Moog (MOG) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net sales rose 6% to $910 million, driven by strong growth in commercial and military aircraft and space and defense, partially offset by industrial declines and divestitures.

• Adjusted EPS increased 16% to $1.78, while diluted EPS rose 11% to $1.64, reflecting higher sales and margin improvements.

• Record bookings and backlog were reported, with $1.3 billion in Q1 bookings and a stable $2.5 billion backlog, led by space and defense.

• Free cash flow usage was $165 million in Q1, mainly due to working capital needs and inventory build for future growth.

• Sustainability initiatives advanced, including CO2 reduction, water management, and sustainable aviation projects.

Financial highlights

• Q1 sales reached $910 million, up 6% year-over-year, with military aircraft (+15%), commercial aircraft (+14%), and space and defense (+8%) showing strong growth; industrial sales declined 7%.

• Adjusted operating margin rose to 11.8% from 11.3% year-over-year, with all segments improving except industrial.

• Gross margin was 26.6%, down from 27.2% year-over-year, impacted by sales mix and a one-time $8 million warranty expense in commercial aircraft.

• Free cash flow for Q1 was $(165) million, compared to $(2) million in Q1 2024, due to working capital investments.

• Capital expenditures were $33 million, with ongoing investment in facilities and equipment.

Outlook and guidance

• FY25 sales guidance maintained at $3.7 billion (+3% year-over-year), with increases in commercial and military aircraft offset by a decrease in industrial due to FX headwinds.

• Adjusted operating margin guidance held at 13.0%, up 60 bps from FY24; segment margins unchanged.

• Adjusted EPS guidance affirmed at $8.20 ± $0.20, up 5% year-over-year (or 14% normalized).

• Free cash flow conversion expected at 50%-75% for FY25, with improvement projected in H2 as inventories and receivables are reduced.

• Q2 EPS forecasted at $1.75 ± $0.10, with flat margins and no repeat of Q1's extraordinary aftermarket strength.