Financial Performance - Net sales for the fiscal year ended October 1, 2022, were $3,035,783, an increase of 6.4% compared to $2,851,993 in the previous year [221]. - Gross profit for the same period was $820,801, representing a gross margin of approximately 27.0% [221]. - Net earnings decreased slightly to $155,177 from $157,220 in the prior year, reflecting a decline of 1.3% [221]. - Research and development expenses were $109,527, down from $125,528 in the previous year, indicating a reduction of 12.8% [221]. - Net cash provided by operating activities was $246,802 thousand, down from $293,226 thousand in the prior year [235]. - The company incurred a loss on the sale of businesses amounting to $3,346 thousand in the current fiscal year, compared to $1,536 thousand in the previous year [235]. - Cash dividends were $1.03 per share for the fiscal year ended October 1, 2022, compared to $1.00 per share in the previous year [230]. Backlog and Sales - The twelve-month backlog was $2.3 billion as of October 1, 2022, representing a 10% increase compared to October 2, 2021 [17]. - As of October 1, 2022, the total backlog was $5.2 billion, representing confirmed orders expected to be recognized as revenue [62]. - Aerospace and defense OEM customers represented 58% of total sales in 2022, while industrial OEM sales accounted for 30% [43]. - Aftermarket sales, which include spare parts and repair services, accounted for 12% of total sales in 2022 [43]. - In 2022, sales under U.S. Government contracts represented 42% of total sales, with foreign government sales accounting for 8% [60]. - Sales to Boeing accounted for 11% of total sales in 2022, while sales to Lockheed Martin represented 9% [61]. Employment and Workforce - In 2022, the company hired 1,792 new regular employees globally [25]. - The average voluntary attrition rate over the last four years was just below 8% [33]. - The company actively seeks to attract diverse talent and has expanded its Diversity, Equity, and Inclusion strategy, including the establishment of Employee Resource Groups [26]. Research and Development - Research and development expenses were at least $110 million in each of the last three years, accounting for approximately 4% of sales in 2022 [21]. - The company’s research and development efforts are critical for maintaining a leadership position in the high-performance, precision controls market [55]. - The company maintains a patent portfolio related to various technologies, including medical devices, which is significant for future revenue opportunities [20]. Environmental and Sustainability Initiatives - The company is assessing its environmental, social, and governance impact across 25 countries to establish sustainability goals [39]. - The Wolverhampton site in the UK transitioned 90% of its electric lighting to LED bulbs, saving over 13,000 kWh annually [41]. - The company is pursuing sustainability goals, but failure to achieve these could negatively impact reputation and operational results [80]. Financial Position and Liabilities - Total assets as of October 1, 2022, were $3,431,841, a slight decrease from $3,433,169 in the previous year [227]. - Total liabilities decreased to $1,995,028 from $2,033,025, reflecting a reduction of 1.9% [227]. - The company had $341 million in borrowings subject to variable interest rates as of October 1, 2022, with an average of $366 million during the year [216]. - The company has incurred significant indebtedness, which may limit operational and financial flexibility, especially in response to changes in capital availability and interest rates [71]. - Long-term debt as of October 1, 2022, totals $836,872 million, an increase from $823,355 million in 2021, with a weighted-average interest rate of 4.16% [318]. Risks and Challenges - The company experienced shortages and delays in materials and components, impacting manufacturing and shipping capabilities [63]. - The COVID-19 pandemic significantly reduced air traffic, affecting demand for flight control systems and leading to a cautious recovery in international travel [59]. - Future levels of defense spending are uncertain and subject to congressional debate, which could adversely impact sales and operating profit [60]. - The company faces competitive pressures from larger, more diversified competitors in industrial and medical markets [54]. - The company relies on subcontractors and suppliers for manufacturing processes, which poses risks to contract performance and future business opportunities [65]. - The company faces risks related to cybersecurity, including potential data breaches and increased operational costs due to compliance with enhanced cybersecurity standards [66]. - Legal proceedings and compliance with government regulations could result in fines or penalties, adversely affecting the company's reputation and financial condition [75]. Acquisitions and Investments - The company plans to pursue additional acquisition opportunities to expand into new markets and enhance its position in existing markets [57]. - The company acquired TEAM Accessories Limited for a purchase price of $14,885, enhancing its Aircraft Controls segment [283]. Inventory and Receivables - Inventories, net of reserves, decreased to $588,466 at October 1, 2022, from $613,095 at October 2, 2021 [301]. - Unbilled receivables of $614,760 as of October 1, 2022, an increase from $546,764 in the previous year [280]. - Receivables from Boeing were $235,405 at October 1, 2022, up from $209,653 at October 2, 2021 [300]. - Receivables from Lockheed Martin were $99,707 at October 1, 2022, compared to $88,744 at October 2, 2021 [300]. Pension and Benefits - Changes in pension assumptions could adversely affect earnings and funding requirements, despite the largest pension plan being essentially fully funded [72]. - The projected benefit obligation for U.S. defined benefit plans decreased to $530,946 in 2022 from $704,989 in 2021, while the fair value of plan assets dropped to $445,723 from $640,513 [343]. - The company’s contributions to defined contribution plans totaled $51,707 in 2022, up from $45,021 in 2021 and $33,663 in 2020 [341].
Moog(MOG_B) - 2022 Q4 - Annual Report