Moog Inc. Q4 FY2024 earnings call

• Customer focus: Completed independent voice of customer analysis, successful certification of ULA Vulcan Rocket, ASA 9100 and FAA audits completed with no findings, made progress on generational defense pursuits including space and ground-based defense. • People Community & Planet: Extreme weather events affected facilities but had business continuity plans; goal to reduce Scope 1 and 2 CO2 emissions by 40% by 2030, Taikang facility in China achieved ISO accreditations. • Financial strength: Progress on margin enhancement through pricing and simplification, sold facilities, deployed 80/20 to 70% of business, shifted from profitability actions to resourcing decisions, showed impact of simplification on sales, head count, and factory space.

FY '24 sales were $3.6 billion, up 9% from FY '23. Commercial aircraft sales increased 18% due to production ramps; military aircraft sales rose 13% with full-year FLRAA sales; Space & Defense sales grew 7% from strong defense demand; Industrial sales increased 1% with softening in industrial automation offset by other submarkets. Adjusted operating margin was 12.4%, up 150 basis points. Fourth quarter sales $917 million, up 5% y-o-y. Military Aircraft sales $216 million, up 17%; Space & Defense sales $263 million, up 9%; Commercial aircraft sales $197 million, up 2%; Industrial sales $242 million, down 5% y-o-y. Adjusted operating margin 12.5% in Q4, up in all segments except commercial.

FY '25 projected sales $3.7 billion, up 3% y-o-y. Space & Defense sales projected to increase 7% to $1.1 billion; commercial aircraft sales 6% to $835 million; military aircraft sales 4% to $840 million; Industrial sales down 5% to $940 million. Adjusted operating margin projected 13.0%, up 60 basis points y-o-y. Adjusted earnings per share projected $8.20 ± $0.20. Free cash flow conversion projected 50%-75% range, increased capital expenditures in FY '25 for organic growth.

• Macroeconomic and end market conditions: Boeing challenges, ongoing conflicts affecting defense spending, soft industrial markets. • Operational risks: Tewkesbury facility damage affecting commercial aircraft aftermarket capacity, potential pressure on cash related to volatility at commercial OEMs' supply chains.

Q: Could you give more specifics on generational defense wins, especially in Europe?

A: Involved in many defense capture/development activities in Europe, strong in armored vehicles, seeing uplift in sales, pursuing ground-based air defense, some classified activities.

Q: Impact of Boeing strike on commercial aircraft?

A: No direct impact, mix weighted towards widebody, aligned with Boeing's current plans.

Q: CapEx plans for FY '25?

A: Capital expenditures $180 million, 4.9% of projected sales, higher than historical, for organic growth due to generational defense opportunities.

Q: European defense sales trends?

A: Increased defense commitments in Europe, pull-through on existing platforms, European business as a percent of defense business doubled in 2 years, invested in facility footprint in Germany.

Q: Tewkesbury facility recovery?

A: Moved production to development labs, over 50% capacity, rebuilding clean room to regain full capacity during FY '25.