PART I FINANCIAL INFORMATION Financial Statements Net sales rose 5% to $1.49 billion, but net earnings fell 13% to $75.4 million due to significant asset impairment and restructuring charges Consolidated Earnings Summary (Six Months Ended) | Metric | Six Months Ended April 2, 2022 | Six Months Ended April 3, 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,494.9M | $1,420.4M | +5.2% | | Gross Profit | $405.9M | $389.6M | +4.2% | | Asset Impairment | $15.2M | $0 | N/A | | Restructuring | $7.8M | $0 | N/A | | Net Earnings | $75.4M | $86.5M | -12.9% | | Diluted EPS | $2.34 | $2.68 | -12.7% | Consolidated Balance Sheet Summary | Metric | April 2, 2022 | October 2, 2021 | | :--- | :--- | :--- | | Total Current Assets | $1,712.8M | $1,718.8M | | Total Assets | $3,441.5M | $3,433.2M | | Total Current Liabilities | $842.4M | $869.4M | | Total Liabilities | $2,010.8M | $2,033.0M | | Total Shareholders' Equity | $1,430.6M | $1,400.1M | Consolidated Cash Flow Summary (Six Months Ended) | Metric | Six Months Ended April 2, 2022 | Six Months Ended April 3, 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $180.2M | $137.4M | | Net Cash used by Investing Activities | ($48.1M) | ($133.7M) | | Net Cash (used) provided by Financing Activities | ($109.7M) | $1.4M | - In 2022, the company recorded impairment charges on long-lived assets in the Aircraft Controls segment due to a slower-than-expected recovery of the commercial aircraft business. Additional impairment charges on receivables and inventories were recorded due to Russian actions in Ukraine28 Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales increased 5% to $1.495 billion, but diluted EPS fell 13% to $2.34 due to Q2 asset impairments and restructuring - In Q2 2022, the company incurred $15 million of asset impairments and $8 million of restructuring expenses, primarily in Aircraft Controls, due to business resizing and portfolio shaping. An additional $2 million in charges were recognized related to Russian actions in Ukraine. These charges impacted diluted EPS by $0.59131 - The twelve-month backlog increased by 21% to $2.3 billion as of April 2, 2022, compared to $1.9 billion a year prior, with increases across all segments128132 - The company divested its NAVAIDS business in Q1 2022, resulting in a $16 million gain and proceeds of $39 million. It also acquired TEAM Accessories Limited for $15 million in Q2 2022 to bolster its MRO capabilities in the Aircraft Controls segment120122 - The fiscal 2022 outlook projects net sales of approximately $3.035 billion, a 6% increase from 2021. The diluted EPS is forecasted to be between $5.04 and $5.44. Adjusted EPS, excluding the NAVAIDS gain and other charges, is expected to be between $5.30 and $5.70149 Aircraft Controls Segment Analysis Aircraft Controls sales grew 4% to $615 million, driven by commercial aircraft, despite a military sales decline; operating profit rose 9% to $54 million Aircraft Controls Performance (Six Months Ended) | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $615M | $591M | +4% | | Military Aircraft Sales | $378M | $407M | -7% | | Commercial Aircraft Sales | $237M | $184M | +29% | | Operating Profit | $54M | $50M | +9% | | Operating Margin | 8.8% | 8.4% | +40 bps | - The segment's operating margin was impacted by a $16 million gain from the NAVAIDS business sale, offset by $15 million of impairment and $4 million of restructuring expenses in Q2. Adjusted operating margin for H1 2022 was 9.3%138 Space and Defense Controls Segment Analysis Space and Defense Controls sales increased 9% to $431 million, but operating profit fell 9% to $45 million due to restructuring and labor inefficiencies Space and Defense Controls Performance (Six Months Ended) | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $431M | $394M | +9% | | Operating Profit | $45M | $50M | -9% | | Operating Margin | 10.5% | 12.6% | -210 bps | - Defense market sales increased by $28 million in H1 2022, primarily driven by a $30 million sales increase in the RIwP program141 - Operating margin was negatively impacted by $2 million in Q2 restructuring charges and continued direct labor inefficiencies related to COVID-19142 Industrial Systems Segment Analysis Industrial Systems sales grew 3% to $449 million, but operating profit decreased 13% to $38 million due to impairment and restructuring charges Industrial Systems Performance (Six Months Ended) | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $449M | $435M | +3% | | Operating Profit | $38M | $44M | -13% | | Operating Margin | 8.4% | 10.1% | -170 bps | - Sales growth was driven by simulation and test (+$12M) and energy (+$7M) markets, while medical market sales decreased by $11M. Weaker foreign currencies reduced sales by $8M144146 - Operating margin was negatively affected by a $2 million impairment charge related to Russia, $2 million in restructuring charges, and disruptions from facility consolidations in Europe and the US147 Financial Condition and Liquidity Net cash from operating activities increased to $180 million, boosted by a new receivables purchase agreement, with $785 million unused borrowing capacity - Net cash from operating activities increased by $43 million YoY, primarily due to a $100 million benefit from a new receivables purchase agreement (RPA)153155 - The company entered into a new Receivables Purchase Agreement (RPA) on November 4, 2021, allowing it to sell up to $100 million in receivables. As of April 2, 2022, the full $100 million was sold and derecognized from the balance sheet168169171 - As of April 2, 2022, the company had $785 million of unused borrowing capacity, including $756 million from its U.S. revolving credit facility. Net debt to capitalization decreased to 33% from 36% at the end of fiscal 2021173 Quantitative and Qualitative Disclosures about Market Risk No material changes occurred in the company's market risk disclosures compared to the prior fiscal year's Annual Report on Form 10-K - There have been no material changes in the company's market risk disclosures during the current year202 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the quarter204 - No material changes to the company's internal control over financial reporting occurred during the most recent fiscal quarter204 PART II OTHER INFORMATION Risk Factors No material changes occurred in the company's risk factors compared to the prior fiscal year's Annual Report on Form 10-K - There have been no material changes in the company's risk factors during the current year205 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 223,893 shares at an average price of $80.16 per share, with 2,517,925 shares remaining authorized Share Repurchases (Quarter Ended April 2, 2022) | Metric | Value | | :--- | :--- | | Total Shares Purchased | 223,893 | | Average Price Paid Per Share | $80.16 | | Shares Purchased Under Public Plan | 55,274 | | Shares Remaining for Repurchase | 2,517,925 | Exhibits The report includes filed exhibits such as CEO and CFO certifications and Interactive Data Files (XBRL) - Exhibits filed with the report include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL data files (101, 104)210
Moog(MOG_A) - 2022 Q2 - Quarterly Report