Moog Inc. · NYSE:MOG.A
Moog — Investor Day (June 2023)
48 slides from Moog's investor day presentation, Jun 6, 2023
Slide 1: 2023 Investor Day
2023 INVESTOR DAY June 6, 2023 Shaping the way our world moves™
Slide 2: Disclosures
Disclosures Cautionary Statement Regarding Forward Looking Information This presentation and accompanying oral discussion contains forward-looking statements within the Private Securities Litigation Reform Act of 1995, which statements may be identified by words such as “may,” “will,” “should,” “bel
Slide 3: Agenda
Agenda An Inflection Point PAT ROCHE Chief Executive Officer Delivering Margin Enhancement MARK TRABERT Chief Operating Officer Building Financial Strength JENNIFER WALTER Chief Financial Officer Questions and Answers | SHAPING THE WAY OUR WORLD MOVES 3
Slide 4: Shaping The Way Our World Moves
Shaping The Way Our World Moves Each day, our people, products and technologies affect the lives of millions across the globe. Moog solutions are critical to our national security, to safe transportation, to reducing factory emissions and to enhancing patients’ lives. 4
Slide 5: An Inflection Point
An Inflection Point PAT ROCHE Chief Executive Officer 6
Slide 6: What I Have Learned
What I Have Learned Strong organic Unnecessary levels Flat operating growth over the of complexity margins and no last decade built over decades visibility on goals Outstanding business that needs execution discipline | SHAPING THE WAY OUR WORLD MOVES 6
Slide 7: What's Changing
What’s Changing Focus on margin expansion Simplification to enhance margins Pricing to recognize fair value delivered Leadership prioritizing Staff empowered to deliver, execution, enabling our with clear expectations performance and accountability Significant value Clear visibility on financial goa
Slide 8: Our Mission
Our Mission A technology company with deep capabilities in motion control systems and precision components Our highly collaborative culture delivers innovative solutions to solve our customers most difficult technical challenges We target specific applications “when performance really matters™” We d
Slide 9: Our Vision
Our Vision Together, we will make a difference by building a sustainable Moog for current and future generations. Highly motivated and empowered workforce 9
Slide 10: Key Leadership Themes
Key Leadership Themes CUSTOMER FOCUS PEOPLE, COMMUNITY FINANCIAL STRENGTH AND PLANET We Deliver We Care We Perform | SHAPING THE WAY OUR WORLD MOVES 10
Slide 11: Financial Targets Through FY26
Financial Targets Through FY26 Base Year FY22 5-7% 100 bps 15-20% 75-100% Sales CAGR Average Annual Adjusted Free Cash Flow Adjusted Operating Earnings per Conversion in Margin Growth Share CAGR FY25 and FY26 Modest Cash Flow in FY24 | SHAPING THE WAY OUR WORLD MOVES 11
Slide 12: Business and Markets Overview
Business and Markets Overview FY22 % of Moog Sales DEFENSE SPACE INDUSTRIAL COMMERCIAL MEDICAL • OEM Platforms • Launch Vehicles • Industrial Automation • OEM Platforms • Enteral Pumps and Sets - F-35 - Thrust Vector Actuators - B787, A350 - RIwP • Simulation and Test - E2, C919 • Infusion Pumps and
Slide 13: Strong Business Growth in Core Markets
Strong Business Growth in Core Markets Proven Strong platform Sustained End market growth engine position market growth diversity 5% CAGR over V-280 and various Defense and Space Provides resilience the last decade classified programs experiencing drive continued prolonged growth growth and Commerci
Slide 14: New Ventures Add Revenue Upside
New Ventures Add Revenue Upside Early success Builds on precision Three opening components, new ventures new market systems engineering opportunities and software Adjacencies create significant growth beyond FY26 | SHAPING THE WAY OUR WORLD MOVES 14
Slide 15: New Ventures
New Ventures Three areas of strategic growth that build on core businesses Space Vehicles – significant growth in ISR and constellations; building complete satellite ready for the addition of payload. First flight this year. Construction – disruption due to sustainability expectations and work force
Slide 16: Margin Performance Will Change
Margin Performance Will Change New approach to deliver margin improvement Execution discipline Leadership priority Empowerment and accountability Mindset shift Systematic approach | SHAPING THE WAY OUR WORLD MOVES 16
Slide 17: Margin Performance Will Change
Margin Performance Will Change Two levers for margin improvement Simplification Unravelling decades-long build-up of complexity Pricing Reflecting the value that we deliver for our customers Clear path to achieve better performance each year | SHAPING THE WAY OUR WORLD MOVES 18
