Moog Q1 2026 Earnings Results & Report

Moog EPS Results

• Actual EPS: $2.63
• Consensus EPS: $2.21
• Beat/Miss: Beat by +$0.42
• One Year Ago EPS: $1.78
• EPS Beat Rate: 8 of last 8 quarters

Moog Revenue Results

• Actual Revenue: $1.10 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: +21.20%

Moog (NYSE:MOG.A) designs and manufactures precision motion-control products and integrated control systems. Its offerings include actuation, flight-control and motion-control technologies used in aircraft, spacecraft, defense systems and industrial equipment.

The company serves commercial and military aviation, space and defense, and industrial markets. Its products support applications ranging from aircraft flight controls and spacecraft systems to machinery used in manufacturing and other industrial operations.

Founded in 1951 by engineer William C. Moog, the company is headquartered in East Aurora, New York, and serves customers around the world.

Moog Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Moog reported an outstanding Q1 with $1.1B sales (+21% YoY), record quarterly sales across all segments, a 12‑month backlog up 30%, and adjusted EPS of $2.63 (record).
• Positive Sentiment: Bookings were notably strong (~$2.3B in the quarter) led by defense and space wins including >$100M PAC‑3 orders, a >$100M space vehicle contract, and over $1B of commercial aircraft orders, positioning Moog to benefit from rising defense production and multi‑year prime programs.
• Negative Sentiment: Tariff headwinds materially pressured margins — commercial aircraft adjusted operating margin fell to 10.6% (down ~120 bps) and management estimates tariffs cost roughly 300 bps in Q1, though they expect mitigation via alternate routing, supplier changes, and improved paperwork.
• Positive Sentiment: Cash and balance‑sheet actions — Q1 used $79M of free cash flow but leverage is at a low 2.0x; management reiterated a ~60% free‑cash‑flow conversion target for FY26 and highlighted working‑capital and supplier‑contract changes that should free tens of millions.

Presentation

[Operator]

Ladies and gentlemen, thank you for joining us, and welcome to the Moog Inc. First Quarter Fiscal 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the conference over to Aaron Astrachan, Head of Investor Relations. Aaron, please go ahead.

[Aaron Astrachan, Head of Investor Relations at Moog Inc.]

Good morning, and thank you for joining Moog's First Quarter 2026 Earnings Release Conference Call. I'm Aaron Astrachan, Director of Investor Relations. With me today is Pat Roche, our Chief Executive Officer, and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental slides, both of which are available on our website. Our earnings press release, our supplemental slides, and remarks made during our call today contain adjusted non-GAAP results. Reconciliations for these adjusted results to GAAP results are contained within the provided materials. Lastly, our comments today may include statements related to expected future results and other forward-looking statements which are not guarantees. Our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEC filings.

[Aaron Astrachan, Head of Investor Relations at Moog Inc.]

Now, I'm happy to turn the call over to Pat.

[Pat Roche, CEO at Moog Inc.]

Good morning, and welcome to our earnings call. We started fiscal 2026 with an outstanding quarter. We delivered exceptional revenue growth of over 20% relative to prior year, underpinned by record quarterly sales in all segments. We increased 12-month backlog by 30%, setting another record. We also improved adjusted operating margin relative to prior year and delivered record earnings per share. Our focus is on delivering for our customers and driving ongoing continuous improvement in pursuit of excellence. Our results are reflective of continuing success in driving both operational and financial performance. Now, let's turn our attention to end markets and the macro environment, starting with defense. The defense market continues to be very strong. We are already seeing increased defense spending by governments in the U.S., Europe, Australia, and Japan, with further increases expected. In addition, there is an urgency to expand industrial capacity in these regions.

[Pat Roche, CEO at Moog Inc.]

