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Moog profits triple despite restructuring costs

Moog Inc., the Elma motion control equipment maker that is cutting jobs in its aircraft and space businesses because of stagnant sales, said Friday that its fourth-quarter profits jumped despite setting aside nearly $13 million to pay for a restructuring.

Moog said its profits jumped to $40.3 million, or 93 cents per share, more than triple the $15.6 million, or 34 cents per share, that the company earned a year ago, when its earnings were hurt by a 52 cent-per-share write-down of the value of its long-struggling medical device business. Excluding that write-down, Moog’s earnings rose by about 8 percent.

Operating profits rose by 14 percent to $18.4 million in the company’s components business, while its medical device unit turned a $3.3 million profit after absorbing the huge write-down last year.

But earnings in Moog’s aircraft controls business, which absorbed a 5 percent staff cut in early October, fell by 19 percent to $27.7 million, while operating profits at its space and defense unit, which is expected to eliminate 10 percent of its staff in early November, tumbled by 78 percent to $596,000. Operating profits in Moog’s industrial systems business fell by 12 percent to $14.1 million.

Moog’s profits jumped by 31 percent to $158 million during the fiscal year that ended in September, and the company said it expects its earnings to keep rising during the current fiscal year.

“It was a very respectable year,” said John Scannell, chief executive officer, referring to fiscal 2014. “I think it was a good performance from the company in the face of market headwinds that were different from what we anticipated coming into the year.”

Moog’s diversification has helped the company cope with sales slowdowns in certain segments, Scannell said. And some of the company’s investments will take time to bear financial fruit.

For instance, he said, Moog has new programs for its commercial aircraft business that will eventually generate more sales. That work is now in the development stage, when costs tend to run higher than during full-scale production of the aircraft. “But that’s a long-term business, and we play for the very long term, and that will turn out to be a very nice business long term.” As the fleets of those new aircraft grow, Moog eventually will reap more aftermarket product sales, as well.

Moog anticipates a softening of sales in its space business, in both satellites and launch vehicles, in the coming year, contributing to the company’s decision to take a $13 million restructuring charge during the quarter. Scannell said $11 million of that amount was related to severance, while the other $2 million related to exiting a couple of product lines.

The company said it expects its earnings per share to rise by 21 percent this year to $4.25, compared with $3.52 during the fiscal year that just ended. It forecast that sales would inch up by less than 1 percent to $2.66 billion from $2.65 billion during the last fiscal year.

A memo from Scannell, obtained by The Buffalo News earlier this month, said that the company was eliminating 5 percent of the jobs within its aircraft group and that it plans to cut staffing within its space and defense unit by about 10 percent in early November.

Scannell on Friday declined to specify how many jobs Moog is cutting, but he said the reductions would impact a “very low-single digit percentage of the work force here. Our operations are global, so there’s an impact around the company on it.”

The aircraft group job cuts were completed in early October, but the job cuts in space and defense have not yet been made, Scannell said.

Earlier this week, a rocket carrying supplies for the International Space Station was destroyed just after it was launched in Virginia; reports said the flight operator detected a problem and made the rocket self destruct. Moog made components used on the rocket, as well for an unmanned spacecraft carried by the rocket that was to deliver supplies.

Moog worldwide has 11,000 full-time employees in 25 countries, including 2,600 in Western New York.

email: drobinson@buffnews.com

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