Aerospace company Moog expects higher sales and profits this year, after struggling through a tough 2009 and recovering in 2010, its longtime CEO and its new president told shareholders Wednesday.
Speaking at the company's annual meeting, executives of the Elma-based manufacturer of motion control and aircraft electronic systems projected a revived air of confidence about future prospects.
Chairman and CEO Robert Brady noted that the company's stock has risen more than 30 percent since its annual meeting last year, when it traded at about $32 per share. It closed Wednesday at $42.71, down 27 cents.
"I think the market has begun to recognize that our company is back on track," said Brady, 70, who has led the company for more than 20 years. Brady said he has no plans to retire, despite the appointment last month of John Scannell as company president.
Brady handed off the primary financial and business presentation to Scannell, an Irish native and 20-year company veteran who was named by the board after institutional investors questioned the company's succession plans.
"Some of you may not have noticed the rate at which I've been aging, but I can tell you that some of our institutional investors have been keeping track, and in recent years they've been inquiring," Brady told about 75 employees and shareholders at the Albright-Knox Art Gallery. "Now they have their answer. John's promotion begins the transition to the next generation of leadership."
Addressing the group, Scannell predicted sales would rise 6 percent this year to $2.24 billion, profits would rise 15 percent to $124 million, and earnings per share would increase 14 percent to $2.70.
The mood at the meeting was in stark contrast to a year ago, when executives were much more muted and tentative following a year in which earnings fell for the first time in 14 years in the wake of a financial crisis and deep recession. Scannell noted that Moog's 2009 fiscal year started just two weeks after the failure of Wall Street giant Lehman Brothers Holdings in September 2008.
"The failure of Lehman Brothers and the subsequent financial crisis and deep recession meant that we couldn't hide from the recession," Scannell said. "So 2009 was also the year of our recession, and it was the year of significant restructurings for the company."
Yet even as the company downsized operations, it also completed eight acquisitions and began making investments in operations that continued in 2010, he said.
"We believe we had positioned the company well for growth in 2010, and that indeed is what happened," he said, noting that sales rose 14 percent, earnings rose 27 percent, and earnings per share rose 19 percent last year. "2010 was the year of our recovery We anticipate that this growth will continue."
Moog is benefiting from a pickup in the economy and continued military spending for U.S. wars in Iraq and Afghanistan, although those conflicts are helping it in different ways.
"The conflict in Iraq was primarily a ground war, with extensive use of military vehicles, whereas the conflict in Afghanistan, because of difficult terrain, is primarily a helicopter war," Scannell said.
Moog supplies equipment and technology for both, and saw a pickup in helicopter sales last year as the U.S. stepped up its efforts in Afghanistan. But Scannell said demand may drop as the military winds down those operations.
The company's products now range from flight control systems and navigation aids for military, commercial and space aircraft to industrial machinery and parts for wind turbines to small medical devices. All five of its business segments reported sales growth last year.
Sales rose 14 percent in Moog's aircraft division, its biggest. The company sells to commercial airplane makers, such as Boeing Co. and European conglomerate Airbus, and provides technology for military helicopters, transport planes and fighter planes, like the F-35 Joint Strike Fighter.
Moog's overall aircraft sales are expected to rise 5 percent this year to $797 million, almost all on the commercial side, as Boeing introduces its new 787 jetliner and business jet sales pick up, while military sales level out.
In its space and defense business, Moog sells products and parts used on military vehicles, satellites and launch vehicles, missiles, and other security and surveillance equipment. Sales last year rose 19 percent to $326 million and are expected to rise 7 percent this year.
In industrial systems, where Moog provides hydraulic, electric and mechanical parts for industrial machinery and wind turbines, sales rose 20 percent last year to $546 million and are expected to be up 11 percent this year to $606 million. This business "was the most hard-hit by the recession," Scannell said.
Moog's components division sells a variety of "complementary products" in all of the company's markets, ranging from $20 motor blower accessories for sleep apnea medical equipment to $1 million parts for the offshore oil and gas exploration industry. Sales rose 4 percent in 2010 to $360 million. They are expected to fall slightly this year to $350 million as the military winds down foreign operations.
Moog's medical devices business, which sells infusion pumps and associated administration sets to hospitals and outpatient clinics, saw sales rise 14 percent to $127 million last year after "a tough year" in 2009, Scannell said. He said sales should rise 11 percent this year to $140 million, as the business returns to profitability.