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 January 28, 2022, our most recent form 8K filed on January 28, 2022, 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 copy of the document, a copy of today's financial presentation is available on our Investor Relations webcast page via www.move.com. John?

Thanks, Anne. Good morning. Thanks for joining us. This morning, we'll report on the first quarter of fiscal 22 and provide color on what we are thinking for the remainder of the year. Let me start with the key financials. Earnings per share of $1.44 included a 33-cent net gain from our portfolio shaping activities. Adjusted earnings per share of $1.11 were in line with our guidance from last quarter. Omicron made this quarter more challenging than we had projected 90 days ago. It further exacerbated the difficulties associated with labor availability, supply chain constraints, and inflationary pressures. Despite these additional headlines, we achieved our plan. Sorry, additional headwinds, we achieved our plan. Adjusted free cash flow in the quarter, excluding the impact of our securitization facility, was $31 million, a conversion ratio of 86% on adjusted net earnings. There's no change to our guidance for the full year. Full year sales will be $3 billion, with adjusted earnings per share of $5.50 plus or minus 20 cents. Now let me move to the headlines. There were several exciting product announcements since we last reported, including a major production win, a strategic collaboration, and a technology demonstrator. First, we reached agreement on the full order for our RIP tourist for the SHORAD program. Over the last years, we have been working on the initial order for 30 units, including non-recurring development. The full order for 124 units, including NRE and options, totals almost $250 million in sales and is our largest defense booking ever outside our aircraft business. SHORAD is just the first major win for our reconfigurable turret, and we anticipate further wins in the future. Second, in early January, we formally launched our MOG construction initiative. with the announcement at the Consumer Electronics Show in Las Vegas of a strategic collaboration with Doosan Bobcat. Bobcat will supply all the controls and actuation on the world's first all-electric track loader, the T7X. Our controls platform opens the future opportunity to augment the operator's capabilities through automation and eventually full autonomous operations. Bobcat's launch customer is Sunbelt Rentals. who wants to build a fleet of all-electric vehicles. We look forward to getting the first units into the field over the next few months. Converting professional equipment from diesel and hydraulics to electrics is a significant challenge, the type of challenge our company has solved in other industries in the past. The electric construction vehicle market is in its infancy, and autonomous vehicle operation is still experimental. However, the longer-term market potential for Moog is enormous. Third, MOG hardware played a critical role in the DARPA Gremlins program this quarter. In early October, the military ran a successful test to recover an unmanned air vehicle into a conventional airplane. MOG provided flight control technology for both the air vehicle and the recovery system, demonstrating again our capability to solve our customers' most challenging technical problems. These programs demonstrate our commitment to organic investments that fuel long-term growth. Over the last few years, we've continued to look for strategic acquisitions, but have struggled to justify the price levels that others are paying. We've therefore decided to double down on internal investments that will create significant long-term value. These investments come in two categories. First, investments in new markets, products, and technology to drive the top line. We've already described some of our growth investments, including our RIP turret, which is now in full production, our space vehicles, which are starting to run production, and our construction equipment initiative, which is in the pre-production phase. Second, investments in infrastructure, facilities, advanced manufacturing systems, and portfolio shaping to build a platform for longer-term goals at higher margins. Note that our forecast for fiscal 22 already includes these investments. Now let me move to the details, starting with the first quarter results. Sales in the quarter of $724 million were 6% higher than last year, Sales were up in each of our three operating groups, with particular strength in the commercial aircraft and space markets. Taking a look at the P&L, our gross margin was down on operational inefficiencies attributable to the pandemic. R&D is in line with last year. Selling and admin expenses are up on increased customer interactions, but in line with our plan for the year. Interest was slightly lower on lower debt levels. This quarter includes the benefits from the sale of our navigation aids business. The effective tax rate was 24.7%, resulting in net income of $46 million and earnings per share of $1.44. Excluding the impact of our portfolio actions in the quarter, adjusted net income was $36 million and adjusted earnings per share were $1.11. Fiscal 22 outlook. Our first quarter was in line with our guidance from 90 days ago. We anticipated a slow start to the year with increasing sales and earnings as we move through the quarters. Our outlook remains unchanged, and therefore we are affirming our full-year guidance of $3 billion in sales, up 6% from last year, and adjusted earnings per share of $5.50, thus a minus 20 cents. Now to the segments. I'd remind our listeners that we provided a supplemental data package posted on our webcast site, which provides all the detailed numbers for your models. We suggest you follow this in parallel with the text. Starting with our aircraft