Summary of Moog Inc. Q2 2026 Earnings Call

1Key Financial Results and Metrics

Sales: $1.1 billion, up 13% year-over-year.

Adjusted Earnings Per Share (EPS): Record high of $10.60, an increase of $0.40 from previous guidance.

Adjusted Operating Margin: 13.4%, a 90 basis point improvement from the prior year, despite 110 basis points of pressure from tariffs.

Free Cash Flow: Nearly $100 million generated in Q2, with year-to-date performance in solid positive territory.

Backlog: Record total and 12-month backlog, up 33% from the prior year.

2Strategic Updates and Business Highlights

Defense Sector: Strong demand driven by increased U.S. defense spending due to geopolitical tensions, particularly in the Middle East. Moog is positioned to ramp up production significantly, especially in missile defense programs.

Commercial Aerospace: Continued strong demand with increased production rates anticipated. Moog is managing inventory carefully to align with customer needs, reflecting a deliberate decision to avoid excess inventory.

Industrial Markets: Stability observed, with growth in data center cooling pump demand.

Recognition: Moog received Supplier of the Year awards from Embraer and General Dynamics Land Systems, highlighting operational excellence and innovation.

Sustainability Initiatives: Continued focus on community engagement and environmental sustainability.

3Forward Guidance and Outlook

Fiscal Year 2026 Guidance: Increased sales and adjusted EPS guidance, reaffirming adjusted operating margin and free cash flow conversion targets.

Sales Growth: Expected solid double-digit year-over-year growth, with adjustments made for specific segments:

Space and Defense: Increased guidance by $35 million.

Industrial: Increased by $30 million.

Military Aircraft: Increased by $25 million.

Commercial Aircraft: Decreased by $20 million due to inventory management.

Third Quarter EPS Forecast: $2.65, plus or minus $0.10.

4Bad News, Challenges, or Points of Concern

Tariff Pressure: Increased from previous guidance, now expecting 110 basis points of pressure due to a higher volume of business in tariff-sensitive areas.

Commercial Aircraft Segment: Adjusted guidance reflects a cautious approach to inventory management, which could impact short-term sales recognition.

Geopolitical Risks: Ongoing conflicts, particularly in the Middle East, could affect supply chains and operational costs, although no immediate negative impacts were reported.

5Notable Q&A Insights

Missile Business Growth: Moog is prepared to meet increased demand for missile production, with discussions ongoing with customers about ramping up capacity.

Commercial Aircraft Demand: The company is managing inventory timing rather than facing a decline in demand, indicating strong long-term prospects.

Defense Spending Outlook: Despite potential political changes, Moog believes it is well-positioned in priority programs that will continue to receive funding.

Operational Efficiency: The company has achieved 100% delivery performance on missile contracts, enhancing its competitive position. Overall, Moog Inc. reported a strong Q2 2026 performance, with robust growth across segments and a positive outlook, despite facing some challenges related to tariffs and geopolitical tensions.