Moog Inc.

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 July 24, 2020, our most recently filed Form 8K filed on July 24, 2020, and in certain of our other public filings with the SEC. We've provided some financial schedules to help our listeners better follow along with the prepared remarks. For those of you who do not already have a document, a copy of today's financial presentation is available on our investor relations webcast page at www.moog.com. John?

Thanks, Anne. Good morning. Thanks for joining us. This morning we report on the third quarter of fiscal 20 and provide some insights on the remainder of the year. Overall, it was a good quarter against the backdrop of a very challenging environment. This result is a tremendous credit to the dedication of our employees around the globe. We believe our results today should reassure our investors around our two key messages. First, short-term strength from our diversity, and second, long-term value from our fundamentals. As we look forward, our priorities remain unchanged. First and foremost is the health and safety of our employees and their families. And second, to continue to meet the needs of our customers and others. As usual, I'll start with the headlines. First, this was the COVID quarter, perhaps the first of several. We came into the quarter believing our defense, space and medical businesses would be strong, industrial would be pressured and commercial aircraft would be hardest hit. Looking back, the quarter unfolded pretty much as expected. Second, Our underlying operations performed extremely well under very difficult circumstances. Despite the precipitous drop in sales, adjusted net earnings of $30 million and adjusted earnings per share of 93 cents remained very respectable. In addition, free cash flow of $90 million was one of our best quarters ever. Third, we incurred various charges associated with resizing our business and revaluing assets as a result of COVID. We booked a total of almost $60 million in charges, including severance, write-downs, and asset impairments. Over 90% of this charge is non-cash. Fourth, on a very positive note, our activities to curtail spending and improve cash flow resulted in lower leverage and improved liquidity at the end of Q3 relative to Q2. And finally, given our healthy financial position, we're reinstating our dividend this quarter at 25 cents per share. In summary, Q3 was a very tough quarter but we managed through it well and delivered strong results. All our facilities continued to operate and the majority of our staff transitioned to working from home. Our diversity across markets, our actions to reduce expenses and improve cash flow, and the commitment of our employees means that today we are more financially secure than we were three months ago. Now let me move to the details, starting with the third quarter results. Sales in the quarter of $658 million were 11% lower than last year, the result of the decline in our commercial aircraft business and weaker industrial markets. Taking a look at the P&L, our gross margin was down on the lower sales and inefficiencies resulting from our new work practices. Our dollar spend in R&D and SG&A were lower as cost containment initiatives were swiftly adopted. Interest expense was marginally lower and we had a very low adjusted tax rate. We incurred $58 million in charges associated with the sudden change in business conditions. Excluding these charges, adjusted net income was $30 million, down 34% from last year, and adjusted earnings per share of $0.93 were down 29% from last year. Fiscal 20 outlook. As we enter the fourth quarter, the macroeconomic environment seems more predictable than it was 90 days ago. We're coming to accept our changed reality, but that new normal still includes significant uncertainty. Therefore, we believe it would be inappropriate to provide detailed guidance for our fourth quarter. However, we can offer the following color on our sales outlook. We believe our fourth quarter will look somewhat similar to our third, with continuing strength in our defense, space, and medical markets, further weakness in industrial, and little or no improvement in our commercial book of business. Now to the segments. I'd remind our listeners that we provided a three-page supplemental data package posted on our webcast site. We suggest you follow this in parallel with the text. Beginning with aircraft. Sales in the third quarter of $249 million were 26% lower than last year as a result of the pandemic. On the positive side, military sales were up in the quarter. We saw a nice growth on the F-35 program as well as in our portfolio of funded development work. Partially offsetting these increases was a decrease in foreign military sales which were particularly strong last year. In the military aftermarket, we had a blowout quarter. We had strong backlog across the portfolio coming into the quarter and benefited from transferring some of our production staff from commercial programs over to military jobs. On the commercial side of the house, we felt the full brunt that COVID had on the airline industry. Sales to our OEM customers were down over 60%. We saw dramatic decreases across the portfolio. The overall decrease was larger than we had expected, a combination of declining production rates at the OEMs, but also their actions to reduce their inventory levels. In the aftermarket, sales were down almost 50%. This was slightly better than what we expected based on flight data. We benefited from a healthy backlog coming into the quarter, and also from the relative strength of our freight customers. Aircraft margins. Adjusted operating margins in the quarter of 4.5% were primarily the result of the significant change in commercial volumes. In addition, we suffered some loss of efficiency in our production facilities, the result of precautions taken to protect our employees' health. During the quarter, we took action to reduce our commercial operations across the globe and incurred costs of $55 million. This includes severance, costs, asset impairments, and various other write-offs, all attributable to the structural decline in our commercial business. Aircraft fiscal 20. The situation in our two major markets is more stable today than it was 90 days ago. We still find ourselves