Slide 18: Leadership Team
Leadership Team Skills and PAT ROCHE Chief Executive Officer MARK TRABERT Chief Operating Officer JENNIFER WALTER Chief Financial Officer PAUL WILKINSON Chief Human Resources Officer experience to deliver JOE ALFIERI MARK GRACZYK STU MCLACHLAN MICHAEL SCHAFF President, President, President, Presiden
Slide 19: Aircraft Organization Simplification
Aircraft Organization Simplification Align each business to focus on different market needs Transform from a complex, matrix organization to a simpler, more focused organization Create clear lines of accountability, and to drive ownership of financial performance further into the organization Focus
Slide 20: Key Takeaways
Key Takeaways An Inflection Point for Moog Proven Clear line of Different Leadership growth engine sight to approach to team in expanding better drive margin committed markets profitability improvement to deliver | SHAPING THE WAY OUR WORLD MOVES 20 21
Slide 21: Delivering Margin Enhancement
Delivering Margin Enhancement MARK TRABERT Chief Operating Officer 22
Slide 22: Company-Wide Initiatives Drive Performance Improvement
Company-Wide Initiatives Drive Performance Improvement Ensure footprint is fit for purpose to execute strategy and simplify the business I Better visibility into Factories focused margin improvement on unique needs opportunities of each market Driven by strategy Reduced complexity and costs improves
Slide 23: Portfolio Shaping
Portfolio Shaping Portfolio reflects strategic direction and simplification of our business Portfolio Growth Divestitures Investing in businesses we are growing Pruning businesses and products that no longer fit Margin expansion, longer-term growth | SHAPING THE WAY OUR WORLD MOVES 23
Slide 24: 80/20 Execution
80/20 Execution 80% of results come from 20% of input Data-driven, systematic process to improving performance Different way of evaluating the business to better understand potential improvement opportunities Deeper understanding of profitability throughout the company Drives improved decision-makin
Slide 25: Footprint Rationalization
Footprint Rationalization 83 75 65-68 Locations Locations 54 Production Locations 48 Production 40-43 Production 2021 2023 2026 Margin expansion | SHAPING THE WAY OUR WORLD MOVES 25
Slide 26: Focused Factories
Focused Factories Realigning production facilities to focus on the unique requirements of each market Markets: Defense, Space, Industrial, Commercial, Medical Original Equipment, Aftermarket Simplifies by untangling integrated factories Optimizes factories and supply chains Parts, quality requiremen
Slide 27: Automation
Automation Reduction of manufacturing system complexity and costs Product lead-time improvement Improved quality via automation and process capability Lower cost of poor quality Configure each factory around a specific strategy to maximize efficiency Improved customer performance, margin expansion,
Slide 28: Company-Wide Initiatives Drive Performance Improvement
Company-Wide Initiatives Drive Performance Improvement | SHAPING THE WAY OUR WORLD MOVES 28
Slide 29: Pricing that Reflects Value Delivered
Pricing that Reflects Value Delivered Moog delivers high value-added solutions to solve our customers’ most difficult challenges across all of our markets Strong, collaborative customer relationships built over decades In many cases, our pricing has not reflected the value we deliver All Moog segmen
Slide 30: Key Takeaways
Key Takeaways Delivering Margin Enhancement Simplifying our Clear plan that We are executing business and securing drives sustained the plan and seeing pricing commensurate performance the expected results with the value improvement delivered | SHAPING THE WAY OUR WORLD MOVES 30
Slide 31: Building Financial Strength
Building Financial Strength JENNIFER WALTER Chief Financial Officer 32
Slide 32: Reaffirming FY23 Guidance
Reaffirming FY23 Guidance USD in millions, except EPS FY22 FY23 F Sales 5% Sales Growth Aircraft Controls Space and Defense Controls Industrial Systems Total Sales $1,256 $872 $907 $3,036 $1,330 $920 $940 $3,190 Adjusted Operating Margin Aircraft Controls 10.1% 10.3% 80 bps Space and Defense Control
Slide 33: Strong Sales Growth
Strong Sales Growth $3.7 - 4.0 B 2-3% CAGR 6-8% CAGR 5-7% 7-9% CAGR Sales CAGR $3.0 B FY22 Aircraft Controls Space and Defense Controls Industrial Systems FY26 F Base Year FY22 - Through FY26 Sales growth across all segments | SHAPING THE WAY OUR WORLD MOVES 33