Recent U.S. government announcements demonstrate strong commitment to raise production rates. These announcements make public the need, which has underpinned our recent elevated levels of business investments. This positions us very well to respond to increasing production demands. Moving to commercial aerospace, our customers have strengthened backlogs and are intent on driving increased production rates. We can see, we continue to see consistency in their production and have confidence in their growth plans. We're maintaining a production plan that supports our customers' needs. On the aftermarket side, we continue to benefit from increased airline activity and aging fleet, increased wide-body fleet utilization, and our ability to maintain a strong aftermarket position through excellent customer service. Finally, within industrial markets, we're seeing signs of recovery. This is reflected both in stronger book-to-bill and continued growth in our twelve-month backlog over three successive quarters.

[Pat Roche, CEO at Moog Inc.]

We see particular strength in demand for data center cooling pumps and medical pumps and sets. Overall, end market conditions are very favorable for our business. Now, turning attention to our leadership priorities, starting with customer focus. We're pleased to have our operational performance officially recognized by another important customer. We received BAE Systems Gold Supplier of the Year Award for 2025, recognizing 100% quality and 100% on-time delivery performance. Our pursuit of operational excellence enables us to meet our customer's requirements, which drives our organic growth. Our strong customer value proposition was further reflected in several notable bookings and contract awards. We secured over $1 billion in commercial aircraft orders across several platforms, reflecting future growth in OE production.

[Pat Roche, CEO at Moog Inc.]

We secured an additional order for over $100 million for the PAC-3 missile program and see further potential given the recent contract between Lockheed Martin and the U.S. government. We also received over $50 million of missile orders across. In addition, we won a new space vehicle contract for over $100 million for our existing Meteosat satellites. These orders account for close to half of what was a record space and defense segment bookings quarter. As we look to further develop our value proposition, we have strengthened our leadership team with the addition of a new C-suite role, namely that of Chief Strategy and Corporate Development Officer. This role will focus on ensuring the robustness of our business development plans and the strategic alignment of our acquisitions.

[Pat Roche, CEO at Moog Inc.]

Our ability to proactively pursue acquisitions and to follow through with effective integration will enhance our ability to create value. We will continue to have a balanced approach to capital allocations. Now, turning to our employees and communities, we believe that our unique culture is a critical asset. It defines our identity, supports the attraction and retention of extraordinary talent, and enhances collaboration with our customers.... I'm exceptionally proud that we have been recognized by Glassdoor with a 2026 Best Places to Work award, which ranks Moog in the top 100 large employers in the U.S. This is testament to our focus on creating a work environment that is rewarding for our employees and empowers them to make their best contribution. In addition, we were proud to receive the inaugural Business of the Year award from the Buffalo Niagara Partnership, our regional chamber of commerce.

[Pat Roche, CEO at Moog Inc.]

We were also recognized for our impressive recovery efforts in Tewkesbury with Team of the Year award from the local business community. Our financial performance continues to strengthen with solid growth and consistent focus on pricing and simplification. Our pursuit of continuous improvement is built on 80/20 principles. Having deployed 80/20 to all our significant manufacturing locations, our focus now is on further enhancing the maturity of 80/20 across the organization and to embed its principles into our management practices. The following practices are important exemplars. Portfolio reviews are shaping our focus on the profitable businesses that we want to invest in and grow. This is happening at site, business unit, and division levels and is informed by segmentation analysis.

[Pat Roche, CEO at Moog Inc.]

Portfolio reviews drive our decisions to sell or exit products, sites, and businesses, and are an ongoing process, allowing us to move resources to where they can have the most impact. Voice of the customer feedback directs our continuous improvement actions. We want to enhance the experience of those important customers, which will drive our success and create an even more clearly differentiated offering. We are specifically responding to our customers' needs for greater agility and capacity to meet increased demand. Pricing reviews are integral to our business process and are happening at all levels in the organization. They are data-driven and informed by our simplification and segmentation analysis. Our pricing activities are ensuring that we are fairly compensated for the value that we create for our customers. Now, let me switch over to the work we're doing to optimize our balance sheet.

[Pat Roche, CEO at Moog Inc.]

