Moog Inc.’s third-quarter profits tumbled by 25 percent as the East Aurora motion control equipment maker moved to cut costs as its sales slumped.
The company also revised its earnings and sales forecast for this year slightly downward, while also saying it expects its sales and profits to rebound next year.
John Scannell, Moog’s chairman and CEO, said the company is facing multiple headwinds that have led to lower aircraft sales, as well as declining revenues at its space and defense, industrial and components businesses.
“From a sales perspective, there were headwinds in most of our businesses,” Scannell said in an interview Friday.
“Our underlying businesses remain strong, and we’re responding to the short term challenges to position our company for fiscal ‘16 and beyond,” he said.
Moog’s profits fell to $36.3 million, or 94 cents per share, from $48.1 million, or $1.08 million, or $1.08 per share, a year ago, as the company absorbed $6.6 million in restructuring expenses. Excluding those costs, which reduced earnings by 11 cents per share, Moog earned $1.05 per share.
The company’s sales slid by 7 percent to $635 million as most of its business units slumped. Aircraft sales fell by 8 percent as both commercial and military revenues declined, as did sales of replacement parts. Space and defense revenues dropped by 7 percent as some satellite programs wrapped up, while industrial revenues were down 12 percent, mainly because of foreign currency adjustments and weaker turbine and wind energy sales. Components’ sales also fell by 3 percent, while medical device revenues rose by nearly 10 percent.
Scannell said the company plans to launch a new effort to sell its medical device business, which struggled for several years but now has become consistently profitable. Despite the rebound, Scannell said the heavily regulated medical device industry is farther outside the company’s core areas of expertise than Moog executives envisioned when they branched out into the sector several years ago. But with the business now profitable, he hopes it will bring a better price and greater interest than it did when an earlier deal to sell the medical pump business fell through about 18 months ago.
Moog said it expects sales this year to total $2.53 billion, down slightly from its May forecast of $2.54 billion. It reduced its earnings forecast for the fiscal year by 3 percent to $138 million, or $3.50 per share, down from its previous projection of $142 million, or $3.55 per share.
For the fiscal year that begins in October, Moog said it expects sales to rise by less than 2 percent from its projected revenues for this year to $2.57 billion. It expects profits to strengthen by about 14 percent to $148 million, or $4 per share.