expectation to recognize approximately 47% as sales over the next twelve months[279]. - The company may not realize the full revenue value of orders in its backlog due to uncertainties in government contracts[63]. Employment and Workforce - The company hired over 2,000 new regular employees globally in 2023[25]. - The average voluntary attrition rate over the last five years was approximately 6%[33]. Financial Position and Assets - Total assets increased to $3,808.0 million from $3,431.8 million year-over-year, reflecting growth in the company's financial position[223]. - Shareholders' equity rose to $1,636.1 million, up from $1,436.8 million, indicating improved financial health and retained earnings[223]. - As of September 30, 2023, the company reported goodwill of $821 million and other intangible assets of $72 million, representing a significant portion of total assets of $3.8 billion[75]. Risks and Challenges - The company experienced supply chain constraints and inflated prices for raw materials, impacting manufacturing and operating profit[64]. - Future levels of defense spending are uncertain and subject to congressional debate, which could adversely impact sales and operating profit[61]. - The company faces risks from competitors with greater resources, which may impact sales and operating margins[55]. - The company relies on subcontractors and suppliers for manufacturing, which poses risks to contract performance and future business opportunities[65]. - The company faces potential liabilities from product defects, which could lead to recalls and significant damages, impacting financial results and reputation[69]. Environmental and Governance - The company is assessing its environmental, social, and governance impact across 25 countries to establish sustainability goals[39]. - Compliance with environmental laws may require significant capital expenditures, especially if new regulations are introduced[81]. Debt and Liabilities - The company had $368 million in borrowings subject to variable interest rates as of September 30, 2023, with an average borrowing of $481 million during the year[211]. - Long-term debt increased from $836,872 million on October 1, 2022, to $863,092 million on September 30, 2023, an increase of about 3.1%[316]. - The weighted-average interest rate on outstanding credit facility borrowings was 6.93% as of September 30, 2023[316]. Pension and Benefits - Changes in pension assumptions could adversely affect earnings and funding requirements, despite the largest pension plan being well funded[74]. - The projected benefit obligation for U.S. plans decreased from $530,946 in 2022 to $494,876 in 2023, a reduction of approximately 6.5%[339]. - The funded status for U.S. plans worsened, with a deficit of $102,432 in 2023 compared to a deficit of $85,223 in 2022, indicating a deterioration of approximately 20.2%[339]. - The company recognized a one-time settlement charge of $12,542 due to the lump sum payment made in the U.S. defined benefit pension plan[339].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ☐ 1934 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 (I.R. ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated condensed financial statements for Moog Inc., including statements of earnings, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, revenue recognition, acquisitions, and various financial accounts [Consolidated Condensed Statements of Earnings](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Earnings) This table provides key financial performance metrics for the three and six months ended April 1, 2023, and April 2, 2022 **Consolidated Condensed Statements of Earnings (Unaudited) - Key Figures (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $836.8 | $770.8 | $1,596.9 | $1,494.9 | | Gross profit | $221.3 | $213.0 | $425.0 | $405.9 | | Earnings before income taxes | $56.3 | $38.7 | $116.6 | $100.1 | | Net earnings | $43.0 | $29.1 | $89.0 | $75.4 | | Basic Net earnings per share | $1.35 | $0.91 | $2.80 | $2.35 | | Diluted Net earnings per share | $1.34 | $0.91 | $2.79 | $2.34 | [Consolidated Condensed Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Comprehensive%20Income) This table details the components of comprehensive income, including net earnings and other comprehensive income (loss), for the specified interim periods **Consolidated Condensed Statements of Comprehensive Income (Unaudited) - Key Figures (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net earnings | $43.0 | $29.1 | $89.0 | $75.4 | | Other comprehensive income (loss), net of tax | $14.7 | $(14.0) | $68.5 | $(16.4) | | Comprehensive income | $57.7 | $15.0 | $157.5 | $59.0 | [Consolidated Condensed Balance Sheets](index=6&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) This table presents the company's financial position, including assets, liabilities, and shareholders' equity, as of April 1, 2023, and October 1, 2022 **Consolidated Condensed Balance Sheets (Unaudited) - Key Figures (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :-------------------------------- | :-------------- | :-------------- | | Total current assets | $1,933.2 | $1,758.3 | | Total assets | $3,699.6 | $3,431.8 | | Total current liabilities | $842.9 | $838.4 | | Total liabilities | $2,119.8 | $1,995.0 | | Total shareholders' equity | $1,579.8 | $1,436.8 | [Consolidated Condensed Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Condensed%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in shareholders' equity, including retained earnings and dividends, for the six-month periods ended April 1, 2023, and April 2, 2022 **Consolidated Condensed Statements of Shareholders' Equity (Unaudited) - Key Figures (dollars in millions)** | Metric | April 1, 2023 (Six Months) | April 2, 2022 (Six Months) | | :-------------------------------- | :------------------------- | :------------------------- | | Beginning Retained Earnings | $2,360.1 | $2,237.8 | | Net earnings | $89.0 | $75.4 | | Dividends | $(16.9) | $(16.4) | | End Retained Earnings | $2,432.2 | $2,296.8 | | Total Shareholders' Equity | $1,579.8 | $1,430.6 | - Cash dividends were **$0.27 per share** for the three months ended April 1, 2023, and **$0.53 per share** for the six months ended April 1, 2023, representing an increase from **$0.26** and **$0.51 per share** for the corresponding periods in 2022[19](index=19&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=9&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) This table summarizes the cash flows from operating, investing, and financing activities for the six months ended April 1, 2023, and April 2, 2022 **Consolidated Condensed Statements of Cash Flows (Unaudited) - Key Figures (dollars in millions)** | Metric | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided (used) by operating activities | $(33.0) | $180.2 | | Net cash used by investing activities | $(74.2) | $(48.1) | | Net cash provided (used) by financing activities | $92.2 | $(109.7) | | Increase (decrease) in cash, cash equivalents and restricted cash | $(9.6) | $21.2 | | Cash, cash equivalents and restricted cash at end of period | $109.7 | $122.1 | [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated condensed financial statements, covering accounting policies, specific accounts, and significant events [Note 1 - Basis of Presentation](index=10&type=section&id=Note%201%20-%20Basis%20of%20Presentation) The financial statements are unaudited, prepared in accordance with U.S. GAAP for interim information, and include normal recurring adjustments, with interim results not indicative of the full year - In 2023, a **$1,000 impairment