Moog Inc.

Ladies and gentlemen, thank you for joining us and welcome to the Moog Inc. Fiscal 2025 Fourth Quarter and Full Year Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star 9 on your telephone keypad to raise your hand and star 6 to unmute when it is your turn. I will now hand the conference over to Aaron Astrakhan, Head of Investor Relations. Aaron, please go ahead.

Good morning, and thank you for joining Moog's fourth quarter 2025 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 SEC filings. Now, I'm happy to turn the call over to Pat.

Good morning and welcome to our earnings call. We closed out fiscal 2025 with an exceptional fourth quarter performance. We achieved record results. This performance capped an outstanding full year in which we achieved strong growth, continued margin expansion, and improved free cash flow, continuing our improvement journey launched at our 2023 Investor Day. Our fourth quarter sets a new high watermark for performance. Record-breaking results included delivering over $1 billion in quarterly sales, hitting an all-time high 12-month backlog of $3 billion, thus achieving our highest quarterly adjusted operating margin and adjusted EPS and free cash flow. Our successful execution of strategy has resulted in a financially stronger business with outstanding fiscal 2025 results. Our focus on customer drove records for orders, backlog, and sales, which are respectively up 36%, 20%, and 7% relative to prior year. Our success at growing the business and our focus on operational execution enabled us to drive record adjusted margin and EPS whilst overcoming tariff headwinds. Finally, we improved free cash flow relative to prior year with an outstanding performance in the last two quarters. Our results demonstrate our dedication to driving improved operational and financial performance. Our focus is on delivering for our customers and driving ongoing continuous improvement. Our success is driven by our employees' commitment to making this both a great place to work and a strong company. And for that, I want to thank all of those dedicated staff who contributed to our performance over the last 12 months. Now let's turn attention to our end markets in the macro environment, starting with defense. The defense market continues to be strong. We're experiencing a secular increase in defense spending within the U.S., NATO nations, and Indo-Pacific allies, which will continue for the foreseeable future. In addition, there is a growing sense of urgency to increase industrial capacity in these regions. We are well positioned to respond to these demands across a broad-based opportunity set with both primes and new entrants. We're winning in the US, we're expanding in Europe, and we're gaining a foothold in Australia. Moving to commercial aerospace, our customers have strong backlogs and are intent to drive increased production rates. Boeing broke ground on a second final assembly building in Charleston, South Carolina, as part of its $1 billion commitment to the 787. In addition, 737 MAX rates are set to increase. we continue to see stability and have confidence in the demand outlook. We maintain a stable production plan that supports our customers' needs. On the aftermarket side, we continue to benefit from increased airline activity, an aging fleet, increased wide-body fleet utilization, and our ability to maintain a strong aftermarket position. Finally, within industrial markets, we continue to have relative stability. We see steady growth in the medical end market and outsized growth in data center cooling. This is reflected in progressive growth in our 12-month industrial backlog over the last two quarters. Overall, end market conditions are very favorable for our business. Now turning attention to our leadership priorities, starting with customer focus. We are incredibly pleased to have our operational performance officially recognized by our customers We received the Crystal Excellence Award from CAE for outstanding operational performance and deep commitment to sustainability. We also received a supplier award from Lockheed Martin for 100% on-time delivery over the last 12 months on the PAC-3 missile program. Our focus on operational excellence ensures that we deliver for our customers and expand our business. Our strong customer value proposition was further reflected in several notable contract awards. We secured an order under the Sergeant Stout program for our reconfigurable integrated weapons platform. This will equip the fifth of the Army's eight battalions and extends our production horizon through to 2027. We leveraged our established presence in Australia to win an important position on future guided multiple launch rocket system production in Australia with Lockheed Martin. This represents the first geographic expansion of our missile business. Finally, we're making substantial progress extending our presence on collaborative combat aircraft. We provide Kratos with flight control and actuation products on the XQ-58, also known as Valkyrie, and the BQM-177. and are in continuing discussions for additional products on their future CCA platforms. This is a great illustration that we deliver fit-for-purpose solutions, not just for advanced military aircraft, but also for the emerging collaborative combat aircraft market. Finally, I saw firsthand how our operations are responding to changing customer needs. Our electric motor