A big write-down at its long-struggling medical devices business caused Moog Inc.’s fourth-quarter profits to plunge by 63 percent, wiping out what otherwise would have been a modest uptick in its earnings.
Nearly all of the drop in profits came from a $38 million hit that Moog took against its earnings to cover a write-down in the value of its medical device business and cover the cost of ongoing restructuring in that business. Moog’s earnings also were hurt by another $4.4 million in restructuring costs at its space and defense controls business.
Those one-time expenses wiped out what otherwise was a quarter that featured a 5 percent improvement in the earnings Moog generated from its actual operations and a 7 percent increase in its revenues. Excluding those restructuring expenses, Moog’s profits matched analyst forecasts.
“The fourth quarter was another quarter of adjustment as we get our house in order for a better 2014,” said John Scannell, Moog’s chief executive officer. “Fiscal 2013 will be remembered as the year of restructuring and write-offs.”
During the fourth quarter, Moog’s profits tumbled to $15.6 million, or 34 cents per share, from $41.8 million, or 91 cents per share a year ago, as the write-downs took their toll on the company’s earnings.
Excluding those one-time charges, Moog’s profits would have improved by 5 percent to $44 million, or 96 cents per share, matching analyst forecasts.
The bright spot in Moog’s fourth quarter was its industrial products business, where operating profits jumped by 31 percent to $16.1 million, despite a modest 2 percent increase in revenues to $153 million.
The company’s aircraft controls business also strengthened, with operating profits rising by 14 percent to $33.1 million as sales grew by 9 percent to $276 million. Most of that improvement stemmed from a 23 percent jump in sales of equipment for commercial aircraft, which offset a slight decrease in military revenues. Sales of military replacement parts were slightly higher.
Earnings from Moog’s components business were virtually flat at $16.2 million, despite a 9 percent jump in sales, as revenues increased from its energy and industrial products because of its recent acquisitions of Tritech and Aspen Motion Technologies.
The restructuring at its space and defense controls business caused that unit’s operating profits to plunge by 73 percent to $2.7 million, even as sales rose by 11 percent to $104 million. Excluding the restructuring costs, the space and defense business’ operating profits dropped by 31 percent to $7.2 million as the profitability of those sales weakened.
The company’s medical device business lost $35.7 million because of the massive write-down, which masked a 9 percent improvement in revenues. Excluding the write-down, the medical device business’ earnings more than doubled to $2.6 million.
Moog executives said they are standing by their previous forecast that the company’s earnings, excluding one-time charges, will rise by about 14 percent to between $3.90 and $4.10 per share, compared with $3.50 per share during the fiscal year that ended in September. The company said it expects its sales to inch up by about 2 percent to $2.67 billion from $2.61 billion during the year that just ended.