charge** was recorded on long-lived assets in the Aircraft Controls segment due to the U.S. Air Force's KC-10 tanker retirement announcement, and a **$219 impairment charge** on receivables in the Space and Defense Controls segment due to an expected contract cancellation[27](index=27&type=chunk) - In 2022, impairment charges were recorded on long-lived assets in the Aircraft Controls segment due to a slower commercial aircraft business recovery, and on receivables and inventories due to Russian actions in Ukraine[28](index=28&type=chunk) [Note 2 - Revenue from Contracts with Customers](index=11&type=section&id=Note%202%20-%20Revenue%20from%20Contracts%20with%20Customers) The company recognizes revenue using the five-step model of ASC 606, with most contracts accounted for as one performance obligation, recognized either over time or at a point in time - Revenue is recognized over time using the cost-to-cost method for U.S. Government contracts and repair/overhaul arrangements, and for many large commercial contracts where performance does not create an asset with an alternative use and there's an enforceable right to payment[38](index=38&type=chunk) - Revenue is recognized at a point in time for commercial contracts in Industrial Systems where the asset has an alternative use, determined by factors like right to payment, legal title, physical possession, risks/rewards, and customer acceptance[39](index=39&type=chunk) **Contract Assets and Liabilities (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :----------------- | :-------------- | :-------------- | | Unbilled receivables | $685.4 | $614.8 | | Contract advances | $317.3 | $296.9 | | Net contract assets | $368.1 | $317.9 | - As of April 1, 2023, the aggregate transaction price allocated to unsatisfied performance obligations was **$5.2 billion**, with approximately **44%** expected to be recognized as sales over the next twelve months[46](index=46&type=chunk) [Note 3 - Acquisitions and Divestitures](index=13&type=section&id=Note%203%20-%20Acquisitions%20and%20Divestitures) The company completed one acquisition in February 2022 and three divestitures in late 2021 and 2022, impacting its Aircraft Controls, Industrial Systems, and Space and Defense Controls segments - On February 21, 2022, Moog acquired TEAM Accessories Limited for **$14.394 million** (net of cash), specializing in Maintenance, Repair and Overhaul of engine and airframe components, integrated into the Aircraft Controls segment[48](index=48&type=chunk) - In September 2022, Moog sold a sonar business (Industrial Systems segment) for **$13.075 million** net proceeds, recording a **$15.246 million loss**, and a security business (Space and Defense Controls segment) for **$9.108 million** net proceeds, recording a **$4.324 million loss**[49](index=49&type=chunk)[50](index=50&type=chunk) - In December 2021, Moog sold its Navigation Aids (NAVAIDS) business (Aircraft Controls segment) for **$36.550 million** net proceeds, recording a **$16.146 million gain**[51](index=51&type=chunk) [Note 4 - Receivables](index=14&type=section&id=Note%204%20-%20Receivables) Receivables increased significantly from October 2022 to April 2023, primarily driven by unbilled receivables, with $100 million sold and derecognized through a Receivables Purchase Agreement **Receivables Composition (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :---------------------- | :-------------- | :-------------- | | Accounts receivable | $382.1 | $363.1 | | Unbilled receivables | $685.4 | $614.8 | | Receivables, net | $1,080.0 | $990.3 | | Allowance for credit losses | $(4.1) | $(4.6) | - Under the RPA, Moog Receivables LLC may sell receivables up to a **$100 million** limit; as of April 1, 2023, **$100 million** was sold and derecognized from the balance sheet, with **$731.26 million** in unsold receivables held as collateral[53](index=53&type=chunk)[56](index=56&type=chunk) [Note 5 - Inventories](index=15&type=section&id=Note%205%20-%20Inventories) Inventories, net of reserves, increased across all categories from October 2022 to April 2023, with work in progress being the largest component **Inventories, net of reserves (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :-------------------------- | :-------------- | :-------------- | | Raw materials and purchased parts | $260.2 | $219.9 | | Work in progress | $339.5 | $305.3 | | Finished goods | $79.3 | $63.2 | | Inventories, net | $679.0 | $588.5 | [Note 6 - Property, Plant and Equipment](index=15&type=section&id=Note%206%20-%20Property,%20Plant%20and%20Equipment) Net property, plant and equipment increased from October 2022 to April 2023, primarily driven by increases in buildings and improvements, and machinery and equipment **Property, Plant and Equipment (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :-------------------------------- | :-------------- | :-------------- | | Property, plant and equipment, at cost | $1,636.3 | $1,522.7 | | Less accumulated depreciation and amortization | $(898.7) | $(853.8) | | Property, plant and equipment, net | $737.6 | $668.9 | [Note 7 - Leases](index=15&type=section&id=Note%207%20-%20Leases) The company leases manufacturing facilities, office space, and equipment, classifying them as operating or finance leases, with weighted average remaining lease terms of 7.8 years for operating and 14.5 years for finance leases **Components of Lease Expense (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Operating lease cost | $7.6 | $7.2 | $15.0 | $14.2 | | Total finance lease cost | $1.6 | $0.9 | $2.9 | $1.7 | **Supplemental Balance Sheet Information Related to Leases (April 1, 2023)** | Metric | Operating Leases (dollars in millions) | Finance Leases (dollars in millions) | | :-------------------------------- | :------------------------------- | :----------------------------- | | Right-of-use assets (net) | $62.6 | $32.9 | | Total lease liabilities | $72.3 | $34.9 | | Weighted average remaining lease term (years) | 7.8 | 14.5 | | Weighted average discount rates | 5.1% | 5.3% | [Note 8 - Goodwill and Intangible Assets](index=18&type=section&id=Note%208%20-%20Goodwill%20and%20Intangible%20Assets) Goodwill increased across all segments, primarily due to foreign currency translation adjustments, reaching $826.5 million as of April 1, 2023, while intangible assets are amortized over their estimated useful lives **Goodwill by Segment (dollars in millions)** | Segment | Balance at October 1, 2022 | Adjustments to prior year acquisitions | Foreign currency translation | Balance at April 1, 2023 | | :---------------------- | :------------------------- | :----------------------------------- | :--------------------------- | :----------------------- | | Aircraft Controls | $199.5 | $0.1 | $4.8 | $204.4 | | Space and Defense Controls | $259.4 | — | $0.1 | $259.5 | | Industrial Systems | $346.4 | — | $16.2 | $362.6 | | Total | $805.3 | $0.1 | $21.1 | $826.5 | **Intangible Assets (April 1, 2023, dollars in millions)** | Type | Weighted Average Life (years) | Gross Carrying Amount | Accumulated Amortization | | :------------------ | :---------------------------- | :-------------------- | :----------------------- | | Customer-related | 11 | $138.9 | $(92.9) | | Technology-related | 9 | $71.6 | $(55.8) | | Program-related | 23 | $37.7 | $(21.0) | | Marketing-related | 8 | $22.4 | $(18.7) | | Other | 10 | $1.8 | $(1.6) | | Total | 12 | $272.4 | $(190.0) | - Estimated future amortization of acquired intangible assets is approximately **$11.7 million** for 2023, **$10.9 million** for 2024, **$9.8 million** for 2025, **$9.6 million** for 2026, and **$8.7 million** for 