group. The underlying market dynamics in our aircraft business were somewhat mixed this last quarter. Global political tensions with Russia and China continue to mount, and there's strong support for defense spending across both sides of the aisle. On the other hand, the continuing resolution and a slower level of activity in the military aftermarket are causes for caution. The recovery in the commercial aircraft market was partially interrupted this quarter by the Omicron variant, what should resume as a virus wave. China flew the 737 MAX, which hopefully means a return to full service sometime in the near future. However, less positive is the fact that the 787 continues to have challenges, and deliveries to airlines are not forecasted to resume for several more months. Aircraft Q1. Sales in the quarter of $303 million were 6% higher than last year. This quarter, the commercial sales were way up, with military sales down from a year ago. We saw strong growth in both the commercial OEM and commercial aftermarket portfolios. On the OEM side, we experienced higher sales across most of our portfolio programs. We had particular strength on the A350 and in business jets. The 787 was also up from a year ago. We had 3 million of additional sales from our Genesis acquisition, which we completed in the last month of Q1 last year. Growth in the commercial aftermarket was driven primarily by the 787, with more modest sales increases on the A350 and in our business jets portfolio. On the military side, we saw decreases in both the OEM book and in the aftermarket. OEM sales on the F-35 were down over 20% as a result of supply chain challenges. In addition, we saw sharply lower sales on some foreign military programs as a result of timing issues. Partially compensating for these reductions were increases in our helicopter product line higher funded development, and additional sales from Genesis. In the military aftermarket, we saw decreases across much of the portfolio, with the exception of the B-22. As part of our wider portfolio shaping program, we completed the divestiture of our NAVAIDS business in the first quarter. We received $39 million in cash and booked a gain of $16 million on the sale. This gain contributed over 500 basis points of operating margin to the aircraft business in the quarter. Sales of our NAVAIDS business in fiscal 21 were $25 million. Aircraft margins. Excluding the gain from the sale of the NAVAIDS business, adjusted margins in the quarter were 8.5%. These margins were ahead of our average for fiscal 21. However, they were down from the same quarter a year ago. Last year, you may remember, we had a particularly positive mix in the first quarter as a result of unusually strong sales on some of our foreign military programs. Aircraft fiscal 22. We're keeping our full-year sales forecast unchanged from 90 days ago at 1.25 billion, up 7% from fiscal 21. We're also keeping the mix between military and commercial unchanged. Our full-year forecast assumes some acceleration on the military side from the run rate of the first quarter. Easing supply chain bottlenecks on the F-35 and a modest pickup in the military aftermarket will drive the growth. On the commercial side, we're already slightly ahead of our projected run rate coming out of the first quarter. We had some favorable timing of material receipts in Q1, which drove the beat. We anticipate this will level out over the coming three quarters. As we go through the remainder of the year, we anticipate margins will strengthen to yield full-year adjusted margins of 10.1%, unchanged from our forecast of 90 days ago. Turning now to space and defense. Underlying demand for our legacy components across both the space and defense markets remains strong. Global investment in space, both commercial and military, continues to create opportunities for growth in our business. In particular, our growth is being fueled by our newer, more integrated product offerings in both markets, the vehicles for space and the reconfigurable turrets in defense. Sales in the first quarter of $208 million were 10% higher than last year. This quarter, we enjoyed nice growth in both the space and defense portfolios. On the space side, sales were up over 10% and continued growth in our space vehicles product line. Sales in this product line more than doubled to over $20 million in the first quarter this year. Increases in our avionics and legacy valves business made up for lower sales on hypersonic development programs. Several of our hypersonic development programs are winding down, We will now have to wait to see which move to the next stage of early production. On the defense side, the growth was driven by our RIP turret on the SHORAD program. As I mentioned in my opening, this quarter we agreed the remaining stages of our contract with DRS and celebrated a total program value over several years of almost $250 million. We saw some slowdown in our tactical missile business this quarter, but this was compensated by higher component sales. Over the last few years, in both the space and defense markets, we follow the strategy of combining our components into more integrated solutions to address the needs of the end customer, primarily the defense department. We call this strategy Agile Prime. Our major growth drivers this year, space vehicles, and our turret offering are examples of the success of this strategy. Going forward, we will continue to offer world-class components as a sub-tier supplier to all the major primes. In parallel, we will look to partner with the primes to offer more cost-effective and flexible solutions that address some of the challenges of their customers. Similar to our aircraft business, our portfolio shaping continued in space and defense this quarter. We took a $2 million charge associated with exiting a product line in our security business. Space and defense margins. Adjusting