Moog Inc. (MOG.A)
F1Q09 (Qtr End 12/27/08) Earnings Call Transcript
January 26, 2009 11:00 am ET
Ann Luhr – IR
Bob Brady – Chairman, President & CEO
John Scannell – CFO
Cai von Rumohr – Cowen
JB Groh – D.A. Davidson
Eric Hugel – Stephens
Ronald Epstein – Merrill Lynch
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Good morning. Before we begin, we call your attention to the fact that we may make forward-looking statements during the course of this conference call. These forward-looking statements are not guarantees of our future performance and are subject to risks, uncertainties and other factors that could cause actual performance to differ materially from such statements.
A description of these risks, uncertainties and other factors is contained in our news release of today's date, our most recent Form 10-K filed on November 25, 2008, and in certain of our other public filings with the SEC. We have provided some financial schedules to help our listeners better follow along with the prepared comments. For those of you who do not already have the document, a copy of today's financial presentation is available on our Investor Relations home page and webcast page at www.moog.com. Bob?
Good morning, everybody. Thanks for joining us. This morning we will report the first quarter of ’09 and will update again our guidance for the year. 2.5 weeks ago at our annual meeting we suggested that when we got the books closed on the first quarter that will probably come in between $0.65 and $0.70 a share. As it turned out, we are at the top of that range. First quarter earnings $30.3 million produced earnings per share of $0.70, up 9% from the $0.64 for the first quarter of ’08.
Sales for the quarter $446 million, we are actually $300,000 lower than the same quarter a year ago. On a constant currency basis, sales were actually up by 3%. But because of the dollar strengthen against the euro, our euro sales translated into fewer dollars. Cost of sales higher than last year. R&D expense at $25.1 million, $1 million higher than last year. But we have lower SG&A expense, lower interest, and we had other income produced by our 40% ownership LTi REEnergy. All these puts and takes together with a very low 16.8% tax rate, produced net earnings of $30.3 million and $0.70. John will discuss the tax rate in a few minutes.
Now let me go to the segments. Aircraft sales $163 million, just a little ahead of last year’s $160 million. The small increase was the net of a big increase on the military side of 16% to $106 million and a similar reduction in the commercial side of $58 million. The big increases in military sales came in three programs and in the after-market. Sales for the quarter at F-35 were $31.4 million, up 36% from last year.
Activity in our company was up from last year only because we’ve started work on the Elma [ph] contract. Our partners, on the other hand, seem to have stepped up their efforts in order to bring their development contracts to completion. Secondly, we’ve started shipments on a substantial new order for flight controls on the Indian Light Combat Aircraft. Sales in the quarter $4.6 million, up from $1.4 million last year.
In addition, increased production rate on the V-22 Tilt Rotor generated a 40% increase in sales to just over $10 million. And lastly, we are pleased to report that the military after-market is picking up like we had anticipated. Sales in the quarter $29.8 million were up 11% a year ago.
On the commercial side, the decline in sales shouldn’t be a surprise to anyone. This was the quarter that included the Boeing strike. Our sales of equipment on the Boeing 7-series production aircraft at $8.3 million, little more than half our sales level of last year. In addition, sales on the 787 were also down in the quarter. So the total for Boeing commercial was $12.6 million, down 38%. The sales of Airbus $5.2 million. We are actually up 6% from a year ago.
Our Business Jet product line also showed a decline. Sales $13 million were down 18%, mostly having to do with the reduced level of shipments on the Hawker 4000. Although the company of Hawker Beechcraft insists that they are maintain their delivery schedule of this airplane, we’ve already delivered more hardware than they were able to use. So our effort has slowed down. The good news in the commercial aircraft business is that our after-market revenue at $21.1 million was almost the same as a year ago, the decrease 1%.
If you remember, in our forecast for the year we are projecting a 10% decline in the after-market. So we now have one quarter’s worth of data that suggests that there may be an upside in that part of our business. Our previous forecast for aircraft in fiscal ’09 was a total $680 million, up ever so slightly from $673 million in ’08. We’re maintaining that forecast for total aircraft sales. There is a bit of a shift, then that military sales will be up $13 million to offset a comparable decline in the commercial side. The increase is primarily in the F-35 and the new order we have on the F-2 Japanese fighter aircraft.