2027[69](index=69&type=chunk) [Note 9 - Equity Method Investments and Joint Ventures](index=19&type=section&id=Note%209%20-%20Equity%20Method%20Investments%20and%20Joint%20Ventures) The company holds equity method investments in joint ventures like Moog Aircraft Services Asia (MASA) and NOVI LLC, and a limited partnership, Suffolk Technologies Fund 1, L.P., with varying ownership interests and capital commitments **Equity Method Investments and Joint Ventures (April 1, 2023, dollars in millions)** | Entity | Net Investment Balance | Income (Loss) Three Months Ended | Income (Loss) Six Months Ended | | :-------------------------- | :--------------------- | :------------------------------- | :----------------------------- | | Moog Aircraft Service Asia | $1.2 | $0.1 | $(0.1) | | NOVI LLC | $0.6 | — | — | | Suffolk Technologies Fund 1, L.P. | $1.0 | $0.2 | $0.1 | | Total | $2.9 | $0.2 | $0.03 | - Moog holds a **51% ownership** in MASA (Aircraft Controls segment) for MRO services, a **42.5% interest** in NOVI LLC (Space and Defense Controls segment) for machine learning in space situational awareness, and a limited partnership interest in Suffolk Technologies Fund 1, L.P. (Industrial Systems segment) with a remaining capital commitment of up to **$6.751 million**[71](index=71&type=chunk)[72](index=72&type=chunk) [Note 10 - Indebtedness](index=20&type=section&id=Note%2010%20-%20Indebtedness) The company's long-term debt primarily consists of a U.S. revolving credit facility, SECT revolving credit facility, and senior notes, with the U.S. facility amended in October 2022 to extend maturity and increase capacity **Long-term Debt Composition (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :-------------------------- | :-------------- | :-------------- | | U.S. revolving credit facility | $435.8 | $321.3 | | SECT revolving credit facility | $28.0 | $20.0 | | Senior notes 4.25% | $500.0 | $500.0 | | Long-term debt | $958.4 | $836.9 | - The U.S. revolving credit facility was amended on October 27, 2022, extending its maturity to October 27, 2027, and increasing its capacity to **$1.1 billion** with an expansion option of up to **$400 million**[76](index=76&type=chunk) - The company has **$500 million** in **4.25% senior notes** due December 15, 2027, and is in compliance with all covenants for its financing arrangements[78](index=78&type=chunk) [Note 11 - Other Accrued Liabilities](index=21&type=section&id=Note%2011%20-%20Other%20Accrued%20Liabilities) Other accrued liabilities primarily include employee benefits, contract reserves, warranty accruals, and accrued income taxes, with warranty accrual activity showing new warranties issued and reductions for settling existing ones **Other Accrued Liabilities (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :---------------------- | :-------------- | :-------------- | | Employee benefits | $47.0 | $56.1 | | Contract reserves | $45.6 | $46.5 | | Warranty accrual | $22.1 | $23.1 | | Accrued income taxes | $24.8 | $17.8 | | Other accrued liabilities | $212.3 | $215.4 | **Warranty Accrual Activity (dollars in millions)** | Metric | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Beginning of period | $23.1 | $26.6 | | Issued during current period | $5.0 | $3.4 | | Reductions for settling warranties | $(6.0) | $(4.9) | | End of period | $22.1 | $24.5 | [Note 12 - Derivative Financial Instruments](index=21&type=section&id=Note%2012%20-%20Derivative%20Financial%20Instruments) The company uses derivative financial instruments, primarily foreign currency contracts, to manage foreign exchange risk for operations and transactions, with some designated as cash flow hedges and others not - As of April 1, 2023, the company had **$14.124 million** in notional foreign currency contracts designated as cash flow hedges, maturing through March 1, 2024, to fix exchange rates on future payments and revenue[82](index=82&type=chunk) - The company also had **$122.789 million** in notional foreign currency contracts not designated as hedging instruments, used to minimize foreign currency exposure on intercompany balances[86](index=86&type=chunk) **Fair Value of Derivatives (dollars in millions)** | Metric | April 1, 2023 | October 1, 2022 | | :-------------------------------- | :-------------- | :-------------- | | Total asset derivatives (hedging) | $0.5 | $0.7 | | Total liability derivatives (hedging) | $0.9 | $4.6 | | Asset derivatives (non-hedging) | $0.03 | $0.7 | | Liability derivatives (non-hedging) | $0.1 | $0.7 | [Note 13 - Fair Value](index=23&type=section&id=Note%2013%20-%20Fair%20Value) The company classifies its financial assets and liabilities into a fair value hierarchy, with derivatives primarily Level 2 and acquisition contingent consideration Level 3, and the fair value of long-term debt differing from its carrying value - Derivatives are valued using pricing models or discounted cash flow analyses incorporating observable market data, classifying them as **Level 2** within the valuation hierarchy[91](index=91&type=chunk) - Acquisition contingent consideration is classified as **Level 3**, with its balance decreasing from **$3.272 million** at October 1, 2022, to **$2.954 million** at April 1, 2023[91](index=91&type=chunk) - As of April 1, 2023, the fair value of long-term debt was **$920.817 million**, compared to its carrying value of **$964.574 million**, classified as **Level 2**[91](index=91&type=chunk) [Note 14 - Restructuring](index=24&type=section&id=Note%2014%20-%20Restructuring) Restructuring accruals, primarily for severance and other costs, increased from October 2022 to April 2023, with the majority related to the 2022 plan, and most costs expected to be paid within a year **Restructuring Accrual by Segment (dollars in millions)** | Segment | Balance at October 1, 2022 | Charged to expense - 2022 plan | Cash payments - 2022 plan | Balance at April 1, 2023 | | :---------------------- | :------------------------- | :----------------------------- | :------------------------ | :----------------------- | | Aircraft Controls | $0.2 | — | $(0.2) | — | | Space and Defense Controls | $0.2 | $0.7 | $(0.4) | $0.5 | | Industrial Systems | $6.7 | $2.4 | $(0.3) | $8.8 | | Total | $7.1 | $3.1 | $(1.0) | $9.3 | - As of April 1, 2023, the restructuring accrual included **$5.263 million** for the 2022 plan, **$2.707 million** for the 2020 plan, and **$1.301 million** for the 2018 plan[92](index=92&type=chunk) [Note 15 - Employee Benefit Plans](index=24&type=section&id=Note%2015%20-%20Employee%20Benefit%20Plans) The company incurs expenses for both defined contribution and defined benefit pension plans, with total expense for defined contribution plans slightly increasing and net periodic benefit costs for defined benefit plans also rising in the first half of 2023 **Total Expense for Defined Contribution Plans (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | U.S. defined contribution plans | $12.0 | $11.2 | $22.2 | $21.7 | | Non-U.S. defined contribution plans | $2.0 | $2.4 | $4.1 | $4.5 | | Total expense | $14.1 | $13.6 | $26.3 | $26.3 | **Expense for Defined Benefit Plans (Six Months Ended, dollars in millions)** | Metric | April 1, 2023 | April 2, 2022 | | :-------------------------------- | :-------------- | :-------------- | | U.S. defined benefit plans | $12.9 | $11.9 | | Non-U.S. defined benefit plans | $2.1 | $3.8 | [Note 16 - Income Taxes](index=24&type=section&id=Note%2016%20-%20Income%20Taxes) The effective tax rate for the three and six months ended April 1, 2023, was 23.6%, a decrease from the prior year, primarily due to the incremental benefit from share exercises - The effective tax