Quarter Highlights
Record net sales of
Adjusted operating margin expanded 210 basis points to 12.5%, benefiting from pricing and simplification.
Adjusted diluted earnings per share increased 54% due to incremental operating profit.
Adjusted free cash flow increased
Year Highlights
Net sales increased 9% to a record
Adjusted operating margin expanded 70 basis points to 10.9%, benefiting from pricing and simplification.
Adjusted diluted earnings per share increased 11%, driven by the growth in operating profit, offset by higher interest expense.
Adjusted free cash flow use resulted from growth in net working capital, primarily physical inventories.
Record twelve-month backlog of
'We had an exceptional quarter that rounded out a great year for our company,' said
Quarter Results
Sales in the fourth quarter of 2023 increased across all segments compared to the fourth quarter of 2022. Aircraft Controls' sales increased 16% to
Adjusted operating margin increased 210 basis points to 12.5% in the fourth quarter of 2023 compared to the fourth quarter of 2022. Aircraft Controls' adjusted operating margin increased 210 basis points driven by retroactive pricing and 80/20 initiatives. These benefits were tempered by additional charges on near-complete funded development programs. Space and Defense Controls' adjusted operating margin expanded 340 basis points due to lower charges associated with our space vehicles development programs and pricing benefits. Adjusted operating margin for Industrial Systems increased 110 basis points as a result of pricing initiatives.
Non-operating expenses in the fourth quarter of 2023 included the benefits of a favorable litigation settlement and lower effective tax rate, which were not anticipated in our prior guidance. These benefits were moderated by incremental interest expense.
Year Results
Sales in fiscal 2023 increased across all segments compared to fiscal 2022. Aircraft Controls' sales increased 11% to
Adjusted operating margin increased 70 basis points to 10.9% compared to 2022. Adjusted operating margin increased 200 basis points in Industrial Systems and increased 70 basis points in Aircraft Controls due largely to pricing benefits. Also within Aircraft Controls, margin expansion was impacted by additional charges for military funded development programs. Space and Defense Controls' adjusted operating margin decreased 40 basis points as charges associated with our space vehicles development programs more than offset underlying stronger operational results.
Free Cash Flow Results
Free cash flow was
Cautionary Statement
Information included or incorporated by reference in this press release that does not consist of historical facts, including statements accompanied by or containing words such as 'may,' 'will,' 'should,' 'believes,' 'expects,' 'expected,' 'intends,' 'plans,' 'projects,' 'approximate,' 'estimates,' 'predicts,' 'potential,' 'outlook,' 'forecast,' 'anticipates,' 'presume' and 'assume,' are forward-looking statements. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual results to differ materially from the expected results described in the forward-looking statements. In evaluating these forward-looking statements, you should carefully consider the factors set forth below.
Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors and other risks and uncertainties that arise from time to time are described in Item 1A 'Risk Factors' of our Annual Report on Form 10-K and in our other periodic filings with the
Market condition risks
The markets we serve are cyclical and sensitive to domestic and foreign economic conditions and events, which may cause our operating results to fluctuate; We depend heavily on government contracts that may not be fully funded or may be terminated, and the failure to receive funding or the termination of one or more of these contracts could reduce our sales and increase our costs; The loss of
Operational risks
A constrained supply chain, as well as inflated prices, across various raw materials and third-party provided components and sub-assemblies have had, and could continue to have, a material impact on our ability to manufacture and ship our products, in addition to adversely impacting our operating profit and balance sheet;
If our subcontractors or suppliers fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted; We face, and may continue to face, risks related to information systems interruptions, intrusions or new software implementations, which may adversely affect our business operations; We may not be able to prevent, or timely detect, issues with our products and our manufacturing processes, which may adversely affect our operations and our earnings and he failure or misuse of our products may damage our reputation, necessitate a product call or result in claims against us that exceed our insurance coverage, thereby requiring us to pay significant damages.
Financial risks
We make estimates in accounting for over-time contracts, and changes in these estimates may have significant impacts on our earnings; We enter into fixed-price contracts, which could subject us to losses if we have cost overruns; Our indebtedness and restrictive covenants under our credit facilities and indenture governing our senior notes could limit our operational and financial flexibility; Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could adversely affect our earnings and equity and increase our pension funding requirements;A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net worth and Unforeseen exposure to additional income tax liabilities may affect our operating results.
Legal and compliance risks
Contracting on government programs is subject to significant regulation, including rules related to bidding, billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties or possible debarment;
Our operations in foreign countries expose us to currency, political and trade risks and adverse changes in local legal and regulatory environments could impact our results of operations;
Government regulations could limit our ability to sell our products outside
We are involved in various legal proceedings, the outcome of which may be unfavorable to us; Our operations are subject to environmental laws and complying with those laws may cause us to incur significant costs; We may face reputational, regulatory or financial risks from a perceived, or an actual, failure to achieve our sustainability goals and The recently received invalidation of our facility security clearance by the
General risks
Future terror attacks, war, natural disasters or other catastrophic events beyond our control could negatively impact our business and
Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.
While we believe we have identified and discussed above the material risks affecting our business, there may be additional factors, risks and uncertainties not currently known to us or that we currently consider immaterial that may affect the forward-looking statements made herein. Given these factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future results. Any forward-looking statement speaks only as of the date on which it is made, and we disclaim any obligation to update any forward-looking statement made in this report, except as required by law.
Contact:
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Email: investorrelations@moog.com
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