and pump operation in Murphy, North Carolina is a key production site for data center cooling pumps. Our team has done a remarkable job meeting the increased volume requirements from our hyperscaler customers. We've doubled volume over the last nine months and I expect this pace of growth to continue in fiscal 26. Our ball and roller screw operation in Bergamo, Italy is working with an industry disruptor to apply roller screws in a new and extremely demanding application environment. Our team has demonstrated significant agility and accelerated the pace of development producing eight prototypes within a year. This underpins my firm belief that we can respond to the expectations of fast-moving new entrants in any market. Now turning to our employees and communities. We're committed to the development of our people and in support of our host communities. We invested in a dedicated hands-on training center for our East Aurora campus. This unit trains machinists and assembly and test operators. It supports onboarding, upskilling, and recertification of employees across our Western New York campuses. It is driving a significant improvement to quality, consistency, and efficiency of skills training. Our investment was complemented by financial support from the U.S. Navy Maritime Industrial Base. We collected over 43,000 pounds, which is close to 19.5 metric tons of waste, with a collective effort of almost 1,000 volunteer staff across 19 sites in 15 countries during a week of action in September. This is a notable example of our staff supporting their local communities. Now, shifting to financial strength. We're seeing our financial performance improve through solid growth and consistent focus on pricing and simplification. We have embedded 80-20 into approximately 80% of our businesses by revenue. Our focus is further strengthening maturity with 80-20 champions working with business leaders to solve the most relevant challenges. 80-20 insights are leading to data-driven business decisions that are improving profitability. Voice of the customer. We've prioritized key customers covering over one quarter of our business by revenue, including hundreds of interviews. We're getting actionable insights that will support business growth. We are clear within the organization on how best to serve our most important customers. Simplification. Customer and product profitability analysis is allowing us to focus resources and reduce complexity. Segmented income statements now widely used across the organization are driving better profitability. Simplification has also been achieved through the sale of non-core businesses and product line asset disposals to focus factory approach which aligns clearly with end market requirements and through consolidation of facilities. These are all ongoing activities within our business. Our simplification initiatives delivered similar margin benefit to that of pricing and volume growth together in the fiscal year. The solid improvement was partially eroded by margins. A look at multi-year trends helps illustrate the profound impact that simplification is having on our business. From fiscal 22 to fiscal 25, while controlling headcount increases to just 4% and reducing our factory space by 8%, we've driven a 27% increase in sales. These achievements reflect strong operational performance and increase our financial strength. Now, let's reflect on the improved financial performance over that same period relative to our investor day goals. Sales growth was ahead of expectations at 8% CAGR, Adjusted margin enhancement exclusive of tariffs averaged 110 basis points or 330 basis points cumulatively and ahead of our 100 basis point average goal. Adjusted EPS growth of 16% CAGR met our goal. Finally, while free cash flow has improved over the last couple of years to 46%, it is short of our target range. We were ambitious for our business at Invest Today in 2023, and I'm proud of the progress that we've achieved over subsequent quarters and years. Now moving to FY26. Our FY26 guidance will further cement this solid multi-year performance improvement. Sales will be up 9% year over year, and adjusted operating margin exclusive of tariffs in both years will be up 70 basis points. FY26 adjusted EPS will be up 15% and free cash flow will strengthen to 60%. In addition to our ongoing margin enhancement actions, we've launched initiatives that specifically focus on structural change that we believe are necessary to enhance free cash flow. These initiatives will deliver impact over the next few years and make a contribution in fiscal 26. Our commercial aircraft business is the most significant contributor to our total trade network and capital requirements. This is because our own manufacturing and supply chain network is complex and dispersed across multiple global locations. In addition, we shielded our supply chain from variations in our customers' demand and challenging terms and conditions. We have multiple actions underway that will help address this situation. Over a few years, these actions will significantly reduce trade network and capital as a percent of sales. We're committed to execute these initiatives with the same focus that we've applied to our margin enhancement journey. I look forward to describing these initiatives over the coming quarters. And with that, Let me hand over to Jennifer for a detailed breakdown on the quarter and our fiscal 2026 guidance.