rate for the three and six months ended April 1, 2023, was **23.6%**, lower than the **24.9%** and **24.8%** for the corresponding periods in 2022, mainly due to the incremental benefit from share exercises[94](index=94&type=chunk) [Note 17 - Accumulated Other Comprehensive Income (Loss)](index=25&type=section&id=Note%2017%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated Other Comprehensive Income (Loss) (AOCIL) improved significantly, moving from a loss of $(311.0) million at October 1, 2022, to $(242.5) million at April 1, 2023, driven by positive foreign currency translation adjustments and retirement liability adjustments **Changes in AOCIL (Six Months Ended April 1, 2023, dollars in millions)** | Component | AOCIL at October 1, 2022 | OCI, net of tax | AOCIL at April 1, 2023 | | :-------------------------------- | :------------------------- | :-------------- | :----------------------- | | Accumulated foreign currency translation | $(182.0) | $62.3 | $(119.7) | | Accumulated retirement liability | $(125.2) | $3.2 | $(122.0) | | Accumulated gain (loss) on derivatives | $(3.8) | $3.0 | $(0.8) | | Total | $(311.0) | $68.5 | $(242.5) | **Net Reclassification from AOCIL into Earnings (Six Months Ended, dollars in millions)** | Metric | April 1, 2023 | April 2, 2022 | | :-------------------------------- | :-------------- | :-------------- | | Retirement liability | $4.4 | $7.0 | | Derivatives | $1.7 | $0.5 | [Note 18 - Stock Employee Compensation Trust and Supplemental Retirement Plan Trust](index=26&type=section&id=Note%2018%20-%20Stock%20Employee%20Compensation%20Trust%20and%20Supplemental%20Retirement%20Plan%20Trust) The Stock Employee Compensation Trust (SECT) and Supplemental Retirement Plan (SERP) Trust hold Moog shares to fund equity-based compensation and retirement benefits, with these shares not considered outstanding for EPS calculations - The SECT assists in administering and funding equity-based compensation plans (RSP, RSP+, ESPP), while the SERP Trust funds benefits under the SERP provisions[98](index=98&type=chunk) - Shares held by the SECT and SERP Trust are not considered outstanding for earnings per share calculations, but their trustees vote them on shareholder matters[98](index=98&type=chunk) [Note 19 - Earnings per Share](index=26&type=section&id=Note%2019%20-%20Earnings%20per%20Share) Basic and diluted weighted-average shares outstanding decreased slightly in the first half of 2023 compared to 2022, while anti-dilutive shares from equity-based awards also decreased **Weighted-Average Shares Outstanding (Shares)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Basic weighted-average shares outstanding | 31,848,140 | 31,984,674 | 31,797,071 | 32,021,036 | | Diluted weighted-average shares outstanding | 32,043,910 | 32,120,726 | 31,959,315 | 32,154,442 | | Anti-dilutive shares from equity-based awards | 3,425 | 54,057 | 12,576 | 58,204 | [Note 20 - Segments](index=27&type=section&id=Note%2020%20-%20Segments) The company operates in three segments: Aircraft Controls, Space and Defense Controls, and Industrial Systems, all of which saw increased net sales for both the three and six months ended April 1, 2023 **Net Sales by Segment (dollars in millions)** | Segment | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Aircraft Controls | $347.0 | $311.3 | $657.3 | $614.6 | | Space and Defense Controls | $245.9 | $223.3 | $463.6 | $431.2 | | Industrial Systems | $243.9 | $236.2 | $476.0 | $449.1 | | Total Net sales | $836.8 | $770.8 | $1,596.9 | $1,494.9 | **Operating Profit by Segment (dollars in millions)** | Segment | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Aircraft Controls | $31.9 | $12.4 | $61.6 | $54.4 | | Space and Defense Controls | $27.5 | $24.1 | $47.8 | $45.4 | | Industrial Systems | $24.4 | $20.7 | $61.1 | $37.9 | | Total operating profit | $83.8 | $57.2 | $170.5 | $137.6 | [Note 21 - Related Party Transactions](index=29&type=section&id=Note%2021%20-%20Related%20Party%20Transactions) Moog Inc. engages in ordinary course business with M&T Bank Corporation and M&T Bank, where its Non-Executive Chairman also serves on the board, including credit extensions and an interest in the U.S. revolving credit facility - Moog Inc. has ongoing financing activities with M&T Bank, including credit extensions totaling **$7.054 million** for the six months ended April 1, 2023, and M&T Bank holds approximately **12% interest** in Moog's U.S. revolving credit facility[102](index=102&type=chunk) - Wilmington Trust, a subsidiary of M&T Bank, acts as the trustee for the pension assets of Moog's qualified U.S. defined benefit plan[102](index=102&type=chunk) [Note 22 - Commitments and Contingencies](index=29&type=section&id=Note%2022%20-%20Commitments%20and%20Contingencies) The company is involved in various legal and administrative proceedings, including environmental matters, but does not expect them to have a material adverse effect, and is contingently liable for standby letters of credit - Moog is involved in legal and administrative proceedings, including environmental matters, but management believes adequate reserves are established and no material adverse effect on financial condition, results of operations, or cash flows is expected[103](index=103&type=chunk)[104](index=104&type=chunk) - The company is contingently liable for **$22.027 million** related to standby letters of credit issued by a bank to third parties as of April 1, 2023[106](index=106&type=chunk) [Note 23 - Subsequent Event](index=29&type=section&id=Note%2023%20-%20Subsequent%20Event) On April 27, 2023, the company declared a quarterly dividend of $0.27 per share for Class A and Class B common stock, payable on May 30, 2023 - On April 27, 2023, Moog declared a **$0.27 per share** quarterly dividend for Class A and Class B common stock, payable on May 30, 2023, to shareholders of record on May 12, 2023[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, covering consolidated results, segment-specific performance, liquidity, capital resources, and market trends [OVERVIEW](index=30&type=section&id=OVERVIEW) Moog Inc. is a global designer and manufacturer of high-performance precision motion and fluid controls for aerospace and defense and industrial markets, operating through three segments - Moog Inc. operates in aerospace and defense (primary/secondary flight controls, weapon systems, satellite positioning) and industrial markets (industrial automation, medical, energy)[110](index=110&type=chunk)[113](index=113&type=chunk) - For the quarter ended April 1, 2023, **64% of revenue** was recognized over time (predominantly Aircraft Controls and Space and Defense Controls) and **36%** at a point in time (most frequently Industrial Systems)[111](index=111&type=chunk)[112](index=112&type=chunk) - The company aims to improve shareholder value through strategic revenue growth (organic and acquired), enhanced operating efficiencies, manufacturing productivity, and capital deployment including acquisitions, share buybacks, and dividends[116](index=116&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=32&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) The company regularly evaluates critical accounting policies, including revenue recognition on long-term contracts, contract reserves, inventory valuation, impairment reviews for goodwill and long-lived assets, pension assumptions, and income taxes - Critical accounting policies include revenue recognition on long-term contracts, contract reserves, inventory valuation, impairment reviews of goodwill and long-lived assets, pension assumptions, and income taxes[122](index=122&type=chunk) [RECENT