dealing with uncertainty. The military side of our business has remained strong, and we anticipate this will continue into the fourth quarter. Our factories continue to operate, and our customers continue to need product. On the commercial side of the business, the situation remains volatile. The OEMs have announced new production schedules for their major programs and we have adjusted our staffing to align with their future long-term demands. However, in the short term, we continue to struggle with significant demand volatility as our customers reduce their inventory and preserve cash. This destocking was a significant factor in our third quarter and is likely to continue to some extent through this coming quarter. In the commercial aftermarket, increasing COVID cases around the world over the last month is delaying the recovery in flight operations we might have expected. Our business is predominantly on wide-body airplanes, and the dearth of international flights does not bode well for a meaningful recovery anytime soon. Overall, this continued volatility makes it difficult to predict what will happen in this coming quarter. At the moment, our assumption is that our military business will remain strong, but we'll come down a little from Q3 on marginally lower aftermarket sales. We anticipate that our commercial OEM sales will be slightly higher as destocking actions abate, and we're hopeful that the commercial aftermarket may tick up slightly. Turning now to space and defense, sales in the quarter of $184 million were 6% higher than last year. Similar to last quarter, the growth is all coming in the space market, with sales up 33% over last year. We continue to see nice growth in our hypersonic development activity, as well as strength across our portfolio of products including avionics and mechanisms. We also had higher sales on various NASA programs with activity on both the Orion crew vehicle and the Space Launch System up from last year. Defense sales were 7% lower than last year, primarily the result of lower activity across various missile programs. Sales of slip ring products on a range of flight vehicles were also down from a year ago. Sales into vehicle applications were about in line with last year, while naval and security sales were slightly higher. Defense, space and defense margins. Adjusted margins in the quarter were 12.3%, down from a very strong 13.9% a year ago. Last year, we had a particularly favorable mix where this year we experienced some inefficiencies as a result of our changed work practices. Space and Defense Fiscal 20. So far, the impact of COVID on our space and defense business has been somewhat muted. Changes to our production facilities have kept our employees safe and healthy, and our engineering crews have been able to advance our development jobs while working from home. As we look to the fourth quarter, we believe this run of stability will continue, and the fourth quarter should be somewhat similar to the third within the normal quarterly fluctuations in this business. Turning now to industrial systems, sales in the third quarter of $224 million were down 3% from last year. However, adjusting for Forex and the sales of our GAT acquisition, organic sales were down about 6%. Similar to last quarter, below the top line number, there were significant shifts in the mix between our major markets. Sales into energy markets were up slightly on the acquired sales from GAT but down organically. The continued downward pressure on oil prices is undermining investment and exploration, suggesting a recovery in our energy market is unlikely in the near term. Sales into industrial automation applications were down 17%. Capital investment was already slowing pre-COVID as the global economy started to cool. The impact of the pandemic has served to both accelerate this drop in capital spending and exacerbate its impact on our industrial automation business. Sales into simulation and test applications were also down in the quarter. In particular, our flight simulation business has softened as demand for pilot training has dropped. To finish on a more positive note, sales into our medical markets were way up in the quarter. Sales of components used in breathing aids were higher on surging demand. and sales of our medical pumps continue to grow in support of COVID requirements. Industrial systems margins. Adjusted margins in the quarter were 9%. The continued shift of our mix away from our industrial automation business is having a negative impact on our margins. In addition, the sales from our GAT acquisition are at relatively low margin due to first year acquisition accounting effects. Industrial systems fiscal 20. accurately forecasting our industrial business continues to be difficult. As we look to next quarter, we believe the underlying macroeconomic trends will continue to pressure our business. Sales into the energy, industrial automation, and simulation and test markets will continue to experience downward pressure, while sales into medical applications should remain healthy. Shifting from the macro to the micro, bookings through the third quarter were marginally below our billings, signifying a declining outlook. Taken all together, we anticipate that sales in Q4 will be slightly lower than Q3. Summary comments. At the time of our last earnings call, we were heading into a storm. We had hoped that Q3 would be the eye of the storm, the COVID quarter, and Q4 would be the transition back to a more normal business environment. That is clearly not the case, and today we find ourselves planning for several more COVID quarters to come. During Q3, we took dramatic action to reduce our spending and resize our business. These actions paid off. Today, our balance sheet is stronger than last quarter, both in terms of leverage and liquidity. As a result, we're reinstating our dividends and selectively starting to reinvest in our business. In the present environment, we believe our shareholders are best served by activities which preserve value today and create value tomorrow. We are committed to maintaining the right balance between our short-term financial strength and the long-term investments required to grow our business. Now let me pass it to Jennifer who will provide more color on our cash flow and balance sheet.