MOG-B — Moog Inc.

Moog Inc. (MOG-B) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $1.1 billion, up 21% year-over-year.
• Adjusted Operating Margin: 13.0%, an increase of 90 basis points from the previous year.
• Adjusted Earnings Per Share (EPS): $2.63, up 37% year-over-year.
• 12-Month Backlog: Increased by 30%, reaching a record level.
• Free Cash Flow: Used $79 million in the quarter, impacted by inventory growth and timing of payments.
• Leverage Ratio: 2.0x, at the low end of the target range (2-3x).

2. Strategic Updates and Business Highlights:

• Market Performance: Strong demand in Defense, Commercial Aerospace, and Industrial markets. Notable bookings included over $1 billion in Commercial Aircraft orders and significant contracts in Space and Defense.
• Operational Excellence: Recognized as BAE Systems Gold Supplier of the Year for 2025, achieving 100% quality and on-time delivery.
• Leadership Changes: Introduction of a Chief Strategy and Corporate Development Officer to enhance business development and acquisition strategies.
• Customer Focus: Continuous improvement initiatives are being implemented, including pricing reviews and supply chain optimization to enhance operational efficiency.

3. Forward Guidance and Outlook:

• Updated Guidance for FY 2026: Increased sales and adjusted EPS guidance; sales expected to grow in double digits year-over-year.
• Segment Guidance Adjustments: Increased sales guidance for Space and Defense by $30 million, Commercial Aircraft by $15 million, and Industrial by $15 million.
• Adjusted EPS Guidance: Increased by $0.20 to $10.20 (plus or minus $0.20).
• Free Cash Flow Conversion: Projected at about 60%, with expectations to generate cash flow equal to the amount used in Q1.

4. Bad News, Challenges, or Points of Concern:

• Commercial Aircraft Margin Pressure: Operating margin decreased to 10.6%, primarily due to tariff impacts (300 basis points) and less favorable sales mix.
• Military Aircraft Margin Outlook: Adjusted down from 14.3% to 13.8% based on Q1 performance, reflecting operational adjustments.
• Free Cash Flow Usage: Initial cash flow usage in Q1 due to inventory growth and timing of payments, although improvements are expected in subsequent quarters.

5. Notable Q&A Insights:

• Guidance Increase Nuances: The increase in guidance reflects strong Q1 performance but includes pull-ins from later in the year, particularly in Defense-related orders.
• Tariff Mitigation Strategies: Management is actively pursuing supply chain adjustments and compliance improvements to reduce tariff impacts on margins.
• Defense Orders Acceleration: Notable uptick in Defense orders, particularly for military readiness, with a sense of urgency driving demand.
• Data Center Cooling Business Growth: Expected to double in 2026, with significant investments in production capacity to meet rising demand.

Overall, Moog Inc. reported a robust start to FY 2026, with strong revenue growth and a positive outlook, although challenges remain in specific segments due to external pressures such as tariffs.