Last quarter, I highlighted an opportunity to reduce trade networking capital requirements in our commercial aircraft business. This structural improvement is being achieved through the simplification of our global manufacturing and supply chain network and reshaping the relationship with our suppliers. We are committed to achieving these initiatives with the same zeal that we have brought to our margin enhancement journey. I'm pleased to share that over the last quarter, we've made considerable progress. I'll share a couple of examples. We are shifting suppliers from long-term discrete purchase orders with fixed quantity and delivery dates to a more agile arrangement based on rolling forecast and short fixed commitment window. This approach allows us to respond to changes in customer demand more effectively and shares the burden of customer demand changes more equitably between us and our suppliers. This action is about 2/3 complete.

[Pat Roche, CEO at Moog Inc.]

We also used these strategic negotiations to optimally align material supply to production plan needs, ensuring that we're not carrying excess to requirement. This builds on prior work and has already reduced expected material receipts for 2026, in line with our annual plan, an impact measured in tens of millions of dollars. We've made progress on these structural issues and will further build on this strong focus. Now, turning to the full year, we've updated our guidance for fiscal 2026, reflecting our excellent performance in the first quarter and a more positive market outlook. We've increased sales and adjusted earnings per share and held adjusted operating margin and free cash flow conversion unchanged.

[Pat Roche, CEO at Moog Inc.]

With this updated guidance, FY 2026 will be a year of double-digit year-over-year sales growth, further expansion in adjusted operating margin, strong growth in adjusted earnings per share, and improved free cash flow conversion. And with that, let me hand over to Jennifer for a detailed breakdown on the quarter and our updated fiscal 2026 guidance.

[Jennifer Walter, CFO at Moog Inc.]

Thanks, Pat. Before I get into our financial performance, I'd like to remind everyone about the revisions we disclosed in our FY 2025 year-end financial statements. As previously described, we identified an error related to the accounting for a certain group of commercial aircraft aftermarket contracts. Accordingly, we revised certain prior period annual and quarterly financial statement amounts to reflect the correction of this error, as well as other previously recognized immaterial out-of-period items in the periods in which they originated. The comparative prior year numbers we'll discuss today are those revised amounts. Additional detail can be found in supplemental schedules posted on our website. Now, turning to our financial performance. We had another outstanding quarter. We beat our plan for sales, adjusted operating margin, adjusted earnings per share, and free cash flow.

[Jennifer Walter, CFO at Moog Inc.]

We took $7 million of charges in the first quarter that we've adjusted out of the operating profit numbers that we'll describe. Over half the charges were associated with M&A activity, with a balance related to simplification efforts and a program termination. I'll now talk through our first quarter results, excluding these charges. Sales in the first quarter of $1.1 billion were 21% higher than last year's first quarter. Each of our segments had a record level of sales and were up double-digit percentages. The largest increase in segment sales was in space and defense.... Sales were a record $324 million, up 31% over the first quarter last year, reflecting broad-based defense demand. Demand was particularly strong for missile control and satellite components.

[Jennifer Walter, CFO at Moog Inc.]

Commercial aircraft sales of $268 million increased 23% over the same quarter a year ago. The increase was driven by volume on major production programs, as well as aftermarket associated with strong fleet utilization. Pricing also contributed to the sales growth. In military aircraft, sales of $247 million were up 16% over the first quarter last year. In the first quarter, we had a significant V-22 spares order that contributed to the strong sales increase. In addition, activity on the MV-75 program continued to increase. Industrial sales were $261 million in the quarter, up 14% over the same quarter a year ago. Sales grew within the expanding data center cooling market. We also had particularly strong sales within industrial automation this quarter.

[Jennifer Walter, CFO at Moog Inc.]

