Moog Inc. (NYSE:MOG) announced today financial results for the quarter and fiscal year ended October 1, 2022.

Fourth Quarter Highlights

Sales of $768 million, up 6% from a year ago;
Operating margin of 8.6% and adjusted operating margin of 10.4%, up 80 basis points from a year ago;
Effective tax rate of 31.6%;
Diluted earnings per share of $0.92;
Adjusted diluted earnings per share of $1.36, up 8% from a year ago; and
$63 million in cash flow from operating activities and $52 million in adjusted cash flow from operating activities.

Full-Year 2022 Highlights

Sales of $3.0 billion, up 6% from a year ago;
Operating margin of 9.3% and adjusted operating margin of 10.2%, up 50 basis points from a year ago;
Effective tax rate of 23.6%;
Diluted earnings per share of $4.83;
Adjusted diluted earnings per share of $5.56, up 14% from a year ago; and
$247 million in cash flow from operating activities and $147 million in adjusted cash flow from operating activities.

Fiscal 2023 Guidance

Sales of $3.2 billion, a 5% increase;
Full year operating margin of 11.0%, up 80 basis points;
Tax rate of 25.0%;
Diluted earnings per share of $5.70, plus or minus $0.20; and
$280 million in cash flow from operating activities.

Segment Results

Aircraft Controls segment revenues in the quarter were $324 million, 9% higher year over year. Commercial aircraft revenues were $137 million, a 39% increase. Sales to commercial OEM customers were $95 million, driven by increases in sales for the Boeing book of business and strength in business jet sales. Commercial aftermarket sales increased 46% on strong repair and overhaul activity and higher 787 and A350 spares.

Military aircraft sales were $186 million, 6% lower year over year. Military OEM sales were down 6%, at $135 million. Supply chain constraints on the F-35 and V-22 programs contributed to the sales reduction. Military aftermarket sales were also off 6%.

Full-year Aircraft Controls segment sales increased 8%, to $1.26 billion. Commercial aircraft sales were 35% higher on OEM production rates. Commercial aftermarket sales were very strong, up 59%, as the recovery in air traffic accelerated. Total military aircraft sales were off 5%, at $745 million. Military OEM sales totaled $540 million, down 6% from a year ago, mostly tied to slower F-35 activity. Military aftermarket sales were down 1%, as lower F-18 and B-2 repairs were only partially offset by higher V-22 and F-15 repair volume.

Space and Defense segment revenue in the quarter was $217 million, an increase of 9% year over year. Defense sales of $143 million increased 20%. The continued production ramp on the RIwP^® turret for M-SHORAD drove the increase. Space sales were down 8%, to $75 million, on slowing hypersonic development and NASA launch vehicle activity.

Space and Defense sales for the year increased 9%, to $872 million. Defense sales of $535 million were 15% higher as the RIwP turret production ramped. Space sales were $338 million, up 1%. Increased spacecraft component and avionics sales were partially offset by decreases in funded development and NASA activity.

Industrial Systems segment revenues in the quarter were $227 million, in line with a year ago. Excluding the impact of foreign exchange movements, underlying sales increased 6%. Sales of products for industrial automation applications were $111 million, up 3% on demand for factory automation equipment. Medical product sales were $62 million, also up 3%, driven by growth of components used by OEMs. Energy sales were mostly flat at $31 million. Sales of simulation and test products were $23 million, down 10%.

Full-year Industrial Systems segment sales were $907 million, up 2%. Excluding the impact of foreign exchange movements, underlying sales increased 5%. Industrial automation sales of $435 million were 2% higher. Energy sales were up 4%, to $126 million. Simulation and test sales increased 12% as the flight simulator market improved. Sales of medical pumps and associated products, at $247 million, were 3% lower.

Consolidated 12-month backlog was $2.3 billion, up 9% from a year ago.

"Fiscal '22 was a record year for the company in terms of both sales and adjusted earnings per share," said John Scannell, Chairman and CEO. "Our commercial aircraft business recovered nicely and demand for our products was strong across all our major markets. The disruption from COVID receded during the course of the year but was replaced with supply chain challenges and labor constraints. Despite these challenges, the company performed extremely well. We are excited about our prospects for the future. As we look to fiscal '23, we anticipate another year of organic growth and margin expansion."