ACCOUNTING PRONOUNCEMENTS](index=32&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) There have been no new accounting pronouncements adopted for the six months ended April 1, 2023, and other ASUs are assessed to be either not applicable or to have an immaterial impact - No new accounting pronouncements were adopted for the six months ended April 1, 2023; other ASUs were assessed and deemed either not applicable or to have an immaterial impact[30](index=30&type=chunk)[31](index=31&type=chunk)[123](index=123&type=chunk) [CONSOLIDATED RESULTS OF OPERATIONS](index=33&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Consolidated net sales increased across all segments in Q2 and H1 2023, despite negative impacts from foreign currency and divested businesses, with net earnings and diluted EPS seeing significant growth **Consolidated Results of Operations (dollars in millions, except per share data)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | % Variance | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | % Variance | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------- | :------------------------------- | :--------- | | Net sales | $837 | $771 | 9% | $1,597 | $1,495 | 7% | | Gross margin | 26.4% | 27.6% | | 26.6% | 27.2% | | | Research and development expenses | $27 | $31 | (13%) | $51 | $58 | (13%) | | Selling, general and administrative expenses as a percentage of sales | 13.9% | 14.4% | | 14.4% | 14.9% | | | Interest expense | $15 | $8 | 81% | $28 | $16 | 73% | | Asset impairment | $1 | $15 | (92%) | $1 | $15 | (92%) | | Restructuring expense | $2 | $8 | (74%) | $3 | $8 | (60%) | | Net earnings | $43 | $29 | 48% | $89 | $75 | 18% | | Diluted earnings per share | $1.34 | $0.91 | 47% | $2.79 | $2.34 | 19% | - Net sales increased **11% in Q2 2023** and **10% in H1 2023**, excluding negative impacts of **$10 million** (Q2) and **$26 million** (H1) from weaker foreign currencies and **$8 million** (Q2) and **$20 million** (H1) from divested businesses[125](index=125&type=chunk) - Gross margin decreased in Q2 and H1 2023 due to unfavorable sales mix in Aircraft Controls, contract-related charges in Space and Defense Controls, and operational charges in Industrial Systems, partially offset by higher sales volumes[126](index=126&type=chunk) - Twelve-month backlog remained relatively unchanged in Q2 2023, with higher orders in Industrial Systems (simulation, test, core industrial) offsetting slight decreases in Aircraft Controls (military development work-down) and Space and Defense Controls (divested security business, timing of missile orders)[131](index=131&type=chunk) [SEGMENT RESULTS OF OPERATIONS](index=35&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) Segment operating profits show varied performance, with Aircraft Controls seeing significant growth, Space and Defense Controls facing development charges, and Industrial Systems benefiting from market recoveries and asset sales [Aircraft Controls](index=35&type=section&id=Aircraft%20Controls) Aircraft Controls net sales increased due to commercial aircraft market recovery, particularly in OEM and aftermarket programs, despite lower military sales, leading to improved operating margin **Aircraft Controls Segment Performance (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | % Variance | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | % Variance | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------- | :------------------------------- | :--------- | | Net sales - military aircraft | $176 | $192 | (9%) | $347 | $378 | (8%) | | Net sales - commercial aircraft | $171 | $119 | 44% | $310 | $237 | 31% | | Total Net sales | $347 | $311 | 11% | $657 | $615 | 7% | | Operating profit | $32 | $12 | 156% | $62 | $54 | 13% | | Operating margin | 9.2% | 4.0% | | 9.4% | 8.8% | | - Commercial OEM sales increased **$43 million in Q2 2023**, with wide-body programs up **$20 million** and business jets/Genesys programs up **$14 million**; commercial aftermarket sales increased **$9 million**, driven by spares and repair volume for the A350 program[135](index=135&type=chunk) - Military aftermarket sales declined **$10 million**, and military OEM programs decreased **$6 million**, partially offset by a **$7 million increase** in the F-35 program[136](index=136&type=chunk) - Adjusted operating margin for Q2 2023 was **9.5%** (vs. 10.0% in Q2 2022) and for H1 2023 was **9.5%** (vs. 9.3% in H1 2022), reflecting an unfavorable sales mix from higher commercial OEM sales, partially offset by lower R&D expenses and incremental sales volumes[138](index=138&type=chunk)[139](index=139&type=chunk) [Space and Defense Controls](index=36&type=section&id=Space%20and%20Defense%20Controls) Space and Defense Controls experienced net sales growth driven by both space and defense markets, with operating margin increasing in Q2 2023 but declining in H1 2023 on an adjusted basis due to development program costs **Space and Defense Controls Segment Performance (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | % Variance | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | % Variance | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------- | :------------------------------- | :--------- | | Net sales | $246 | $223 | 10% | $464 | $431 | 8% | | Operating profit | $28 | $24 | 14% | $48 | $45 | 5% | | Operating margin | 11.2% | 10.8% | | 10.3% | 10.5% | | - Space market sales increased **$18 million in Q2 2023** (excluding product shift) due to accelerated activity on satellite avionics and space vehicle programs; defense market sales increased **$5 million**, driven by an **$11 million increase** from the RIwP turret program reaching full-rate production, partially offset by the absence of sales from a divested security business[141](index=141&type=chunk) - Adjusted operating margin for Q2 2023 was **11.7%** (vs. 11.6% in Q2 2022), benefiting from higher sales but offset by nearly **300 basis points** of development charges on space vehicle programs; adjusted operating margin for H1 2023 was **10.6%** (vs. 11.3% in H1 2022) due to cost growth on space vehicle development programs[143](index=143&type=chunk)[144](index=144&type=chunk) [Industrial Systems](index=37&type=section&id=Industrial%20Systems) Industrial Systems net sales increased due to general market recoveries, despite negative impacts from weaker foreign currencies and a divested sonar business, with operating margin improving significantly in H1 2023 **Industrial Systems Segment Performance (dollars in millions)** | Metric | Three Months Ended April 1, 2023 | Three Months Ended April 2, 2022 | % Variance | Six Months Ended April 1, 2023 | Six Months Ended April 2, 2022 | % Variance | | :-------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------- | :------------------------------- | :--------- | | Net sales | $244 | $236 | 3% | $476 | $449 | 6% | | Operating profit | $24 | $21 | 18% | $61 | $38 | 61% | | Operating margin | 10.0% | 8.8% | | 12.8% | 8.4% | | - Excluding weaker foreign currencies (**$7 million Q2**, **$18 million H1**) and divested sonar business sales (**$3 million Q2**, **$6 million H1**), sales increased **8% in Q2 2023** and **12% in H1 2023**[146](index=146&type=chunk) - Industrial automation market sales increased **$15 million in Q2 2023**; in H1 2023, sales increased **$24 million** for industrial automation, **$5 million** in medical, **$1 million** in simulation and test, and **$3 million** in energy (excluding divested business)[147](index=147&type=chunk)[148](index=148&type=chunk) - Operating margin in H1 2023 included a **$10 million gain** from the sale of three buildings; adjusted