A rebound by Moog Inc.'s struggling space and defense controls business, coupled with stronger earnings from its industrial controls unit, helped the Elma aerospace company boost its fourth-quarter profits by a third.
The improvement in those businesses, along with growth in its components unit, offset a slowdown in the company's aircraft controls segment.
"The aircraft business, which has been our growth driver the last couple of years, is stabilizing," said Robert T. Brady, Moog's chairman and chief executive officer. "On the other hand, our other three businesses are growing."
Moog's profits, which grew to $15.7 million, or 60 cents per share, from $11.8 million, or 50 cents per share, a year ago, fell a penny short of analyst forecasts, according to Thomson Financial/First Call. But investors brushed off the shortfall, pushing Moog stock up 9 cents to $38.99, with the shares hitting a new 52-week high of $39.44 during the day.
While Moog officials repeated their earlier forecast that profits during the fiscal year that began in October would range between $2.39 and $2.48 per share, up from $2.17 during the latest fiscal year. The company also hiked its revenue forecast by about $6 million to between $974 million and $994 million, up from $939 million during the year that ended in September.
"We always have a couple of businesses that are in trouble or slowing down," Brady said. "The important thing is to have the ones that are on the uptick growing enough. So far, it's been working out."
Moog's sales grew by 25 percent to $240.1 million from $192.8 million, largely because of the acquisition of Northrop Grumman's Litton Poly-Scientific division a year ago.
The biggest gains in the quarter came from Moog's industrial controls business, which increased its operating profits by 63 percent on an 18 percent jump in sales after adjusting for currency fluctuations.
"We're seeing big increases in nearly every industrial product line," said Brady, who predicted that industrial sales would grow by 9 percent this year to $306 million.
Moog's aircraft controls business, which endured an 11 percent drop in operating profits as sales slipped by 3 percent, was hurt by a drop in work on the Joint Strike Fighter as the project moved from the developmental to testing stage.
While Brady said he expects the company's military aircraft sales to be down slightly this year, he thinks the worst is over for Moog's commercial aircraft business as production picks up at Boeing Co., its biggest customer. Brady said he expects Moog's aircraft sales to grow by 1 percent this year to $417 million.
The company's space and defense controls business, which has been hurt by slumping satellite sales in the past, became profitable after Moog's defense controls product line, which had been in the industrial unit, was shifted to the segment. Sales rose by 15 percent to $30 million, and the unit earned $1.1 million.
While Moog increased its revenue forecast for the current fiscal year, it held its earnings outlook steady because the company may hold a debt offering during the year to convert some of its bank debt, which has a three-year term, to a longer, 10-year maturity while interest rates remain low.
"With rates that low, why shouldn't we get some 10-year money," said Robert R. Banta, Moog's chief financial officer.