Slide 34: Strong Sales Growth
Strong Sales Growth Commercial Aircraft Military Aircraft Commercial Aircraft Recovery Evolving Defense Portfolio Ramp-up on wide-body platforms Ramp-up of V-280 development work 787 - 10/mo in FY26 A350 - 9/mo in FY26 Shift of funded development into production Growth on other platforms Stable F-35
Slide 35: Strong Sales Growth
Strong Sales Growth Space and Defense Controls Industrial Systems Growing Defense Demand Refining Industrial Portfolio Accelerated growth of Space products for Growth in major markets emerging defense needs Continuation of portfolio shaping activities Ramp-up of RIwP® to full-rate production Geopoli
Slide 36: Operating Margin Expansion
Operating Margin Expansion 100 bps Segment margins between 13-16% in FY26 Average Annual Adjusted Operating Margin Expansion 10.1% 10.9% 9.5% FY22 FY26 F FY22 FY26 F FY22 FY26 F Aircraft Controls Space and Defense Controls Industrial Systems Base Year FY22 - Through FY26 FY26 margins in the teens fo
Slide 37: Operating Margin Expansion
Operating Margin Expansion Aircraft Controls Pricing for the value Mix shift within Commercial recovery provided military aircraft | SHAPING THE WAY OUR WORLD MOVES 37
Slide 38: Operating Margin Expansion
Operating Margin Expansion Space and Defense Controls Pricing for the value Efficiencies associated Moving beyond space provided with sales growth vehicles challenges | SHAPING THE WAY OUR WORLD MOVES 38
Slide 39: Operating Margin Expansion
Operating Margin Expansion Industrial Systems Pricing for the value Benefits of Benefits of footprint provided portfolio shaping rationalization | SHAPING THE WAY OUR WORLD MOVES 39
Slide 40: Adjusted Earnings per Share Growth
Adjusted Earnings per Share Growth 15-20% Driven by strong operational performance Operating margin expansion Sales growth Adjusted Earnings per Share CAGR Assumptions 24% - 25% effective tax rate in FY24 - FY26 No share repurchases Base Year FY22 - Through FY26 | SHAPING THE WAY OUR WORLD MOVES 40
Slide 41: Free Cash Flow Generation
Free Cash Flow Generation 75-100% Deliberate decisions to support organic growth Investments in facilities - expansion and automation Free Cash Flow Out-year improvements Conversion in Inventory management activities FY25 and FY26 Normalization of capital expenditure levels Consumption of strong cus
Slide 42: Capital Deployment
Capital Deployment Organic growth Facilities and advanced manufacturing capabilities New business ventures $2 B Strategic M&A Complementary to our portfolio Capital Available Strategic and financial focus to be Deployed Through FY26 Return of capital to shareholders Quarterly dividend payments Oppor
Slide 43: Key Takeaways
Key Takeaways Building Financial Strength Key initiatives Strong organic Capital deployment Management in place to drive sales growth aids focused on team committed margin expansion in margin organic growth to building expansion opportunities financial strength | SHAPING THE WAY OUR WORLD MOVES 43
Slide 44: Closing Remarks
Closing Remarks We have a strong, resilient and growing business Defense and Space markets are growing Commercial aircraft is rebounding We are repositioning ourselves in existing markets and entering new markets We have a strong commitment to margin expansion We have a realizable plan to deliver su
Slide 45: Questions and Answers
Questions and Answers PAT ROCHE MARK TRABERT JENNIFER WALTER Chief Executive Officer Chief Operating Officer Chief Financial Officer | SHAPING THE WAY OUR WORLD MOVES 45
Slide 46: Appendix
Appendix FY 2022 A FY 2023 F FY 2022 A FY 2023 F As reported results As adjusted FY 2022 and FY 2023 results3, 4 Sales $ 3,035.8 $ 3,190.0 Sales $ 3,035.8 $ 3,190.0 Net Earnings 155.2 186.0 Net Earnings 178.6 182.4 Net Earnings Per Share $ 4.83 $ 5.811 Net Earnings Per Share $ 5.56 $ 5.702 Segment S
Slide 47: Appendix
Appendix FY 2022 A FY 2023 F FY 2022 A FY 2023 F As reported results As adjusted FY 2022 and 2023 results: excluding the (detriment)/benefit of securitization5 Cash Flow from Operations $ 247 $ 165 Cash Flow from Operations $ 147 $ 165 Capital Expenditures (139) (165) Capital Expenditures (139) (165
Slide 48: Appendix
Appendix FY 2022 A FY 2023 F Difference between As reported and As adjusted FY 2022 and 2023 results3, 4 Operating Profit Aircraft Controls $ (3.3) $ (1.0) Space and Defense Controls (7.9) (1.5) Industrial Systems (14.2) 7.2 $ (25.4) $ 4.7 Operating Margin Aircraft Controls -0.3% -0.1% Space and Def