Moog Inc. is looking forward to a more stable second half of its fiscal year.
“I think stability is the theme of the (second) quarter,” said John Scannell, CEO of the Elma-based motion control equipment maker.
The company made no changes to financial outlook for the remaining six months of its fiscal year, which, in itself, was notable. During the first quarter, Moog scaled back its full-year sales projection by $100 million, and forecast its full-year earnings would be flat, instead of rising by 19 percent.
In second quarter results released Friday, Moog reported net earnings of $31 million, or 85 cents per share, down slightly from $32 million, or 80 cents per share, a year ago. Its earnings topped analysts’ estimates of 80 cents.
Moog reported a drop in year-over-year sales in four of its five segments. Its aircraft controls segment – which accounted for 45 percent of Moog’s total sales – reported a less than 1 percent increase in revenue, to $276 million.
The military side of the aircraft controls segment looks stable, Scannell said. On the commercial side, Moog is still spending heavily on the research and development phase of a the Airbus A350 commercial jet program. Eventually, the R&D will wind down and profitability on the program will rise as production ramps up, he said.
Scannell said the company took a hard look during its first quarter at resetting its expectations for the remainder of the fiscal year.
“We tried to get ahead of some of those downward slopes that we had been suffering through for the last year or two,” he said.
For instance, Moog’s oil and gas industry business has been hit hard in the past couple of years, but things seemed to level off in the second quarter. “It’s not where we’d like to be but it feels like as we look out of the rest of the year, that doesn’t get any worse.”
Moog has downsized its operations that support offshore oil exploration. But Moog is “still very clearly in that business,” and believes that industry will recover with time, Scannell said. “It’s still a good business for us, even though it’s down 70 percent.”
Moog took $8 million in restructuring charges during the quarter. Scannell said Moog doesn’t make those decisions hastily.
“I try to explain to folks internally, the reason we have restructuring is not because we just want to reduce our costs or increase our profits,” he said. “It’s because our customers stop buying our products, for whatever reason.”