for the portfolio shaping charge, underlying margins in the quarter were 11%. These margins were down from a few years ago for a combination of reasons. First, as in all our businesses, COVID is putting operational pressure on our facilities, both in terms of labor efficiencies as well as supply chain disruption. Second, our new growth factors of turrets and space vehicles are in the early stages of production and are at lower margins than our more mature businesses. We expect the margins on these new businesses to improve over the coming years. Space and defense fiscal 22. There's no change to our forecasted sales for the year. Full year space sales will be $350 million in line with the run rate of the first quarter. Full year defense sales will be $530 million, an acceleration from the first quarter as the shore ad program continues to grow. For the full year, we're keeping our adjusted margin forecast unchanged at 11.5%. Now to industrial systems. The major global economies are showing real strength despite the ongoing pandemic. We see this strength reflected in our industrial bookings. Across every market from cars to materials to electronics, demand is buoyant while the supply chain is struggling to keep up. Capital spending is up, driving strong demand for our automation components. With oil prices firming and flight training on the increase, we're feeling positive about the remainder of our fiscal year. It's too early to tell if the present high level of demand is transitory as a result of constrained supply chains, or whether it is stable longer term. Sales in the quarter of $213 million were marginally higher than last year. Sales were up in three of our sub-markets, energy, industrial automation, and sim and test. Sales in the medical applications were down from a year ago. Energy sales were up across much of the portfolio as oil prices continued to edge upwards. Industrial automation sales were up, reflecting the increasing confidence in the global recovery. Sales into sim and test applications were up as we delivered on some large test programs in China. Sales of flight simulation systems remained muted again this quarter, actually down from a year ago. However, on a more positive note, we are starting to see stronger demand for flight simulation systems as the airline market recovers. Finally, sales of the medical applications were down in the quarter as the underlying business continues to settle after the COVID surge. Industrial systems margins. Margins in the quarter of 8.1% were down from a year ago, but in line with expectations. This quarter, we incurred moving expenses and production disruption as we continue to refine our footprint and consolidate facilities in both Europe and the US. We also increased our investments in future growth factors, in particular, our electric construction vehicle initiatives. We're confident that these investments will pay off on both the top line and the bottom line over the coming years. In the shorter term, our strong backlog gives us confidence that the remainder of this fiscal year will see a pickup in both sales and margin. Industrial systems fiscal 22. There's no change to our sales forecast from last quarter. For the full year, we anticipate sales of $910 million, with an acceleration as we move through the quarters. The risk to meeting this plan will not be on the demand side. We already have the backlog. Our primary concern remains the supply chain's ability to meet this increased level of activity. We're forecasting full year margins of 9.5%. Summary guidance. Overall, it was a solid quarter in line with our guidance despite the unexpected arrival of the Omicron variant. Business sentiment remains positive across all our markets, while supply challenges are tempering our growth on both the top and bottom lines. It was an exciting quarter for product announcements with the Shorad production program, the Bobcat strategic collaboration, and the Gremlins technology demonstration. We continued to generate healthy free cash flow and return some of that cash to our investors through our dividend and share buyback programs. Growth on the top and bottom lines remains our focus. Our search for strategic acquisitions is ongoing, but the last few years have taught us to be wary of overpaying. In addition, our portfolio review has shown that internal investments have often created more long-term value than some of our acquisitions. As a result, we're accelerating the pace of internal investment this year, both in terms of capital expenditures as well as investments in new market opportunities. We're very excited at the long-term opportunities for our business. Climate change is opening opportunities for us in construction vehicles, and demographic shifts are creating the need for additional automation. The availability of ever lower cost sensors and advanced computing platforms is enabling transformational change. At our core, we are an engineering and technology company. Our greatest strength is working with our customers to solve their most difficult technical challenges. We have both the components technology and the systems integration capability to make things work. Our collaboration with Bobcat came from demonstrating this capability. Within six months of our first conversation, we had a fully operational vehicle. For the second quarter, we anticipate earnings per share of $1.30, plus or minus 15 cents. Our range is relatively wide again, as we remain unsure about the evolution of the virus and the potential impact of vaccine mandates and further supply chain issues on our business. However, these are transitory issues, and they will resolve, we believe, over the coming quarters. Our underlying business remains strong, and we're very optimistic about the longer term. Now, let me pass you to Jennifer, who will provide more color on our cash flow and balance sheet.