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Despite higher profits, Moog lowers earnings outlook

Moog Inc.’s profits rose in its fiscal first quarter, but the company lowered its earnings forecast for the full year.

The Elma-based manufacturer of motion control equipment reported quarterly net earnings of $35.3 million, up 10 percent from a year ago. It recorded earnings per share of 86 cents, which was up 23 percent and was helped by Moog’s ongoing share repurchase program.

Moog’s quarterly sales were $631 million, down 2 percent from a year ago. The company cited negative effects of foreign currency exchange.

“It was kind of a mixed quarter,” said John R. Scannell, chairman and chief executive officer. Still, he said the results were in line with what Moog expected.

Moog lowered its sales and earnings outlook for the current fiscal year based on economic factors such as a stronger U.S. dollar, “industrial malaise” outside the United States, and the sharp drop in the price of oil. Moog reduced its sales forecast by $95 million to $2.57 billion, from $2.66 billion. And it reduced its projected net earnings to $157 million, from $180 million, and earnings per share to $3.85, from $4.25. While Scannell said it was “disappointing” to have to make such revisions, he noted that $3.85 would still be a record high for the company.

Moog said its earnings per share could reach $3.95 in fiscal 2015, based on completion of a previously authorized share repurchase program.

Moog’s aircraft controls segment sales were unchanged from last year, at $266 million. But within the category, commercial aircraft sales were up 10 percent, while military aircraft sales fell 8 percent. Scannell said he was hopeful U.S. defense spending would increase in the future, but that was difficult to predict.

Its industrial systems sales were down 7 percent from last year, to $133 million. Scannell said that segment was hurt by “stagnation” in Europe and a growth slowdown in Asia, while the U.S. market has performed well. Its space and defense control sales were about the same as a year ago, at about $100 million.

Sales in Moog’s components group fell 3 percent from a year ago, to $100 million. Scannell said he anticipates the steep decline in the price of oil will hurt sales in this segment by about $20 million this year.

And its medical devices segment recorded sales of $31 million, down 3 percent, as well. Moog has looked to sell its medical devices segment, and came close before a deal fell through several months ago. Scannell told analysts on a conference call the company plans to try again, after organizing that business in a way to make it most appealing to a buyer. “We don’t want to sell the business at what we believe is a significant discount,” he said.

“Despite the challenges we’re facing, fiscal (2015) is forecast to be another year of strong cash flow and a record year for the company in terms of earnings per share,” Scannell said.

During the fourth quarter, Moog’s local operations were shut down for about a week due to the November snowstorms. Scannell said he did not think that had a major effect on the quarterly results.