operating margin for H1 2023 was **11.3%** (vs. 9.3% in H1 2022), driven by incremental margin from higher sales volumes[150](index=150&type=chunk) [CONSOLIDATED SEGMENT OUTLOOK](index=38&type=section&id=CONSOLIDATED%20SEGMENT%20OUTLOOK) Moog Inc. anticipates higher sales and operating margins in 2023, driven by commercial and industrial market recoveries and increased demand for space and defense programs, with net earnings and diluted EPS also expected to increase **2023 Outlook vs. 2022 (dollars in millions, except per share data)** | Metric | 2023 Outlook | 2022 | $ Variance | % Variance | | :-------------------------- | :------------- | :--- | :--------- | :--------- | | Net sales | $3,190 | $3,036 | $154 | 5% | | Operating profit | $354 | $283 | $71 | 25% | | Operating margin | 11.1% | 9.3% | | | | Net earnings | $186 | $155 | | | | Diluted earnings per share | $5.81 | $4.83 | | | - Total company sales growth is expected to be **7% in 2023**, excluding impacts from 2022 divestitures and weaker foreign currencies; adjusted operating margin is projected to increase to **11.0%** from **10.2% in 2022**[152](index=152&type=chunk) - Aircraft Controls expects sales increases in commercial OEM programs and a slight operating margin increase due to improved factory utilization[153](index=153&type=chunk) - Space and Defense Controls anticipates sales growth in space and defense programs and increased operating margin from higher sales volume and absence of prior charges[154](index=154&type=chunk) - Industrial Systems projects sales increases across markets and an improved operating margin from building sales gain, lower charges, and portfolio shaping[155](index=155&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company experienced a shift from cash provided by operating activities to cash used in H1 2023, primarily due to increased inventory and receivables, while financing activities provided cash through net borrowings **Net Cash Provided (Used) by Activities (Six Months Ended, dollars in millions)** | Metric | April 1, 2023 | April 2, 2022 | $ Variance | | :-------------------------- | :-------------- | :-------------- | :--------- | | Operating activities | $(33) | $180 | $(213) | | Investing activities | $(74) | $(48) | $(26) | | Financing activities | $92 | $(110) | $202 | - Operating activities used **$33 million in H1 2023**, a **$213 million decrease** from H1 2022, primarily due to **$79 million more cash used by inventory**, **$72 million more by accounts receivable**, and **$43 million less from customer advances**[157](index=157&type=chunk) - Investing activities used **$74 million in H1 2023**, including **$90 million in capital expenditures** (with a **$28 million building purchase**), partially offset by **$20 million** from sales of buildings and businesses; capital expenditures are projected to be **$165 million in 2023**[159](index=159&type=chunk)[160](index=160&type=chunk) - Financing activities provided **$92 million in H1 2023**, including **$122 million of net borrowings** on credit facilities, partially offset by **$17 million** for dividend payments and **$8 million** for share repurchases[161](index=161&type=chunk) - As of April 1, 2023, the company had **$663 million of unused capacity**, including **$645 million** from the U.S. revolving credit facility, and was in compliance with all financing covenants[174](index=174&type=chunk) [ECONOMIC CONDITIONS AND MARKET TRENDS](index=42&type=section&id=ECONOMIC%20CONDITIONS%20AND%20MARKET%20TRENDS) The company's businesses operate in aerospace and defense and industrial markets, facing varying supply chain pressures, with defense spending increasing, commercial aircraft recovering, and industrial markets showing increased order demand - Aerospace and defense businesses accounted for **70% of 2022 sales**, with defense market funding increasing and commercial aircraft market (less than **18% of 2022 sales**) still recovering, especially international travel[184](index=184&type=chunk) - Industrial markets (**30% of 2022 sales**) benefited from increased order demand in industrial automation, simulation and test, and energy, but are now experiencing supply chain pressures[185](index=185&type=chunk) - Weaker foreign currencies, primarily the Euro and British Pound, against the U.S. dollar decreased sales by **$26 million** in the first six months of 2023 compared to the prior year[125](index=125&type=chunk)[197](index=197&type=chunk) [Cautionary Statement](index=44&type=section&id=Cautionary%20Statement) This section outlines various strategic, market condition, operational, financial, legal, compliance, and general risks that could cause actual results to differ materially from forward-looking statements - Forward-looking statements are subject to factors, risks, and uncertainties, including competitive markets, R&D success, intellectual property protection, acquisition/divestiture integration, cyclical markets, government contract dependency, customer concentration (Boeing, Lockheed Martin), backlog realization, supply chain issues, health pandemics, information systems risks, product quality, and product failure[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) - Additional risks include accounting estimates for over-time contracts, fixed-price contract losses, indebtedness covenants, pension funding, goodwill impairment, income tax liabilities, foreign operations risks, government regulations, legal proceedings, environmental laws, sustainability goals, catastrophic events, and employee retention[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes in the company's market risk disclosures since the Annual Report on Form 10-K for the fiscal year ended October 1, 2022 - No material changes in market risk information have occurred in the current year compared to the disclosures in the Annual Report on Form 10-K for the fiscal year ended October 1, 2022[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of April 1, 2023, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of April 1, 2023[208](index=208&type=chunk) - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[208](index=208&type=chunk) PART II OTHER INFORMATION [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the Annual Report on Form 10-K for the fiscal year ended October 1, 2022 - No material changes in risk factors have occurred in the current year compared to the disclosures in the Annual Report on Form 10-K for the fiscal year ended October 1, 2022[209](index=209&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's share repurchase program allows for the purchase of up to 3 million common shares, with approximately 2.2 million shares remaining under authorization as of April 1, 2023 **Common Stock Purchases for the Quarter Ended April 1, 2023** | Period | Total Number of Shares Purchased | Average Price Paid Per Share (dollars) | Maximum Number of Shares that May Yet Be Purchased Under Plans or Programs | | :----------------------------------- | :------------------------------- | :----------------------------------- | :----------------------------------------------------------------------- | | January 1, 2023 - January 28, 2023 | 92,322 | $87.13 | 2,198,081 | | January 29, 2023 - February 25, 2023 | 28,745 | $97.79 | 2,198,081 | | February 26, 2023 - April 1, 2023 | 23,421 | $100.30 | 2,198,081 | | Total | 144,488 | $91.39 | 2,198,081 | - The Board of Directors authorized a share repurchase program for up to **3 million common shares** (Class A or Class B), with approximately **2.2 million shares** remaining under this authorization[212](index=212&type=chunk) - Purchases included shares by the SECT from the ESPP, RSP, and equity-based compensation award recipients, as well as shares accepted/withheld for exercise price and tax obligations related to equity-based awards[212](index=212&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements, certifications from the CEO and CFO, and XBRL interactive data files - Exhibits include Form of Employment Termination Benefits Agreement, Certifications of Chief Executive Officer and Chief Financial Officer (pursuant to Exchange Act Rule 13a-14(a) and 18 U.S.C. Section 1350), and Interactive Data Files (XBRL)[213](index=213&type=chunk)[214](index=214&type=chunk) SIGNATURES This section confirms the official signing of the report by the Chief Executive Officer, Chief Financial Officer, and Controller on April 28, 2023 - The report was signed on **April 28, 2023**, by Pat Roche (Chief Executive Officer), Jennifer Walter (Vice President and Chief Financial Officer), and Michael J. Swope (Controller)[216](index=216&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 1, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 (I.R.S. ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 2, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ☐ 1934 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 (St ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ☐ 1934 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 (S ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 1, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF ☐ 1934 For the transition period from _________ to _________ Commission file number 1-05129 MOOG Inc. (Exact name of registrant as specified in its charter) New York 16-0757636 ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Moog Inc. is a global designer and manufacturer of precision motion and fluid controls across aerospace, defense, and industrial markets, with 44% of 2021 revenue from U.S. Government contracts - Moog operates through **three primary segments**: Aircraft Controls, Space and Defense Controls, and Industrial Systems[12](index=12&type=chunk) - Sales from U.S. Government contracts represented **44% of total sales** in fiscal year 2021[15](index=15&type=chunk) - The twelve-month backlog as of October 2, 2021, reached **$2.1 billion**, a **24% increase** year-over-year[16](index=16&type=chunk) - Moog employs nearly **14,000 people** across **more than 25 countries**, demonstrating its global presence[21](index=21&type=chunk) - Key customers include major aerospace and defense OEMs (Boeing, Lockheed Martin, Airbus) and industrial/medical companies (McKesson, Phillips Healthcare)[44](index=44&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) Moog faces significant risks from the COVID-19 pandemic, intense competition, reliance on government contracts, customer concentration, and fixed-price contract exposure - The COVID-19 pandemic continues to pose significant risks, impacting customer demand, manufacturing, and supply chains, especially in commercial aviation[55](index=55&type=chunk) - Intense competition from larger, more diversified firms with greater financial and R&D resources poses a significant challenge[56](index=56&type=chunk) - A substantial **44% of 2021 sales** depends on U.S. Government contracts, subject to funding fluctuations and termination risks[63](index=63&type=chunk) - Significant customer concentration exists, with **Boeing and Lockheed Martin each accounting for 12% of total sales** in 2021[64](index=64&type=chunk) - **88% of 2021 sales** using the cost-to-cost method were from fixed-price contracts, exposing the company to cost overrun losses[71](index=71&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[85](index=85&type=chunk) [Properties](index=18&type=section&id=Item%202.%20Properties) As of October 2, 2021, Moog occupied 5.7 million square feet globally, with 4.2 million owned and 1.5 million leased, across its segments Total Occupied Space by Segment (as of Oct 2, 2021) | Segment | Owned (sq ft) | Leased (sq ft) | Total (sq ft) | | :--- | :--- | :--- | :--- | | Aircraft Controls | 1,530,000 | 419,000 | 1,949,000 | | Space and Defense Controls | 912,000 | 522,000 | 1,434,000 | | Industrial Systems | 1,710,000 | 603,000 | 2,313,000 | | Corporate Headquarters | 20,000 | — | 20,000 | | **Total** | **4,172,000** | **1,544,000** | **5,716,000** | [Legal Proceedings](index=18&type=section&id=Item%203.%20Legal%20Proceedings) No pending legal proceedings are expected to have a material adverse effect on the company's financial condition or operations - Management believes no pending legal proceedings will materially adversely affect the company's financial condition[87](index=87&type=chunk) [Mine Safety Disclosures](index=18&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[87](index=87&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=19&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Moog's Class A and B common stocks trade on the NYSE; the company repurchased 75,230 shares in Q4 2021 under a 3 million share program - The company's Class A (MOG.A) and Class B (MOG.B) common stocks are traded on the NYSE[88](index=88&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Shares Purchased Under Program | | :--- | :--- | :--- | :--- | | July 4 - July 31, 2021 | 4,471 | 83.34 | — | | Aug 1 - Aug 28, 2021 | 49,300 | 74.53 | 46,724 | | Aug 29 - Oct 2, 2021 | 21,459 | 75.88 | 15,700 | | **Total** | **75,230** | **75.44** | **62,424** | - A new share repurchase program authorized up to **3 million common shares** on November 20, 2020, with **2,756,853 shares remaining** as of October 2, 2021[91](index=91&type=chunk) [Selected Financial Data](index=21&type=section&id=Item%206.%20Selected%20Financial%20Data) Fiscal 2021 saw net sales of $2.85 billion, with net earnings recovering to $157.2 million and diluted EPS of $4.87, while the twelve-month backlog grew to $2.1 billion Five-Year Selected Financial Data (in thousands, except per share data) | Metric | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales (thousands) | $2,851,993 | $2,884,554 | $2,904,663 | $2,709,468 | $2,497,524 | | Net earnings (thousands) | $157,220 | $9,205 | $174,548 | $95,240 | $143,157 | | Diluted EPS ($) | 4.87 | 0.28 | 4.96 | 2.64 | 3.95 | | Twelve-month backlog (thousands) | $2,100,000 | $1,700,000 | $1,500,000 | $1,500,000 | $1,200,000 | | Net debt to capitalization (%) | 36 | 40 | 36 | 38 | 33 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses fiscal 2021's 1% sales decrease to $2.85 billion, significant net earnings recovery to $157 million, and a positive 2022 outlook with projected sales of $3.04 billion and EPS of $5.30-$5.70 [Consolidated Results of Operations](index=29&type=section&id=Consolidated%20Results%20of%20Operations) Fiscal 2021 net sales decreased 1% to $2.85 billion, while net earnings surged to $157 million from $9 million in 2020, and backlog increased 24% to $2.1 billion FY2021 vs FY2020 Consolidated Results (in millions) | Metric | 2021 (millions) | 2020 (millions) | $ Variance (millions) | % Variance | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,852 | $2,885 | $(33) | (1%) | | Net earnings | $157 | $9 | $148 | n/a | | Diluted EPS ($) | 4.87 | 0.28 | 4.59 | n/a | | Twelve-month backlog (millions) | $2,100 | $1,700 | $400 | 24% | - The significant increase in net earnings was primarily due to the absence of 2020's **$121 million pension settlement charge**, **$38 million long-lived asset impairments**, and **$23 million inventory write-down**[139](index=139&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Segment Results of Operations](index=31&type=section&id=Segment%20Results%20of%20Operations) In