In conjunction with today's release, Moog Inc. will host a conference call today beginning at 10:00 a.m. ET, which will be broadcast live over the Internet. John Scannell, Chairman and CEO, and Jennifer Walter, CFO, will host the call.

Listeners can access the call live or in replay mode at www.moog.com/investors/communications. Supplemental financial data will be available on the webcast web page 90 minutes prior to the conference call.

About Moog Inc.

Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog's high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine and medical equipment. Additional information about the company can be found at www.moog.com.

CAUTIONARY STATEMENT

Information included or incorporated by reference in this press release that does not consist of historical facts, including statements accompanied by or containing words such as "may," "will," "should," "believes," "expects," "expected," "intends," "plans," "projects," "approximate," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume" and "assume," are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. In evaluating these forward-looking statements, you should carefully consider the factors set forth below.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A "Risk Factors" of our Annual Report on Form 10-K and in our other periodic filings with the SEC and include the following:

STRATEGIC RISKS

We operate in highly competitive markets with competitors who may have greater resources than we possess;
Our research and development and innovation efforts are substantial and may not be successful, which could reduce our sales and earnings;
If we are unable to adequately enforce and protect our intellectual property or defend against assertions of infringement, our business and our ability to compete could be harmed; and
Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as we conduct divestitures.

MARKET CONDITION RISKS

The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate;
We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs;
The loss of The Boeing Company or Lockheed Martin as a customer or a significant reduction in sales to either company could adversely impact our operating results; and
We may not realize the full amounts reflected in our backlog as revenue, which could adversely affect our future revenue and growth prospects.

OPERATIONAL RISKS

A reduced supply, as well as inflated prices, across various raw materials and third-party provided components and sub-assemblies within our supply chain could have a material impact on our ability to manufacture and ship our products, in addition to adversely impacting our operating profit and balance sheet;
We face various risks related to health pandemics, such as the COVID-19 pandemic, which have had material adverse consequences on our operations, financial position, cash flows, and those of our customers and suppliers;
If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted;
We face, and may continue to face, risks related to information systems interruptions, intrusions and or new software implementations, which may adversely affect our business operations;
We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes which may adversely affect our operations and our earnings; and
The failure or misuse of our products may damage our reputation, necessitate a product recall or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages.

FINANCIAL RISKS

We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings;
We enter into fixed-price contracts, which could subject us to losses if we have cost overruns;
Our indebtedness and restrictive covenants under our credit facilities and indenture governing our senior notes could limit our operational and financial flexibility;
Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements;
A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth; and
Unforeseen exposure to additional income tax liabilities may affect our operating results.

LEGAL AND COMPLIANCE RISKS

Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment;
Our operations in foreign countries expose us to currency, political and trade risks and adverse changes in local legal and regulatory environments could impact our results of operations;
Government regulations could limit our ability to sell our products outside the United States and otherwise adversely affect our business;
We are involved in various legal proceedings, the outcome of which may be unfavorable to us;
Our operations are subject to environmental laws and complying with those laws may cause us to incur significant costs; and
We may face reputational, regulatory or financial risks from a perceived, or an actual, failure to achieve our Environmental, Social and Governance ("ESG") goals.

GENERAL RISKS

Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business; and
Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.

While we believe we have identified and discussed above the material risks affecting our business, there may be additional factors, risks and uncertainties not currently known to us or that we currently consider immaterial that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to update any forward-looking statement made in this report, except as required by law.

