Moog Inc. started its fiscal year with a bang, easily topping analyst forecasts with a 43 percent surge in profits fueled by surprisingly strong sales from its space and defense and components businesses.
"It's a great start to the year," said Robert T. Brady, Moog's chairman and chief executive officer. "Everything's really rolling along."
The strong first quarter prompted the Elma aerospace company to hike its earnings forecast Monday for the entire year to $2.30 per share, which is 3 cents more than analysts surveyed by Thomson Financial/First Call were expecting and 17 percent above last year's profits.
Moog's profits surged to $24.1 million, or 56 cents per share, from $16.8 million, or 43 cents per share. The company's sales jumped by 15 percent to $356 million during the quarter that ended in December from $310 million a year earlier.
Much of the increase in earnings came from the company's space and defense business, which more than tripled its operating profits to $5.4 million as sales grew by 18 percent. Strong demand for defense controls, especially the U.S. Marine Corps' light armored vehicle program, fueled the increase, along with rising sales for replacement components for the Space Shuttle.
Earnings also improved at Moog's industrial controls business, with operating profits rising by 16 percent to $13.5 million as sales increased by 13 percent, led by a 45 percent rise in sales of controls used in steel mills being built in China. "Margins are improving as we move more toward selling systems, as opposed to components," Brady said.
Moog's components business increased its profits by 29 percent to $13.1 million as rising sales of equipment used on military aircraft such as the Euro Fighter and the Blackhawk helicopter contributed to a 22 percent jump in revenues to $68 million.
The company's growing medical devices business earned $2.1 million on nearly $11 million in sales as three acquisitions since last spring have allowed Moog to branch out into a new area. Moog agreed earlier this month to buy Colorado-based infusion pump maker Zevex International for $83.8 million. The deal, if it is completed by the end of March, could boost Moog's medical component sales to $25 million during the fiscal year that ends in September, Brady said.
"The Zevex acquisition relates directly to our strategy of becoming a specialist in infusion pumps," he said. "If we complete Zevex, we'll probably focus on developing the capabilities of the companies we've acquired" in the medical components business.
Earnings fell by 16 percent at Moog's aircraft controls business as the company absorbed high research and development costs, especially on the Boeing 787 Dreamliner commercial jet, while sales rose 3 percent to $130 million.
All of the aircraft sales growth came from Moog's commercial clients, with sales to Boeing rising by 16 percent while business jet sales grew slightly and replacement part revenues increased by 7 percent. Military aircraft component sales fell slightly.