In addition, sales of enteral feeding and IV sets were also strong, reflecting current demand. We'll now shift to operating margin. Adjusted operating margin in the first quarter was 13.0%, up 90 basis points from the first quarter a year ago, or up 220 basis points, excluding tariff pressure. Excluding this pressure, each of our segments were up nicely, reflecting operational strength. Space and defense operating margin was 14.8% in the first quarter, up 280 basis points. The increase was driven by profitable sales growth, offset partially by increased business capture, product development, and operational readiness investments. Industrial operating margin was 14.1%, 100 basis points above that of the same period a year ago. Business optimization and sales growth drove our operating margin upwards, while tariffs pressured our margin.

[Jennifer Walter, CFO at Moog Inc.]

Military aircraft operating margin was 11.9% in the first quarter, up 60 basis points from the first quarter last year. We benefited from the strong aftermarket sales, which was offset by a less favorable OE sales mix. Commercial aircraft operating margin was 10.6%, down 120 basis points from the first quarter last year. The decrease was driven by tariff pressure. Operating margin benefited from increased volume and pricing benefits. Putting it all together, adjusted earnings per share came in at $2.63, up 37% compared to last year's first quarter. The increase reflects the higher operating margin and sales level, offset partially by the impact of tariffs. Let's shift over to cash flow. Although we planned a slow start to the year, free cash flow came in better than expected.

[Jennifer Walter, CFO at Moog Inc.]

In the first quarter, we used $79 million of free cash flow. Growth in our physical inventory consumed cash, and we were negatively impacted by the timing of payments, including the normal timing of compensation payments. Capital expenditures were at about the same level as the quarterly average from last year and are expected to pick up in the rest of this year. We continue to invest in our facilities to support our strong growth opportunities. Our leverage ratio was 2.0 times as of the end of the first quarter, putting us at the low end of our target leverage of 2-3 times. Our capital deployment priorities center around organic growth and will pursue strategic acquisitions to complement our existing portfolio, as Pat already mentioned. We strive to have a balanced capital deployment strategy over the long term.

[Jennifer Walter, CFO at Moog Inc.]

We'll now shift over to our updated guidance for the year. We're increasing our 2026 guidance for sales and adjusted earnings per share from what we provided a quarter ago, and we're affirming our guidance on adjusted operating margin and free cash flow conversion. We're increasing our sales guidance for three of our segments. In space and defense, we're increasing our guidance by $30 million to reflect new orders and strong first quarter sales. We're increasing guidance for commercial aircraft by $15 million to reflect production ramps on narrow-body programs, as well as strong first quarter aftermarket sales. We're also increasing guidance for industrial by $15 million, and this largely reflects strong demand for data center cooling pumps. We're holding our adjusted operating margin in FY 2026 at 13.4%, a 40 basis point increase over FY 2025.

[Jennifer Walter, CFO at Moog Inc.]

We're adjusting segment operating margins slightly in two of our segments based on first quarter performance. We're increasing our operating margin for space and defense to 13.9% and moderating our operating margin for military aircraft to 13.8%. We're increasing our FY 2026 adjusted earnings per share guidance by $0.20 to $10.20 ± $0.20. The increase reflects sales growth beyond what we had initially projected. For the second quarter, we're forecasting earnings per share to be $2.25 ± $0.10. Finally, turning to cash. We're still projecting free cash flow conversion to be about 60%, an improvement over FY 2025. Next quarter, we expect to generate free cash flow at least equal to the amount that we used in the first quarter.

[Jennifer Walter, CFO at Moog Inc.]

Timing of payments, including the normal timing of compensation payments, used cash in the first quarter, but won't do so in the second quarter. In addition, we'll consume less cash for physical inventories as we continue to reschedule material receipts within commercial aircraft. We had an incredible start to the year with our strong first quarter financial performance, and we'll continue to build on our financial strength in fiscal year 2026. We'll achieve a record level of sales, further expand our operating margin, and make meaningful progress towards generating strong free cash flow. Now I'll turn it back to Pat.

[Pat Roche, CEO at Moog Inc.]

We delivered an outstanding first quarter financial results. We've improved our guidance based on the continuing strong performance in the robust market. With that, let me open the floor to questions.

[Operator]

We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Jon Tanwanteng from CJS Securities. Your line is open. Please go ahead.

