Yahoo Finance Moog Inc (MOG.A) Q2 2024 Earnings Call Transcript Highlights: Surpassing Expectations with ...
Revenue: $930 million, an 11% increase from the previous year's quarter.
Adjusted Operating Margin: 13.6%, significantly above plan.
Earnings Per Share (EPS): Adjusted EPS of $2.19, surpassing the high end of guidance.
Free Cash Flow: Use of $84 million, driven by growth in net working capital.
Net Income: Not explicitly mentioned, but strong sales and operational performance suggest positive outcomes.
Market Capitalization: Not discussed in the call.
Gross Margin: Not specifically mentioned, but implied improvements through operational enhancements.
Same-Store Sales: Not applicable to Moog Inc's business model.
Store Locations: Not relevant, but closure and consolidation of manufacturing facilities mentioned.
Release Date: April 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide more tangible details or quantify what you're seeing, learning, or realizing from the 80/20 initiative, and how it's driving core margin expansion? A: Patrick J. Roche, President, CEO & Director of Moog Inc., explained that the 80/20 initiative is central to the company's improvement activities, influencing business decisions and the use of other tools to drive organizational enhancements. He attributed the quarter's improvement equally to pricing and simplification, facilitated by the 80/20 approach. This initiative helped in making strategic decisions such as exiting the C-5 transport aircraft aftermarket, focusing resources on more impactful customer and product lines.
Q: Can you provide any updates on current shipping rates for commercial aircraft and potential risks of near-term inventory build? A: CEO Patrick J. Roche noted that Moog Inc. is manufacturing in alignment with the schedules provided by Boeing and Airbus, with no changes communicated that would alter their plans. He mentioned that Moog is currently running at rate 5 on the 787, with plans to ramp up to rate 8 within the fiscal year, aiming for rate 10 by fiscal '26.
Q: Could you discuss the factors contributing to the lighter free cash flow in the quarter and expectations moving forward? A: Jennifer Walter, VP & CFO, attributed the pressure on free cash flow to growth in working capital driven by record sales levels. She detailed challenges in billed receivables due to timing of collections and pressures from physical inventories and customer advances. Walter projected modest positive free cash flow for FY '24, with expected relief in physical inventories and continued pressure in billed receivables.
Q: Are there any transformational changes or potential acquisitions on the horizon for Moog Inc. to enhance growth or business robustness? A: CEO Patrick J. Roche emphasized the company's current focus on delivering promised margin enhancements rather than seeking transformational changes or acquisitions. He highlighted the importance of continuing to execute on existing commitments to improve margins as outlined during their Investor Day.
Q: Can you provide insights into the biggest contributors to backlog growth and the impact of supplemental defense spending packages? A: CEO Patrick J. Roche pointed out that backlog growth was primarily driven by strengthening in Commercial Aerospace and Defense sectors, with a slight decline in Industrial. He mentioned that the DoD's fiscal year budget supports strategic programs like next-generation air defense, which aligns with Moog's capabilities in primary flight control systems.
Q: What are the implications of the lawsuit filed by L3Harris on Moog's space vehicle program? A: CEO Patrick J. Roche acknowledged the lawsuit but chose not to comment on specifics during the call. He assured that Moog would defend against the allegations and mentioned ongoing support for L3Harris and other space vehicle programs, indicating continued business activities despite the legal challenge.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
