Moog Inc.'s first-quarter profits rose 16 percent, easily topping analyst forecasts, as the Elma aerospace company got a boost from rising production of the Airbus A350 commercial jet and the U.S. military's F-35 Joint Strike Fighter.
Moog's profits rose to $30.6 million, or 84 cents per share, from $26.2 million, or 71 cents per share, a year ago, bolstered by stronger operating profits from its aircraft and components businesses.
John Scannell, Moog's chairman and CEO, said the improved profits reflected the cost-cutting and restructuring the company has done in recent years, as well as general improvement in most of its markets.
"It was a good start to the year, and it puts us on track for our full-year guidance," Scannell said Friday. "Most of our businesses have stabilized since this time last year, and we are seeing positive results from restructuring and our portfolio reviews of the past few years."
Scannell said he's taking a wait-and-see approach to evaluate the impact the Trump administration might have on Moog and its wide-ranging markets.
"I think the whole country is wondering how this all will play out," Scannell said.
On the one hand, Scannell said he thinks the Trump administration will lean toward increasing defense spending, which would be good for Moog. At the same time, President Donald Trump's tweets about high costs and profits at defense contractor Boeing Co. could signal a crackdown on defense firm profits.
Scannell also raised concerns about the possibility that the Trump administration could move toward more protectionist trade policies and back away from existing free trade agreements.
"Any form of protectionism is not a plus for multinational companies," he said.
"Other sovereign nations can respond," Scannell said. "So you get into a protectionist war that doesn't help anyone."
But Scannell was more hopeful that the Trump administration would reduce corporate taxes, including changes that would reduce taxes on foreign earnings that are repatriated to the United States. Moog currently has about $300 million that could be repatriated, said Donald Fishback, Moog's chief financial officer.
During the first quarter, Moog's profits were hurt by losses from the sales currently underway of four small European space businesses, which reduced the company's earnings by 7 cents per share. Excluding those one-time expenses, Moog's earnings of 91 cents per share were well above the 80 cents per share that analysts were expecting.
At the same time, Moog said it was sticking with the earnings forecast for the current fiscal year that it issued three months ago, predicting that the company's profits would be around $3.50 per share, up slightly from $3.47 per share a year ago. Moog trimmed its sales forecast slightly, saying it now expects revenues to rise 1 percent to $2.42 billion, which is $20 million less than it predicted three months ago.
During the first quarter, which ended in December, Moog's sales rose 4 percent to $590 million from $568 million a year ago.
Operating profits in Moog's aircraft controls business, which accounts for about 45 percent of the company's revenues, grew by 25 percent because of the A350 and F-35 production increases. Earnings from its components unit jumped by 44 percent on a 10 percent increase in revenues. That improvement offset a 38 percent decline in operating profits at its space and defense controls business and a 22 percent drop at its industrial systems unit.