Moog Annual Report 2022 122022 - Flipbook - Page 4
CHAIRMAN'S LETTER
To Our Shareholders, Employees, and Friends,
In 2022, we saw a dramatic change in the world order that
will impact business for decades to come. In the face of
these external challenges, our company delivered excellent
results in 2022 and is poised to see further growth in the
years to come.
The Russian invasion of Ukraine in February changed
the geo-political landscape in Europe for a generation.
In Asia, escalating tensions over Taiwan further eroded
the relationship between China and the U.S. Combined,
these events have redefined the global political landscape
into an East-West divide. From a Moog perspective,
all company activities with Russia have stopped and we’re
taking a more cautious view of the future of our business
in China. On the economic front, the impact of COVID on
our business waned as we went through the year, but we
were faced with new challenges around supply chain,
labor attrition, and inflation.
Fiscal 2022 was a record year for Moog with sales of over
$3 billion and adjusted earnings per share of $5.56. Sales
were up 6% over 2021, after two years of slight declines.
Sales in 2022 exceeded our pre-COVID record set in 2019
by over 4%. This performance is a testament to the
diversity of our end markets.
Sales in our Aircraft Controls segment were 8% higher
than last year. Commercial OEM sales were up on strong
sales to both Boeing and Airbus, while sales into business
jet applications doubled. The commercial aftermarket was
particularly strong this year as the 787 and A350 fleets
came back into service. On the military side of the house,
lower sales on the F-35 and on foreign fighter programs,
combined with lost sales from our Navaids divestiture,
drove a 6% decline in the OEM top line. Sales into the
military aftermarket were stable.
In our Space and Defense Controls segment, sales were
up 9%, driven by the success of our Reconfigurable
Integrated weapons Platform (RIwP). We booked a multiyear order worth over $250 million for this product on the
M-SHORAD Inc. 1 program, our largest ever order in this
segment. On the Space side, growth in our integrated space
vehicles and avionics product lines compensated for lower
NASA work. Over the last 6 years, our Space and Defense
segment has grown at an annual compound rate of 10%.
Sales into Industrial Systems applications were 2% higher
than last year. Adjusting for foreign currency effects, underlying
sales were up 5%. Increased demand for flight training
simulators drove a double-digit increase in our simulation and
test market. Our energy and industrial automation markets
also increased year over year. In the energy market,
higher oil prices and increased energy usage drove demand
for both our exploration and generation products. In the
industrial automation markets, we saw increased investment
in capital equipment to expand factory capacities and
alleviate supply chain bottlenecks. Conversely, we saw some
softening in the demand for our medical products as
conditions normalized post-COVID.
In 2022, we saw our multi-year
focus on innovation start to
bear real fruit. Over the last
few years, we’ve described
three new growth vectors –
our RIwP turret, integrated space
vehicles, and our construction
initiative. In fiscal ’19, these three
initiatives had total sales of
less than $40 million. In fiscal ’22,
sales were over $160 million,
a fourfold increase in three years.
®
In 2022, we saw our multi-year focus on innovation start
to bear real fruit. Over the last few years, we’ve described
three new growth vectors – our RIwP® turret, integrated
space vehicles, and our construction initiative. In fiscal ’19,
these three initiatives had total sales of less than $40 million.
In fiscal 2022, sales were over $160 million, a fourfold
increase in three years.
Fiscal 2023 should be another good year for our company.
Sales are projected to increase to $3.2 billion with growth
and margin expansion in each of the operating segments.
Aircraft Controls sales will be up on continued strong
performance in the commercial arena. Products for space
applications will lead the growth in the Space and Defense
segment. Industrial Systems will benefit from higher
deliveries of flight simulation products. A global recession
or an energy crisis in Europe could impact our plans in
Industrial Systems, but we enter the year with a very healthy
backlog which should cushion the effect of any slowdown.
In early November, after 32 years with Moog and 11 years
in the CEO role, I announced my plan to retire, effective
February 1, 2023. Pat Roche, our current executive vice
president and COO, will take over as CEO. I will remain as
the non-executive Chairman of the company.
Over the last 11 years, the company has evolved and grown.
We have maintained our excellence in critical components
while maturing into a systems provider. We have partnered
4
with major OEMs to deliver platform solutions to end
customers. We have invested significantly in innovation
across the complete portfolio. Organic initiatives have
become the engine for growth, with acquisitions playing a
supporting role. We have maintained a strong balance
sheet and returned capital to shareholders through our
dividend and buyback programs. Through ups and downs
in our markets, including a global pandemic, we have
remained steadfast in our commitment to our engineering
roots and our focus on solving our customers’ most
difficult technical challenges. We have maintained our
culture of collaboration and problem solving, rooted
in trust and integrity. Finally, we have strived to create
long-term value for all our stakeholders by investing
for the future, while simultaneously managing through
the short-term challenges of daily business.
It has been an exciting journey. And yet, as I look to the
future, I believe the best years for Moog are still to come.
I have complete confidence in Pat and the next generation
of leadership to build on the past and take the company
to new heights. Business is all about people, and success
is a function of the talent throughout the company. Over
the past decade, we have invested heavily in long-term
talent management and succession planning so that we
have the team in place today to succeed tomorrow.
As the world grapples with aging demographics, as well as
climate change and global security challenges, the demand
for our expertise and products will grow significantly. We
have already established new businesses along exciting
growth vectors which take advantage of macro trends.
These include our Agile Prime strategy in defense, our
space vehicles product line, and our Moog construction
start-up. Each of these businesses represents multi-billiondollar opportunities for the company in the years to come.
It has been a great privilege to be the CEO of Moog. Over my
years in management I have learned that success is
based on the performance of the people you lead. In as
far as we have been successful in my time as CEO, it is
the work of every Moog employee around the world that
has made it happen. My thanks to all of them for their
dedication and commitment.
Respectfully submitted,
John Scannell
Chairman and Chief Executive Officer