Moog Inc.

Good morning and welcome to the Moog First Quarter Fiscal Year 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Aaron Astrakhan. Please go ahead, sir.

Good morning and thank you for joining Moog's First Quarter 2024 Earnings Release Conference Call. I'm Aaron Astrakhan, Director of Investor Relations. With me today is Pat Roach, our Chief Executive Officer, and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental slides, both of which are available on our website. Our earnings press release, our supplemental slides, and remarks made during our call today contain adjusted non-GAAP results. Reconciliations for these adjusted results to GAAP results are contained within the provided materials. Lastly, our comments today may include statements related to expected future results and other forward-looking statements which are not guarantees. Our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEG filings. Now, I am happy to turn the call over to Pat.

Good morning and welcome to the call. Today, we report on an excellent start to fiscal 24. We have positive feedback that we are delivering for our customers and that our employees are highly engaged and vested in our success. This feeds through to stronger financial performance. Sales were strong, delivering double-digit growth relative to prior year. Adjusted operating margin increased 90 basis points relative to prior year, which is in line with our margin enhancement plans. Together, these factors resulted in EPS performance at the upper end of our guidance range. Given a great start to the fiscal year, we are confident that we will deliver 110 basis points of incremental adjusted operating margin for the full year, as previously guided. We have also increased both revenue and EPS guidance relative to 90 days ago. Now, I'd like to provide some highlights on our operational performance, starting with customer focus. We were pleased to receive customer recognition from United Launch Alliance as the most innovative supplier of the year 2023. Moog supplies thrust vector actuators for ULA's Vulcan rocket. It was great to see the successful Vulcan certification one flight on January 8th, and we look forward to many more successful launches. We've secured major contract awards in both defense and space that indicate that our product offerings are meeting real customer needs. We received a significant order for our reconfigurable integrated weapons platform, taking cumulative bookings from $270 million to $350 million, which extends full-rate production through to the end of fiscal 25. In addition, we secured further space vehicle business, bringing cumulative bookings to $280 million. We are delighted with the success in building these businesses. Finally, in a highly regulated medical market, we are pleased to have completed a full independent audit of our medical device operations with zero non-conformances. This is a credit to the team's focus on quality and continuous improvement. Speaking of teams and moving to people, community, and planet, our unique culture is core to defining who we are as a company. It is the reason that talented people come to our organization and stay with us. I'm immensely proud to share that Moog was recently recognized by Glassdoor as one of the best places to work. We were ranked 21st of the top 100 large U.S. companies, ranked first in New York State, and we're the top manufacturing company and top aerospace and defense company in this ranking. In addition to this recognition externally, Our own recent global employee survey indicated increased levels of engagement relative to our last survey taken prior to the pandemic. Our highly engaged workforce is what enables us to deliver for our customers and drive improved company performance. Turning next to Planet, we continue to increase our focus on environmental issues. During our last earnings call, we committed to reducing Scope 1 and Scope 2 greenhouse gas emissions by 40%, by 2030. We are also intent on reducing both water consumption and hazardous waste byproducts and will commit to specific goals by the end of calendar year 24. We recently published our fiscal 23 sustainability accounting standards board disclosure, which provides insights into our environmental performance for our stakeholders. And finally, financial strength. We continue to drive margin enhancement through pricing and simplification. We've already secured important price adjustments that reflect the value that we deliver for our customers. This made an important contribution to our margin improvements in this quarter. Our business leaders continue to pursue fair pricing on an ongoing basis. We're continuing to systematically reduce unnecessary complexity in our business. 80-20 is the methodology that drives much of this activity. and we're gaining traction across all businesses. In the quarter, we rolled out 80-20 to a further two manufacturing sites, bringing total deployment to 12 sites. We're using data and analytics on customers, products, and profitability to make key business decisions. At two of our more recently deployed sites, we uncovered the opportunity to end of life significant numbers of low margin, high overhead items to reduce complexity. For example, we've discontinued more than 40% of part numbers that were previously available for sale at one site and 20% at the other. This is all part of our product simplification efforts. We're making good progress in strengthening our 80-20 talent. We trained 120 more leaders on our 80-20 approach this quarter, bringing the total trained to close to one quarter of our global leadership. In addition, we're selectively hiring key expertise to supplement our internal talent. We see significant opportunities to deliver financial improvements beyond profitability. We're building a framework to better structure our 80-20 activities. This will guide how we apply 80-20 at each site, and we will also be able to assess our ability to deliver against our own capability maturity model. Finally, we will use consistent measures across the business to inform our operational reviews and decision making. The buy-in for 8020 from all levels of the organization has been outstanding. This widespread acceptance and support of 8020 activities is a positive sign that we are on the right track. It shows that our team understands the benefit of this approach and is committed to implementing it in their respective areas. Our work on portfolio rationalization, footprint, and focused factories continues apace, and we will have more to report on this in the next earnings call. Macroeconomic and end market conditions. The geopolitical environment has remained volatile over the past months. The situation is defining defense priorities for the US and global partner nations. This is driving investment in industrial capacity to meet current and future demands. In addition, The need for a strategic shift is pushing the development of new capabilities. We are active in supporting both near-term production requirements and the development of those future capabilities. Consequently, we are seeing a broad-based increase in demand across our defense applications, notably missile components, space components, and space vehicles. Commercial aviation continues to recover strongly. Increased fleet utilization is driving higher aftermarket activity, and the wide-body production ramps at Boeing and Airbus are driving a significant pickup in our OEM business. Industrial output in Europe continues to soften, with German manufacturing contracting in the last quarter. We continue to adjust our business in response to demand, and we will move to a reduced work week for our largest German site in February. On the other hand, Our flight simulation business is experiencing strong demand due to increasing fleet utilization and flight hours leading to increased flight training. We are getting indications of strong future demand from our customers. Guidance for 24. Considering our quarter one performance and the current end market conditions, we're increasing our full year guidance for revenue by $50 million and EPS by $0.10 per share. and holding firm on our adjusted operating margin guidance of 12%, an increase of 110 basis points relative to the prior year. Now, let me hand over to Jennifer for a more detailed breakdown of the quarter and our guidance.