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Moog focuses on growth after strong fourth quarter

Moog Inc., after years of cost-cutting as it main markets endured ups and downs, is shifting into a growth mode.

"Our business is turning up, and our focus has shifted to growth," said CEO John Scannell after Moog reported a 16 percent jump in fourth-quarter profits that easily beat analyst forecasts.

That growth focus could take the form of additional investments in Moog's current businesses, such as its recent efforts to bulk up its operations in the developing field of additive manufacturing. Or it could come through smaller, strategic acquisitions that would add $50 million to $100 million in sales and complement the technology and markets that Moog now serves, Scannell said in an interview  Friday.

"We're not looking to get into something totally different," he said.

The improvement was broad-based, with each of Moog's four operating segments reporting higher operating profits. Only the company's industrial systems business, which has been hurt by softness in its energy and industrial automation markets, had lower sales during the quarter.

The Elma-based control systems manufacturer said its profits improved to $38.6 million, or $1.07 per share, during the quarter that ended during September, up from $33.1 million, or 92 cents per share, a year ago. The earnings topped analysts forecasts by 12 cents per share.

Its sales grew by 5 percent to $649 million from $619 million a year earlier.

Moog also said it expects its sales and profits to keep growing into next year. The company said it expects its earnings per share to rise by about 5 percent to $4.10 per share, up from $3.90 per share during the fiscal year that ended in September. It predicted that its sales would rise by 5 percent to $2.62 billion from $2.5 billion during the previous fiscal year.

"What could be really positive is if defense spending picked up," especially with more money allocated toward spare parts to improve the availability of the U.S. military's aircraft, Scannell said. That would help Moog's aircraft replacement parts business.

"The challenge is still in our energy business," Scannell said. "Oil has stabilized, but wind still is challenging."

Much of the improvement during the fourth quarter came from Moog's space and defense controls business, where operating profits jumped by 67 percent on a 4 percent increase in sales as revenues from products that it sells for use in military vehicles were strong.

Earnings from its aircraft controls business, which accounts for about 43 percent of the company's revenues, grew by 12 percent, buoyed by 13 percent sales growth in its commercial aircraft unit stemming from an 11 percent increase in sales to Airbus and a 7 percent rise in Boeing revenue related to the 787 commercial jet.

Earnings from Moog's industrial business rose by 5 percent, despite a 3 percent drop in sales, as its margins improved. The company's components business increased its earnings by 1 percent as profit margins weakened despite a 10 percent increase in sales.

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