Moog Inc.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(dollars in thousands, except per share data)

	Three Months Ended					Twelve Months Ended
	October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net sales	$	767,999		$	724,285	$	3,035,783		$	2,851,993
Cost of sales		564,642			528,716		2,211,384			2,076,270
Inventory write-down		191			—		3,598			—
Gross profit		203,166			195,569		820,801			775,723
Research and development		25,209			33,972		109,527			125,528
Selling, general and administrative		111,829			106,697		448,531			412,028
Interest		11,381			8,604		36,757			33,892
Asset impairment		2,125			1,500		18,053			1,500
Restructuring		1,140			—		9,509			—
Loss on sale of businesses		19,492			1,536		3,346			1,536
Gain on sale of building		(9,075	)		—		(9,075	)		—
Other		(1,969	)		580		1,174			(2,535	)
Earnings before income taxes		43,034			42,680		202,979			203,774
Income taxes		13,618			8,112		47,802			46,554
Net earnings	$	29,416		$	34,568	$	155,177		$	157,220

Net earnings per share
Basic	$	0.92		$	1.08	$	4.85		$	4.90
Diluted	$	0.92		$	1.07	$	4.83		$	4.87

Average common shares outstanding
Basic		31,945,478			32,104,127		31,977,482			32,112,589
Diluted		32,086,583			32,274,296		32,117,028			32,297,956

Moog Inc.
RECONCILIATION TO ADJUSTED NET EARNINGS BEFORE TAXES, INCOMES TAXES, NET EARNINGS AND DILUTIVE NET EARNINGS PER SHARE
(dollars in thousands)

	Three Months Ended						Twelve Months Ended
	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
As Reported:
Earnings before income taxes	$	43,034		$	42,680		$	202,979		$	203,774
Income taxes		13,618			8,112			47,802			46,554
Effective income tax rate		*31.6*	%		19.0	%		*23.6*	%		22.8	%
Net earnings		29,416			34,568			155,177			157,220
Diluted net earnings per share	$	0.92		$	1.07		$	4.83		$	4.87

Loss on Sale of Businesses:
Earnings before income taxes	$	19,492		$	1,536		$	3,346		$	1,536
Income taxes		970			(461	)		(3,303	)		(461	)
Net earnings		18,522			1,997			6,649			1,997
Diluted net earnings per share	$	0.58		$	0.06		$	0.21		$	0.06

Gain on Sale of Building:
Earnings before income taxes	$	(9,075	)	$	—		$	(9,075	)	$	—
Income taxes		(2,142	)		—			(2,142	)		—
Net earnings		(6,933	)		—			(6,933	)		—
Diluted net earnings per share	$	(0.22	)	$	—		$	(0.22	)	$	—

Pension Curtailment Gain:
Earnings before income taxes	$	—		$	—		$	—		$	(5,830	)
Income taxes		—			—			—			—
Net earnings		—			—			—			(5,830	)
Diluted net earnings per share	$	—		$	—		$	—		$	(0.18	)

Other Charges:
Earnings before income taxes	$	3,457		$	5,368		$	31,160		$	5,368
Income taxes		845			1,227			7,447			1,227
Net earnings		2,612			4,141			23,713			4,141
Diluted net earnings per share	$	0.08		$	0.13		$	0.74		$	0.13

As Adjusted:
Earnings before income taxes	$	56,908		$	49,584		$	228,410		$	204,848
Income taxes		13,291			8,878			49,804			47,320
Effective income tax rate		*23.4*	%		17.9	%		*21.8*	%		23.1	%
Net earnings		43,617			40,706			178,606			157,528
Diluted net earnings per share	$	1.36		$	1.26		$	5.56		$	4.88
The diluted net earnings per share associated with the adjustments have been calculated individually and in total using the quarterly average outstanding shares in the period in which the adjustments occurred. Accordingly, adjusted diluted net earnings per share may not reconcile when totaled due to rounding.

Results shown above have been adjusted to exclude impacts associated with the sale of a building located in Salt Lake City used in our Industrial Systems operations during 2022, a pension curtailment gain in 2021, and the sale of businesses during each period presented. In addition, inventory write-down charges, asset impairment and restructuring related to the impact of continued portfolio shaping activities and the Ukraine crisis have also been excluded. While management believes that these adjusted financial measures may be useful in evaluating the financial condition and results of operations of the Company, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP.