[Jonathan E. Tanwanteng, Managing Director at CJS Securities]

And then congrats on a great start to the year. I was wondering if you could comment on just the guidance increase for the year, a little bit less on both the revenue and the earnings versus what you've beat in Q1 by. I was wondering if you could, you know, give us any color on that, if there's any nuance that we missed, maybe some timing items that were pulled in, or maybe one-off items that weren't sustainable, just to help us understand, you know, the mismatch there.

[Jennifer Walter, CFO at Moog Inc.]

Yes, John, I'll take that. Yes, we did increase our guidance for EPS by $0.20 for the year. And while we beat our Q1 guidance by about twice that, we did have a very strong first quarter performance, as we've described, and we've reflected that in our guidance. In particular, it came in strong sales. We had strong sales in space and defense, overall strength of, that business in commercial aircraft, related to production and aftermarket activity, and in industrial, certain areas within industrial automation. So that part has been carried forward and part reflected in our guidance for the year. But we also had some pull-ins from later in the year, and these are largely defense-related things, and I'd attribute it to military readiness.

[Jennifer Walter, CFO at Moog Inc.]

For instance, the V-22 spares order, that is something that reflects basically a year's worth of orders that came in in just the first quarter. We saw similar types of things within our space and defense business as well. These latter examples for military readiness are largely pull-ins from later in the year and just reflect timing. We have reflected the true increases for the year in that we achieved in Q1 for the full year.

[Jonathan E. Tanwanteng, Managing Director at CJS Securities]

Okay, great. That's really helpful. Thank you. And then second, could you just talk about the decrease in the military aircraft margin outlook? What's going on there? I'm not sure if you went into that.

[Jennifer Walter, CFO at Moog Inc.]

Yeah. What we did is we just reflected our Q1 performance and, made sure that we took that into consideration as we were going forward for the full year. So previously we had it at 14.3%. We decreased it to 13.8% as we achieved 11.9% in the year. So basically, it's just fine-tuning it to based on our results for the first quarter. And that's offset by some of the increase that we saw in our space and defense business. So we are holding our operating margin for the company at the 13.4% that we had previously guided to.

[Jonathan E. Tanwanteng, Managing Director at CJS Securities]

Okay. Thank you. And then finally, just on the better cash flow in the quarter, was that a result of your better, you know, net working capital initiatives, or maybe lower CapEx, or was that just a function of the higher earnings?

[Jennifer Walter, CFO at Moog Inc.]

It is attributable to our physical inventories. We had slowed down the material receipts that we had talked about this quarter and last quarter. We had done a nice job on that, and we saw that come through in our results this quarter, and we look forward to continuing those efforts and building upon those as we move throughout the year as well.

[Jonathan E. Tanwanteng, Managing Director at CJS Securities]

Got it. Thank you.

[Pat Roche, CEO at Moog Inc.]

Thanks, John.

[Operator]

Your next question comes from Michael Ciarmoli from Truist Securities. Your line is open.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Hey, um-

[Operator]

Please go ahead.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Hey, morning, guys. Nice results. Thanks for taking the question. Jennifer, Pat, just on the commercial aircraft margins, I know you called out tariff pressure, but is there any other headwind there? I mean, you guys are making really good progress across the portfolio, and, you know, I know the aircraft side seems to be the one that's got more of the tariff-related pressure. We saw, you know, a year-over-year decline there, and I think that it's probably a couple of quarters since it... Or a couple, more than a couple of quarters that it's been down to 10.6%. Anything else going on in that segment that's giving you sort of a challenge in driving those margins higher, or is it really just all tariffs and some mix?

[Jennifer Walter, CFO at Moog Inc.]

Tariffs is about 300 basis points of the impact on this quarter compared to a quarter ago when we didn't have the tariff impact.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay.

[Jennifer Walter, CFO at Moog Inc.]

So without that, that business is up very nicely. So operationally wise, we're seeing the increased sales volume and pricing benefits come through really nicely. So that business overall is performing great. The tariff pressure is what's why we're seeing that downtick there.

