Moog (rhymes with "rogue") rules with its precision-control components and systems used in aerospace products, industrial machinery, and medical equipment. Servoactuators, Moog's core product, receive electrical signals from computers and then perform specific actions. Using its servoactuators, Moog builds flight and control systems for commercial and military aircraft, as well as hydraulic and electrical controls for automated industrial machinery, wind turbines, and control systems for satellites and spacecraft, launch vehicles, and missiles. It also makes infusion therapy pumps, slip rings for CT scanners, and motors used in devices for sleep apnea. Customers in the US make up more than half of sales.
Moog operates through manufacturing facilities in Asia, Canada, Costa Rica, Europe, the Philippines, and the US. The US accounted for about 60% of its net sales in 2013. Germany and the UK collectively accounted for 13%, while China generated 4% of its total revenue.
Aircraft controls, accounting for 40% of sales, provides primary and secondary flight controls for military and commercial aircraft, including large commercial transports, supersonic fighters, business jets, and rotorcraft. Development programs in this segment include the F-35 Joint Strike Fighter, the Boeing 787 Dreamliner, and the Airbus A350XWB, and the Black Hawk/Sea Hawk helicopter. The aftermarket accounts for about 36% of the segment's sales.
Industrial systems (23% of sales) serves such markets as wind energy, flight simulation and training, plastics making, power generation, testing, metal forming, oil exploration, and material handling. Products include electric rotor blade pitch controls, electromechanical motion simulation bases, and control assemblies.
The components segment (16% of sales) focuses on slip rings, fiber-optic rotary joints, and motors. Slip rings and fiber-optic rotary joints both are available in several sizes, which makes them useful in several applications, such as radar pedestals and floating platforms for offshore oil exploration. The segment's motors include factional horsepower brushless motors that operate with minimal noise and are optimal for sleep apnea equipment.
Space and defense controls (15% of sales) serves satellites and space vehicles, armored combat vehicles, and launch vehicles, and tactical and strategic missiles (such as Hellfire, TWO, and Trident), among other technologies. Medical devices (6% of sales) operates in the markets of infusion therapy, enteral clinical nutrition, sensors, and surgical hand pieces.
Moog has enjoyed four straight years of steady growth. Net sales rose 6% in 2013 to pass the $2.6 billion mark for the first time in company history. The growth for 2013 was attributed to strong performances by all segments except industrial systems, which was negatively affected by foreign currency translations.
Acquisitions within the space and defense controls and components segments contributed 70% of the growth for 2013. Its aircraft controls segment was helped by a 80% boost in sales derived from the commercial market with OEM sales to Boeing driving most of the growth.
After three straight years of increased profits, however, Moog saw its profits decline 21% from $152 million in 2012 to $121 million in 2013 due to goodwill impairment and restructuring charges and a loss on the sale of operations within its medical devices segment.
Mergers and Acquisitions
The company uses acquisitions to move into new markets and strengthen its place in existing markets. In 2013 it purchased Virginia-based Aspen Motion Technologies, a designer and manufacturer of high-performance permanent magnet brushless DC motors, integrated digital controls and motorized impellers for motors, for $34 million. It integrated it into its components segment.
The company also in 2013 purchased Colorado-based Broad Reach Engineering, a designer and maker of spaceflight electronics and software for aerospace, scientific, commercial and military missions, for $48 million and integrated it into its space and defense controls segment. In 2012 Moog acquired Tennessee-based Protokraft and UK-based Tritech International Limited and folded those operations into its components segment.
Other prongs of the company's strategy include developing systems integration for customers technical problems, focusing on aftermarket development, developing products for emerging markets, and lowering costs. More specifically the company is optimistic about sales from the production of the F-35 and demand for navigation aids, benefiting the aircraft controls segment.
The company also expects a sales increase in tactical missiles and development work for NASA in its space and defense controls segment. Industrial systems is ready for more demand from the test equipment, motion simulator, and power general markets, along with a modest increase in demand from the wind energy market. Components looks ahead to strong sales from industrial markets. Medical devices expects strong demand for pumps, which includes some new products.
Despite reductions in the US military budget, Moog is optimistic about continued healthy sales from that sector because of its focus on technologies the military continues to emphasize, such as the F-35 Joint Strike Fighter and the V-22 Osprey. In the realm of another government cutback, Moog believes it is in the right place for help NASA replace the retired Space Shuttle. Business related to US government accounts for about 30% of Moog's sales.
Capital Research Global Investors owns about 12% of Moog; Columbia Wanger Asset Management and Blackrock each own about 10% of the company's shares.