Moog Inc.
RECONCILIATION OF NET EARNINGS TO ADJUSTED EBITDA
(dollars in thousands)

	Three Months Ended					Twelve Months Ended
	October 1, 2022			October 2, 2021		October 1, 2022			October 2, 2021
Net earnings	$	29,416		$	34,568	$	155,177		$	157,220
Add back (deduct):
Income taxes		13,618			8,112		47,802			46,554
Interest		11,381			8,604		36,757			33,892
Depreciation		19,070			19,865		75,238			76,671
Amortization		3,153			3,488		13,151			13,488
Loss on sale of businesses		19,492			1,536		3,346			1,536
Gain on sale of building		(9,075	)		—		(9,075	)		—
Pension curtailment gain		—			—		—			(5,830	)
Other Charges:
Inventory write-down		192			—		3,598			—
Asset impairment		2,125			1,500		18,053			1,500
Restructuring and other		1,140			3,868		9,509			3,868
Adjusted EBITDA	$	90,512		$	81,541	$	353,556		$	328,899

Adjusted EBITDA is defined as net earnings before income taxes, interest, depreciation, amortization, and other adjustments. Adjusted EBITDA is not a measure determined in accordance with GAAP and may not be comparable with the measures as used by other companies, however management believes this adjusted financial measure may be useful in evaluating the financial condition and results of operations of the Company. This information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP.

Moog Inc.
CONSOLIDATED SALES AND OPERATING PROFIT (UNAUDITED)
(dollars in thousands)

	Three Months Ended						Twelve Months Ended
	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Net sales:
Aircraft Controls	$	323,859		$	297,972		$	1,256,461		$	1,161,238
Space and Defense Controls		217,494			200,018			872,343			799,235
Industrial Systems		226,646			226,295			906,979			891,520
Net sales	$	767,999		$	724,285		$	3,035,783		$	2,851,993
Operating profit:
Aircraft Controls	$	34,811		$	26,193		$	123,620		$	96,678
		*10.7*	%		8.8	%		*9.8*	%		8.3	%
Space and Defense Controls		16,102			17,296			86,844			88,333
		*7.4*	%		8.6	%		*10.0*	%		11.1	%
Industrial Systems		14,986			19,233			72,384			85,948
		*6.6*	%		8.5	%		*8.0*	%		9.6	%
Total operating profit		65,899			62,722			282,848			270,959
		*8.6*	%		8.7	%		*9.3*	%		9.5	%
Deductions from operating profit:
Interest expense		11,381			8,604			36,757			33,892
Equity-based compensation expense		2,135			1,041			8,882			7,461
Non-service pension expense (income)		1,673			859			6,072			(2,194	)
Corporate and other expenses, net		7,676			9,538			28,158			28,026
Earnings before income taxes	$	43,034		$	42,680		$	202,979		$	203,774

Moog Inc.
RECONCILIATION TO ADJUSTED OPERATING PROFIT AND MARGINS
(dollars in thousands)

	Three Months Ended						Twelve Months Ended
	October 1, 2022			October 2, 2021			October 1, 2022			October 2, 2021
Aircraft Controls operating profit - as reported	$	34,811		$	26,193		$	123,620		$	96,678
Gain on sale of business		—			—			(16,146	)		—
Other charges		—			—			19,484			—
Aircraft Controls operating profit - as adjusted	$	34,811		$	26,193		$	126,958		$	96,678
		*10.7*	%		8.8	%		*10.1*	%		8.3	%

Space and Defense Controls operating profit - as reported	$	16,102		$	17,296		$	86,844		$	88,333
Loss on sale of business		4,112			—			4,112			—
Other charges		331			2,510			3,755			2,510
Space and Defense Controls operating profit - as adjusted	$	20,545		$	19,806		$	94,711		$	90,843
		*9.4*	%		9.9	%		*10.9*	%		11.4	%

Industrial Systems operating profit - as reported	$	14,986		$	19,233		$	72,384		$	85,948
Loss on sale of business		15,379			1,536			15,379			1,536
Gain on sale of building		(9,075	)		—			(9,075	)		—
Other charges		3,126			2,858			7,922			2,858
Industrial Systems operating profit - as adjusted	$	24,416		$	23,627		$	86,610		$	90,342
		*10.8*	%		10.4	%		*9.5*	%		10.1	%

