Moog (rhymes with "rogue") makes 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 55% of its net sales in 2015. Germany and the UK collectively accounted for 12%, while Japan generated 6% of its total revenue.
Aircraft controls, accounting for 43% 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 (21% 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 (17% 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 (4% of sales) operates in the markets of infusion therapy, enteral clinical nutrition, sensors, and surgical hand pieces.
Sales and Marketing
The company's principal customers are original equipment manufacturers (OEMs) and end-users for whom it provides aftermarket support. Aerospace and defense OEM customers collectively represented 51% of 2015 sales. The majority of these sales are to a small number of large companies. Industrial OEM sales, which represented 33% of 2015 sales, represented a wide range of global customers.
Major aftermarket customers include the US government and commercial airlines. In 2015, aftermarket sales accounted for 16% of total sales. The company has long-term contracts with some of its customers which mainly reside within its aircraft controls, and space and defense controls segments.
After experiencing four straight years of steady growth, Moog saw its net sales decline 5% from $2.65 billion in 2014 to $2.53 in 2015. Moog's net income has fluctuated over the years; after rising in 2014, it declined 17% in 2015. In addition, its cash flow from operations has steadily increased the last five years.
The dip in net sales for 2015 was fueled by a 12% drop in industrial system sales and a 27% decline from sales within the UK. The company states that overall, weaker foreign currencies, in particular the Euro and the British Pound relative to the US dollar, contributed 80% of its sales decline in 2015.
The company is aiming for sales in 2016 to increase 2% to $2.6 billion. It expects that aircraft controls will drive the sales growth, due mostly to the ramp up of the Airbus A350 program. It also projects slight sales increases in space and defense controls; medical devices; and industrial systems, and a small decrease in components' sales. Moog expects the benefits of its 2015 cost containment strategies to drive the margin expansion.