Moog was established under the laws of New York State in 1951 and is headquartered in East Aurora, New York. The Company’s Class A and Class B common stock is registered and listed on the New York Stock Exchange under the ticker “MOG”.
The Company is a leading manufacturer and designer of high performance, fluid and motion controls and systems for a wide array of applications including aerospace, defense, medical device and industrial markets.
The Company’s major systems and products include commercial and military airplane flight controls, strategic and tactical missiles controls, controls for satellite positioning, controls for space launch vehicles, gun barrels positioning controls and controls for automatically loading military combat vehicles. The Company’s products are also used in various industrial applications such as injection molding machines, power generating turbines, metal forming, simulators for pilot training and some medical applications.
The Company’s primary manufacturing sites are based in US, including sites in Utah, New York, North Carolina, California, Virginia and Pennsylvania as well as in Germany, England, Italy, the Philippines, Japan, India and Ireland.
The Company focuses on increasing its revenue base and improving cash flows and profitability by leveraging its market leading position and by strengthening leaderships in the niche market. The Company emphasizes on a balanced and diversified mix of its business in terms of geographic presence, product presence and customer base. Moog is also focusing on improving operating efficiencies through a variety of manufacturing and process initiatives and leveraging low cost manufacturing locations.
Moog has historically grown through acquisitions. In August 2006, the Company completed acquisition of McKinley Medical through stock issuance. McKinley Medical engages in designing, assembling and distribution of disposable pumps used primarily to administer therapeutic drugs. In April 2006, the Company completed acquisition of Curlin Medical and its affiliates. Curlin Medical manufactures infusion pumps used in controlled delivery of therapeutic drugs. In November 2005, Moog completed acquisition of Flo-Tork. Flo-Tork is designs and manufactures pneumatic and hydraulic rotary actuators for industrial and military applications.
In February 2006, Moog issued 2,875,000 Class A shares for net proceeds of $84 million which was utilized to pay outstanding debt under credit facilities. The Company employed approximately 7,300 people as of September 30, 2006.
The Company’s customers include Original Equipment Manufacturers for defense and aerospace market, which accounted for 43% of Moog’s net sales in 2006; OEM customers of medical businesses and industrial market, which accounted for 31% of the Company’s net sales in 2006; and aftermarket customers which include commercial airlines and the US Government. The Boeing Company accounted for nearly 9% of Moog’s total net sales in 2006. Net sales to Lockheed Martin also accounted for nearly 9% of total net sales.
The Company’s international operations are based primarily in the Asian-Pacific region and Europe and it operates through fully owned foreign subsidiaries in these regions.
Financial Performance. The Company’s worldwide net sales increased 24.3% to $1,306 million in 2006 from $1,051 million in 2005. Moog’s earnings before income tax increased 26.5% to $120.1 million in 2006 from $94.9 million in 2005. The Company’s operating margin improved to 9.2% in 2006 from 9.0% in 2005. The Company’s net income increased 25.7% to $81.3 million in 2006 from $64.7 million in 2005. Moog’s net income margin also increased marginally to 6.2% in 2006 from 6.1% in 2005.
Outlook for 2007. The Company expects an increase of 9%-11% in net sales in 2007 over 2006. The Company expects diluted earnings per share to increase between 12% and 16% to between $2.21 and $2.29, respectively.
The Company has organized itself into five different operating segments: Space and Defense Controls, Aircraft Controls, Industrial Controls, Medical Devices and Components.
Aircraft Controls. Aircraft Controls is the Company’s largest business segment and generates its revenues from three primary sectors: commercial aircraft, military aircraft and aftermarket services. The segment offers a comprehensive range of system integration capabilities and technologies. The segment engages in designing, manufacturing and integration of flight controls for commercial and military aircraft. The segment’s key customers include BAE, Boeing, Airbus, Bombardier, Lockheed Martin and Honeywell.
Space and Defense Controls. The segment generates revenues from space vehicles and satellites, missile defense, strategic and tactical missiles, launch vehicles and defense controls. The segment engages designing, manufacturing and integration of electric and chemical propulsion systems and flight motion controls for military and commercial satellite markets. The segment’s major include Lockheed Martin, Alliant Techsystems, Astrium, Boeing and Raytheon.
Industrial Controls. Industrial Controls serves customers in six major markets across the world including plastics making machinery, metal forming, power generating turbines, heavy industry, simulation and test.
The segment’s key customers include Huskey, FlightSafety, Tuftco, Schlumberger and Cooper.
Components. The segment provides fiber optic rotary joints, motors and slip rings. It also offers electromechanical actuators for commercial, military and aerospace applications, fiber optic modems, avionic instrumentation, resolvers and optical switches. The segment’s key customers include Lockheed Martin, Respironics, Raytheon, Litton Precision Products, Honeywell and the US Government.
Medical Devices. Moog entered into medical devices market through acquisitions of McKinley Medical and Curlin Medical in 2006.