Total operating profit - as adjusted	$	79,772		$	69,626		$	308,279		$	277,863
		*10.4*	%		9.6	%		*10.2*	%		9.7	%

Moog Inc.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)

	October 1, 2022			October 2, 2021
ASSETS
Current assets
Cash and cash equivalents	$	103,895		$	99,599
Restricted cash		15,338			1,315
Receivables, net		990,262			945,929
Inventories, net		588,466			613,095
Prepaid expenses and other current assets		60,349			58,842
Total current assets		1,758,310			1,718,780
Property, plant and equipment, net		668,908			645,778
Operating lease right-of-use assets		69,072			60,355
Goodwill		805,320			851,605
Intangible assets, net		85,410			106,095
Deferred income taxes		8,630			17,769
Other assets		36,191			32,787
Total assets	$	3,431,841		$	3,433,169
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long-term debt	$	916		$	80,365
Accounts payable		232,104			200,602
Accrued compensation		93,141			112,703
Contract advances		296,899			263,686
Accrued liabilities and other		215,376			212,005
Total current liabilities		838,436			869,361
Long-term debt, excluding current installments		836,872			823,355
Long-term pension and retirement obligations		140,602			162,728
Deferred income taxes		63,527			64,642
Other long-term liabilities		115,591			112,939
Total liabilities		1,995,028			2,033,025
Shareholders' equity
Common stock - Class A		43,807			43,803
Common stock - Class B		7,473			7,477
Additional paid-in capital		516,123			509,622
Retained earnings		2,360,055			2,237,848
Treasury shares		(1,047,012	)		(1,007,506	)
Stock Employee Compensation Trust		(73,602	)		(79,776	)
Supplemental Retirement Plan Trust		(58,989	)		(63,764	)
Accumulated other comprehensive loss		(311,042	)		(247,560	)
Total shareholders' equity		1,436,813			1,400,144
Total liabilities and shareholders' equity	$	3,431,841		$	3,433,169

Moog Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)

	Twelve Months Ended
	October 1, 2022			October 2, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	155,177		$	157,220
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		75,238			76,671
Amortization		13,151			13,488
Deferred income taxes		11,739			8,162
Equity-based compensation expense		8,882			7,461
Loss on sale of business		3,346			1,536
Asset impairment and Inventory write-down		21,651			1,500
Other		(2,257	)		(791	)
Changes in assets and liabilities providing (using) cash:
Receivables		(86,867	)		(73,459	)
Inventories		(28,677	)		19,576
Accounts payable		43,349			20,520
Contract advances		42,097			59,298
Accrued expenses		(4,445	)		2,290
Accrued income taxes		3,070			4,653
Net pension and post retirement liabilities		18,093			12,503
Other assets and liabilities		(26,745	)		(17,402	)
Net cash provided by operating activities		246,802			293,226
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired		(11,832	)		(77,600	)
Purchase of property, plant and equipment		(139,431	)		(128,734	)
Net proceeds from businesses and buildings sold		70,612			14,675
Other investing transactions		(2,668	)		502
Net cash used by investing activities		(83,319	)		(191,157	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving lines of credit		840,475			799,950
Payments on revolving lines of credit		(827,801	)		(838,936	)
Proceeds from long-term debt		—			78,700
Payments on long-term debt		(80,364	)		(68,080	)
Payments on finance lease obligations		(2,524	)		(2,156	)
Payment of dividends		(32,970	)		(32,106	)
Proceeds from sale of treasury stock		18,414			10,866
Purchase of outstanding shares for treasury		(48,558	)		(31,673	)
Proceeds from sale of stock held by SECT		13,250			679
Purchase of stock held by SECT		(14,830	)		(4,239	)
Net cash used by financing activities		(134,908	)		(86,995	)
Effect of exchange rate changes on cash		(10,256	)		768
Increase in cash, cash equivalents and restricted cash		18,319			15,842
Cash, cash equivalents and restricted cash at beginning of period		100,914			85,072
Cash, cash equivalents and restricted cash at end of period	$	119,233		$	100,914

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Moog Inc. Reports Fiscal Year End 2022 Results and Initial Guidance for Fiscal Year 2023