fiscal 2021, Aircraft Controls sales declined 4% to $1.16 billion, Space and Defense grew 4% to $799 million, and Industrial Systems fell 2% to $892 million, with varied operating profit changes - Aircraft Controls sales decreased **4% to $1.16 billion**, driven by a **22% decline in commercial aircraft sales**; operating profit surged **179% to $97 million** due to the absence of prior year charges[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - Space and Defense Controls sales increased **4% to $799 million**, but operating margin decreased from **13.2% to 11.1%** due to higher costs and supply chain challenges[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Industrial Systems sales declined **2% to $892 million**, while operating profit increased **7% to $86 million** due to lower COVID-related charges[157](index=157&type=chunk)[159](index=159&type=chunk) [Segment Outlook](index=34&type=section&id=Segment%20Outlook) Moog forecasts a 6% increase in fiscal 2022 net sales to $3.04 billion, with operating profit growing 16% to $313 million and diluted EPS projected at $5.30-$5.70 2022 Financial Outlook (in millions, except EPS) | Metric | 2022 Forecast (millions) | 2021 Actual (millions) | % Variance | | :--- | :--- | :--- | :--- | | Net Sales | $3,035 | $2,852 | 6% | | Operating Profit | $313 | $271 | 16% | | Diluted EPS ($) | $5.30 - $5.70 | $4.87 | +13% (at midpoint) | - Aircraft Controls sales are expected to grow **7% in 2022**, driven by recovery in commercial OEM and military programs[161](index=161&type=chunk) - Space and Defense Controls sales are projected to increase **10% in 2022**, fueled by advanced space missions, satellites, and new defense programs[162](index=162&type=chunk) [Financial Condition and Liquidity](index=35&type=section&id=Financial%20Condition%20and%20Liquidity) Fiscal 2021 saw net cash from operating activities increase 5% to $293 million, investing activities use $191 million, and financing activities use $87 million, improving net debt to capitalization to 36% Cash Flow Summary (in millions) | Activity | 2021 (millions) | 2020 (millions) | % Variance | | :--- | :--- | :--- | :--- | | Operating activities | $293 | $279 | 5% | | Investing activities | $(191) | $(146) | 31% | | Financing activities | $(87) | $(143) | (39%) | - The company invested **$78 million** for the Genesys acquisition and increased capital expenditures to **$129 million** in 2021[168](index=168&type=chunk) - Net debt to capitalization improved to **36%** at fiscal year-end 2021, down from **40%** in 2020, driven by increased total capitalization[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Moog faces market risks from interest rate fluctuations on $409 million variable-rate debt and foreign currency exposure on one-fifth of 2021 sales, mitigated by derivatives - A hypothetical **one percentage point increase in interest rates** would have increased 2021 interest expense by **$5 million**[207](index=207&type=chunk) - A hypothetical **10% change in the U.S. dollar's value** would have impacted 2021 net earnings by approximately **$6 million** from translation effects[209](index=209&type=chunk) - The company uses forward currency contracts to hedge foreign currency cash flows, with **$172 million notional amounts** outstanding as of October 2, 2021[208](index=208&type=chunk) [Financial Statements and Supplementary Data](index=41&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for fiscal years 2019-2021, showing a significant 2021 profitability rebound with $157.2 million net earnings, $3.43 billion total assets, and $1.40 billion shareholders' equity Consolidated Statement of Earnings Highlights (in thousands) | Line Item | FY 2021 (thousands) | FY 2020 (thousands) | FY 2019 (thousands) | | :--- | :--- | :--- | :--- | | Net sales | $2,851,993 | $2,884,554 | $2,904,663 | | Gross profit | $775,723 | $743,696 | $815,832 | | Earnings before income taxes | $203,774 | $5,417 | $226,952 | | Net earnings | $157,220 | $9,205 | $174,548 | | Diluted EPS ($) | 4.87 | 0.28 | 4.96 | Consolidated Balance Sheet Highlights (in thousands) | Line Item | Oct 2, 2021 (thousands) | Oct 3, 2020 (thousands) | | :--- | :--- | :--- | | Total current assets | $1,718,780 | $1,613,487 | | Total assets | $3,433,169 | $3,225,831 | | Total current liabilities | $869,361 | $710,554 | | Long-term debt | $823,355 | $929,982 | | Total shareholders' equity | $1,400,144 | $1,243,083 | Consolidated Cash Flow Highlights (in thousands) | Line Item | FY 2021 (thousands) | FY 2020 (thousands) | FY 2019 (thousands) | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $293,226 | $279,177 | $181,423 | | Net cash used by investing activities | $(191,157) | $(146,193) | $(115,720) | | Net cash used by financing activities | $(86,995) | $(142,766) | $(98,681) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=95&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section is not applicable to the company - Not applicable[439](index=439&type=chunk) [Controls and Procedures](index=95&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and internal control over financial reporting were effective, with no material changes during the recent fiscal quarter - The CEO and CFO concluded that disclosure controls and procedures are **effective** as of the report's end[440](index=440&type=chunk) - No material changes occurred in internal control over financial reporting during the most recent fiscal quarter[442](index=442&type=chunk) [Other Information](index=95&type=section&id=Item%209B.%20Other%20Information) On November 15, 2021, the Board adopted amended by-laws and approved revisions to executive compensation plans, including SARs, RSUs, and the Short Term Incentive Plan - The Board of Directors adopted amended and restated by-laws effective **November 15, 2021**[443](index=443&type=chunk) - Revisions were made to executive compensation plans, including SARs and RSUs, and the Management Short Term Incentive Plan, adjusting EPS and FCF weighting to **75% and 25%** respectively[444](index=444&type=chunk)[445](index=445&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=97&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the **2021 Proxy Statement**[448](index=448&type=chunk) [Executive Compensation](index=97&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation is incorporated by reference from the 2021 Proxy Statement - Information regarding executive compensation is incorporated by reference from the **2021 Proxy Statement**[450](index=450&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=97&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2021 Proxy Statement - Information regarding security ownership and equity compensation plans is incorporated by reference from the **2021 Proxy Statement**[451](index=451&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=97&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2021 Proxy Statement - Information regarding related party transactions and director independence is incorporated by reference from the **2021 Proxy Statement**[452](index=452&type=chunk) [Principal Accountant Fees and Services](index=97&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - Information regarding principal accountant fees and services is incorporated by reference from the **2021 Proxy Statement**[453](index=453&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - Lists all financial statements, schedules, and exhibits filed with the Form 10-K[456](index=456&type=chunk) [Form 10-K Summary](index=103&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided by the company - None[465](index=465&type=chunk)