[Pat Roche, CEO at Moog Inc.]

And that tariff pressure-

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay.

[Pat Roche, CEO at Moog Inc.]

That tariff pressure was particularly high in quarter one. We have, as you know, aftermarket repairs coming back from airlines around the world, and some of the costs associated with tariffs on that were higher than we had anticipated within the quarter. Not all of those airlines were completing the paperwork in the necessary manner for us in order to bring them in, into a bonded area, avoiding the tariff, and we're tightening up on that process and helping our customers make sure that they are compliant. So that should go down in subsequent quarters, but it was a relatively significant hit in this quarter.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay. And that was my next question. What else could you do to mitigate this tariff? So it sounds like you just mentioned the paperwork, getting them into some bonded areas. Is there anything else? I mean, is it as simple as just pricing, or are there other levers you can pull to offset that headwind?

[Pat Roche, CEO at Moog Inc.]

Well, we're actually doing quite a number of things. We've, we have some supply chain routes around the world, which end up bringing products, I would say, unnecessarily into the U.S. and back out to our customer who is outside of the U.S. So we've changed around-

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay

[Pat Roche, CEO at Moog Inc.]

Some of our supply chain. We're now using one of our facilities in the U.K. with a Belgian supplier, and then the product gets delivered to France, and so it never comes into the U.S. That actually is single-digit million saving for us in tariff costs, and so we're pursuing all of those avenues, Michael.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay. Okay. And then, just moving on, I guess, I can't recall a bookings quarter this strong for you guys. I know you called out some of those major defense programs, but then I noticed that the 12-month backlog, you know, didn't really go up nearly as much as the total bookings. So how much of those $2.3 billion are beyond 12 months? I know you mentioned PAC-3, presumably, you know, that's gonna spread over a couple of years, but maybe if you could just give a little bit more color on the bookings and kind of the backlog trends.

[Pat Roche, CEO at Moog Inc.]

Yeah. I mean, we're really pleased with the bookings, Michael, because I think they reflect that we're doing the right things for the customer, and it's building a solid book of business for us. And so, yeah, they're at an exceptionally high level. If I characterize that $2.3 billion, about half of that was the commercial aircraft business, and that was, C919 order that stretches out for a number of years.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay

[Pat Roche, CEO at Moog Inc.]

... and some increased engine valve orders that were in there as well, and also reflecting the progression of our wide-body OE, sales going forward as well. So those. It was reflecting that whole increase in both narrow-body, wide-body, and engines on the commercial side. About a quarter of the orders were Space and Defense Group related, and those orders, that brought orders in Space and Defense Group to a record level, and what was driving that was, or a lot of it was PAC-3, over a $100 million order for PAC-3, adding to the $100 million-plus order we had a year ago on PAC-3, plus a space vehicle order, ordering Meteosat satellites. You know about those from our previous calls, so that was good to get a-

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Yeah

[Pat Roche, CEO at Moog Inc.]

Follow-on order on those. And then about a sixth of it was Military Aircraft Group, and that was reflecting both current platform programs that we're working on and new aircraft or new developments that are moving into production.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Got it. That's helpful. Just the last one, Jennifer, what's sort of the expectation for working capital and maybe physical inventory for the remainder of the year?

[Jennifer Walter, CFO at Moog Inc.]

Yeah, so as we look into 2026, some of the things that we'll see within working capital is we are going to see positive advances. So that'll be

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Okay

[Jennifer Walter, CFO at Moog Inc.]

... a positive for us. We will see some growth in receivables and physical inventories associated with business growth, but we are mitigating that with the activities that Pat has described there.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Perfect. Thanks, guys. I'll jump back in the queue.

[Pat Roche, CEO at Moog Inc.]

Thank you.

[Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities]

Mm-hmm.

[Operator]

Your next question comes from Gautam Khanna from TD Securities. Your line is open.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Yeah, good morning.

