Moog NYSE: MOG.A reported record third-quarter fiscal 2026 sales of $1.1 billion, up 15% from a year earlier, as demand increased across its aerospace, defense and industrial businesses. The company also said its 12-month backlog rose 23% year over year and generated $133 million of free cash flow during the quarter.
Adjusted earnings per share reached a record $3.72, up 60% from the prior-year quarter. Chief Financial Officer Jennifer Walter said roughly half of the increase reflected stronger underlying business performance, primarily from higher sales, while the other half was attributable to tariff refunds.
The quarter included a $30 million operating-profit benefit from the recovery of previously paid IEEPA tariffs, equivalent to 270 basis points of operating margin and approximately $0.70 per share. Moog also completed a review of its domestic research and development tax credit, resulting in a $35 million prior-year benefit that was excluded from adjusted results, along with an $8 million one-time tax benefit tied to legal-entity simplification and $13 million of simplification-related charges.
Segment growth across portfolio
Sales increased in each of Moog's four business segments. Space and Defense revenue rose 17% to $336 million, supported by broad defense demand, particularly for missile controls and space vehicles. Military Aircraft sales increased 9% to $245 million as repair and overhaul activity, spare-part sales and activity on the MV-75 program increased.
Commercial Aircraft sales rose 17% to $254 million, driven by increased production-program volume, pricing on certain major programs and strong aftermarket sales. Industrial revenue increased 18% to $282 million, with about half of the growth coming from the rapidly expanding data-center cooling market. Medical-device and energy markets also contributed to Industrial growth.
- Space and Defense adjusted operating margin was 15.7%, up 150 basis points year over year.
- Military Aircraft adjusted operating margin was 14.7%, up 290 basis points.
- Commercial Aircraft adjusted operating margin was 15.2%, up 50 basis points.
- Industrial adjusted operating margin was 19.9%, aided by data-center cooling pump growth and the tariff refund.
Consolidated adjusted operating margin was 16.4%, up 280 basis points from the prior-year quarter. Walter said that, excluding both the tariff refund and a prior-year benefit from the sale of a non-core Commercial Aircraft product line, operating margin improved 80 basis points.
Data-center cooling ramps rapidly
Chief Executive Officer Pat Roche said demand for data-center cooling pumps is being driven primarily by one hyperscale customer through two cooling distribution unit manufacturers. The business is expected to grow from about $25 million in fiscal 2025 revenue to nearly $100 million in fiscal 2026, representing a near-quadrupling of throughput.
Moog expanded production by improving manufacturing yield and line efficiency before replicating its production lines. The company now operates two lines in Murphy, North Carolina, and recently began operating a third line in Bangalore, India. Roche said the three lines have capacity of about 1,300 pumps per week.
The current RM44 pump is used for in-rack cooling of high-performance AI processing equipment. Moog is also qualifying a next-generation product for in-row cooling across multiple racks. Roche said the product is designed to meet the OCP AS5 standard established by Google and is expected to enter production next year, with both products in production during fiscal 2027.
While the company has focused on meeting demand from its existing customer base, Roche said it has begun business-development outreach to additional cooling distribution unit manufacturers and hyperscalers.
Defense demand and capacity planning
Roche characterized defense demand in the United States and Europe as a “generational inflection,” citing priorities including missile replenishment, space capabilities and aircraft procurement. Moog expects missile-program revenue of about $275 million in fiscal 2026, more than 20% above the prior year.
He said anticipated increases tied to seven-year missile agreements have not yet flowed into Moog's reported backlog, though the company is in active discussions with prime contractors and has performed planning exercises for higher volumes. Moog expects prime contractors to increase production rates by multiples on programs including PAC and THAAD, according to Roche.
To support a higher missile-production ramp, Moog is working on manufacturing flow, yield and methods engineering, Roche said. The company has room within existing Salt Lake City facilities for additional production lines before requiring building expansions. Required capital is expected to be concentrated in test equipment rather than heavy machining equipment.
On the MV-75 program, Roche said Moog experienced no workflow disruption or slowdown during the quarter and expects activity to continue through the fourth quarter under its current guidance. He said Textron had experienced a workflow disruption but that work had resumed, and Textron had committed to self-fund a potential gap over the next several months if necessary.
Guidance raised
Moog raised its fiscal 2026 outlook for revenue, adjusted operating margin, adjusted earnings per share and free-cash-flow conversion. Revenue guidance was increased by $50 million, including a $10 million increase in Space and Defense on missile-control demand, a $10 million increase in Military Aircraft due to aftermarket activity, and a $30 million increase in Industrial related to cooling-pump demand.
The company raised adjusted operating-margin guidance by 70 basis points to 14.1%, largely reflecting the tariff refund. It increased adjusted EPS guidance by $1.05 to $11.65, plus or minus $0.10, citing tariff refunds, a higher current-year R&D tax credit and projected earnings from higher sales.
Moog now expects free-cash-flow conversion of about 70%, up from its prior forecast, as capital expenditures are projected to be lower than previously expected because of the timing of investments supporting organic growth. Walter said the company ended the quarter with a leverage ratio of 1.5 times and continues to prioritize organic investment while pursuing strategic bolt-on acquisitions that complement its portfolio.
About Moog (NYSE:MOG.A)
Moog Inc designs, manufactures, and integrates precision motion and fluid controls and controls systems for original equipment manufacturers and end users in the aerospace, defense, and industrial markets worldwide. The company's Aircrafts Controls segment offers primary and secondary flight controls for military and commercial aircrafts; aftermarket support services; and ground-based navigation aids. Its Space and Defense Controls segment provides controls for satellites, space vehicles, launch vehicles, armored combat vehicles, tactical and strategic missiles, security and surveillance, and other defense applications; and gun aiming, stabilization, and automatic ammunition loading for armored combat vehicles.
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