Profits at Moog Inc. rose 12 percent for the quarter that ended March 26, aided by rising sales of control parts for aircraft, satellites and industrial machinery.
Profits of $15.8 million, or 40 cents per share, matched analysts estimates for the quarter, according to a Nelson Information/Thomson Financial. Sales were $255 million, up 9 percent from a year ago.
"It was a good quarter," Chief Executive Officer Robert T. Brady said. "Sales were strong in each area."
The Elma-based aerospace manufacturer raised its sales estimate for the fiscal year by $7 million, to about $1 billion, but held steady with its profit target of between $1.60 to $1.66 per share.
Holding profits back were reserves of $2.4 million taken on two Airbus projects during the quarter. The reserves involve rework necessary on braking systems and the withdrawal from a contract with a British electronics supplier.
"This is really a pay-me-now or pay-me-later situation," Brady said of the contract. Dropping the supplier causes development expenses to be booked sooner, but performing the electronics work in-house will boost profits on the program in the long run, he said.
"These (reserves) are not ongoing, you're not going to be hearing about these quarter after quarter," he told analysts during a conference call.
Moog's stock fell $1.52 on the New York Stock Exchange to close at $28.48, a decline of 5 percent.
Although the company's results were stable, the market punished Moog for failing to raise its profit targets, Bank of America Securities analyst Robert Stallard said in a research note. He called the drop an over-reaction, and said Moog's price is fair compared with peers in aerospace and defense. Stallard gives the stock a "neutral" rating with a 12-month price target of $32.02.
Moog has 2,035 workers at its plant and headquarters in Elma, with a worldwide employment of about 5,800. The period ended March 26 was the second quarter of its fiscal year ending in September.
Despite the crisis facing big U.S. airlines, sales of passenger aircraft are healthy because of growing air travel in Asia and demand for business jets, Brady said. Moog's aircraft segment, which supplies controls to companies like Boeing and Airbus, saw sales grow 7 percent.
Asia is also boosting Moog's sales of control parts for power turbines. "China is madly building power stations" to boost its inadequate power supplies, he said. The trend helped lift sales in Moog's industrial controls segment by 7.7 percent.
Also during the quarter Moog acquired two operations in Europe for a total of $4.6 million. That and expenses from a sale of high-yield debt consumed $8 million in cash, causing the company to lower its debt reduction target for the year to $64 million, from $72 million, Chief Financial Officer Robert Banta said.
The backlog of orders was $482 million, up $400,000 from the end of the previous quarter.