[Operator]

Please go ahead.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Thank you. Yeah, good morning. Thanks, guys.

[Pat Roche, CEO at Moog Inc.]

Good morning.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

I was curious on the, you know, the V-22 order, and just in general, are you seeing a, an uptick in defense orders in the, in the current quarter? And just curious, like, you know, was that a surprise that you got that order all at once? Is there any change in kind of customer activity that's worth noting, one way or the other?

[Jennifer Walter, CFO at Moog Inc.]

I'm not sure that there's too much of a change. This one did happen to be basically what we had expected to have in orders for the year get accelerated into the quarter. So it is an acceleration. On the military side, we are seeing a little bit of acceleration in moving things to the left. We're positioned well so that we can accommodate these orders and take care of that. I don't know that it's too much of a change, but we are seeing that really in the defense side. As I mentioned earlier, I think it's really just determined by military need for readiness and just making sure that suppliers like us are positioned well, and we are positioned well to meet those needs.

[Pat Roche, CEO at Moog Inc.]

If I step back from just that specific case, I mean, there is a sense of urgency in the defense side of the business to actually accelerate capacity for missile programs, specifically replenishing an arsenal that was heavily depleted, and as Jennifer has said, on readiness, making sure that all the assets that you have are able to be deployed. I think that's a general trend-

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Yeah, and to the-

[Pat Roche, CEO at Moog Inc.]

pulling things into to the left.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Yeah, to follow up on that point, Pat, I'm just curious, like, we're seeing these contracts or framework agreements anyway. I negotiated with some of the defense prime contractors. I'm curious, how advanced are your conversations with those primes to kind of get capacity up and perhaps, you know, that flow down to you guys? I'm just curious, how far advanced are those talks?

[Pat Roche, CEO at Moog Inc.]

So how I would characterize it is this, this need to build capacity has been apparent for at least 18-24 months. And when we've been bidding on missile programs, over that period, we've been asked the question again and again, "What would you need to do to double your capacity or to quadruple your capacity?" So it has been well flagged through the industry. I think the announcement of the 7-year frame agreement with Lockheed Martin makes it really public that there's this government imperative to increase those production volumes. And so we've been planning through that, and we've been making investments in our business that are supportive. You know, once we think about the PAC-3 program, we run that through our Salt Lake City facility.

[Pat Roche, CEO at Moog Inc.]

Over the course of the last couple of years, we've freed up space in that facility by selling an NavAids business a few years back. As you remember, that space is now completely free and available for new work to be loaded into that facility. That will be the PAC-3 activity. We've decided to invest in a circuit card assembly line in that plant as well, in support of programs like PAC-3 and other missile programs. And those capital, capital investments are all within our current planning.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Thanks, Pat.

[Pat Roche, CEO at Moog Inc.]

So we're looking forward to seeing these levels of volume coming on those programs, Gautam.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

That makes a lot of sense. And just last one, Jennifer, what was the total company price realization year-over-year in the quarter?

[Jennifer Walter, CFO at Moog Inc.]

Did you say for pricing benefit?

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Yes.

[Jennifer Walter, CFO at Moog Inc.]

Yeah, we haven't given out the pricing benefit year over year, but as we look to it, it does contribute nicely. It's not half of the amount that we're doing. It's definitely volume and demand is being the biggest part. And then I would say it's complemented by price increases that we're securing throughout our book of business.

[Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities]

Great. Thank you, guys.

[Pat Roche, CEO at Moog Inc.]

You're welcome. Thank you.

[Operator]

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Your next question comes from Kristine Liwag from Morgan Stanley.

[Kristine Liwag, Senior Aerospace & Defense Equity Analyst at Morgan Stanley]

Hey, good morning, everyone. It's wonderful to see, you know, some of these strong sales signals converting to orders. I was wondering, on PAC-3, can you just let us know how much this is as a percent of company sales, or if not PAC-3, how we think about overall missiles as a size for Moog?

[Pat Roche, CEO at Moog Inc.]

Yeah. Kristine, good morning. Welcome. If I think about our missiles business, in 2025, it was over $200 million, and it was growing at about 20% a year. In 2026, we expect it to be more than $250 million business for us within that space and defense group.

[Kristine Liwag, Senior Aerospace & Defense Equity Analyst at Morgan Stanley]

Great. And, you know, that's a helpful color, Pat. So I was wondering, with the record, or I guess, novel, contracts that Lockheed signed with the Department of Defense for the PAC-3 and the THAAD, I mean, it seems like we're in the beginning stages of this new acquisition reform that's providing multi-year outlook and capacities growing 300%-500%. I was wondering how you should-how we think about, you know, what these could mean for, for your business, and is that the growth trajectory that you could potentially see as we get more of these deals signed?

[Pat Roche, CEO at Moog Inc.]

We're very optimistic about it, Kristine. We feel that we have been demonstrating over the last couple of years a really strong commitment to this business. We're delivering really well operationally. As you know, from the last quarter, we got an award from Lockheed Martin for 100% on time, 100% quality. In this quarter, we announced that BAE Systems have given us an award. Also, that was on a missile program. So we are really effective at delivering, and if people are looking for increased capacity and throughput, no better place to go than some place that's delivering 100% on time. So I think we're well set up to meet the needs of our customers in these programs in terms of our capacity to accommodate it. I just mentioned the Salt Lake City factory.

[Pat Roche, CEO at Moog Inc.]

We have the floor, the square footage available there to meet the expanded needs that we see coming, even if it is, 2 or 4 times current levels on those programs. And our exposure across missile programs is really broad. So we're all focused on PAC-3 here, but THAAD is also a program that is experiencing significant growth. We have content on that and hope to increase scope on that, plus Standard Missile-2, Standard Missile-3, Standard Missile-6, PrSM, Tomahawk, to name just a few. So it is a really positive upside for us, Kristine.

[Kristine Liwag, Senior Aerospace & Defense Equity Analyst at Morgan Stanley]

Wow! Super exciting. If I could squeeze a third question about data center cooling. Can you talk about what exactly you're supplying? How big could this business be for you, and what's the margin profile of data center cooling?

[Pat Roche, CEO at Moog Inc.]

So, in 2025, it was about $25 million of sales. We expect that to double in 2026. In terms of what we manufacture, it is a pump that is used to circulate the cooling fluids through the long rack of processors and servers that are used in these data centers. So it's a critical component within the cooling system. It goes into what's called a cooling distribution unit, which is at the end of the server line. We have multiple pumps within that for redundancy reasons. Our pump has some highly differentiated features associated with it, which improve its reliability and maintainability in the environment.

[Pat Roche, CEO at Moog Inc.]

We've gone from producing at a rate of about 200 a week of these pumps at the beginning of 2025 to over 500 a week by the end of 2025, and our customers would like us to double the volume on those pumps. And so we're standing up a second production line and boosting capacity in our existing facility.

[Kristine Liwag, Senior Aerospace & Defense Equity Analyst at Morgan Stanley]

Great. Thank you very much.

[Pat Roche, CEO at Moog Inc.]

You're welcome. Thank you, Kristine.

[Operator]

There are no further questions at this time. I will now turn the call back to CEO Pat Roche for closing remarks.

[Pat Roche, CEO at Moog Inc.]

That concludes our earnings call. I appreciate you taking the time to listen to our update on the business, and I look forward to providing an update again next quarter. Thank you.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• Aaron Astrachan, Head of Investor Relations
• Pat Roche, CEO
• Jennifer Walter, CFO

Analysts

• Jonathan E. Tanwanteng, Managing Director at CJS Securities
• Michael Ciarmoli, Managing Director, Aerospace & Defense Equity Research at Truist Securities
• Gautam Khanna, Aerospace and Defense Equity Analyst at TD Securities
• Kristine Liwag, Senior Aerospace & Defense Equity Analyst at Morgan Stanley