MOOG INC

Previous wording

Under ASC 606, 64% of revenue was recognized over time for the quarter ended March 30, 2024, using the cost-to-cost method of accounting. The over-time method of revenue recognition is predominantly used in Space and Defense, Military Aircraft and Commercial Aircraft. We use this method for U.S. Government contracts and repair and overhaul arrangements as we are creating or enhancing assets that the customer controls. In addition, many of our large commercial contracts qualify for over-time accounting as our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed to date.

Current wording

Under ASC 606, 65% of revenue was recognized over time for the three months ended June 29, 2024, using the cost-to-cost method of accounting. The over-time method of revenue recognition is predominantly used in Space and Defense, Military Aircraft and Commercial Aircraft. We use this method for U.S. Government contracts and repair and overhaul arrangements as we are creating or enhancing assets that the customer controls. In addition, many of our large commercial contracts qualify for over-time accounting as our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed to date.

Previous wording

For the quarter ended March 30, 2024, 36% of revenue was recognized at the point in time control transferred to the customer. This method of revenue recognition is used most frequently in Industrial. We use this method for commercial contracts in which the asset being created has an alternative use. We determine the point in time control transfers to the customer by weighing the five indicators provided by ASC 606. When control has transferred to the customer, profit is generated as cost of sales is recorded and as revenue is recognized.

Current wording

For the three months ended June 29, 2024, 35% of revenue was recognized at the point in time control transferred to the customer. This method of revenue recognition is used most frequently in Industrial. We use this method for commercial contracts in which the asset being created has an alternative use. We determine the point in time control transfers to the customer by weighing the five indicators provided by ASC 606. When control has transferred to the customer, profit is generated as cost of sales is recorded and as revenue is recognized.

Previous wording

We focus on improving shareholder value through strategic revenue growth, both organic and acquired, improving operating efficiencies and manufacturing initiatives and utilizing low cost manufacturing facilities without compromising quality. Historically, we have taken a balanced approach to capital deployment in order to maximize shareholder returns over the long term. These activities have included strategic acquisitions, share buybacks and dividend payments. Today, we believe we can create long term value for our shareholders by continuing to invest in our business through both capital expenditures and investments in new market opportunities. We will also continue exploring opportunities to make strategic acquisitions and return capital to shareholders.

Current wording

We focus on improving shareholder value through strategic revenue growth, both organic and acquired, improving operating efficiencies and manufacturing initiatives and utilizing low cost manufacturing facilities without compromising quality. Historically, we have taken a balanced approach to capital deployment in order to maximize shareholder returns over the long term. These activities have included strategic acquisitions, share buybacks and dividend payments. Today, we believe we can create long term value for our shareholders by continuing to organically invest in areas of strong growth.

Previous wording

On October 20, 2023, we acquired Data Collection Limited ("DCL") based in Auckland, New Zealand for a purchase price, net of acquired cash, of $6 million. DCL specializes in manufacturing and operating pavement surveying equipment and providing innovative solutions for measuring and managing pavements. This operation is included in our Military Aircraft segment. The purchase price allocation is subject to adjustments as we obtain additional information for our estimates during the measurement period.

Current wording

On October 20, 2023, we acquired Data Collection Limited ("DCL") based in Auckland, New Zealand for a purchase price, net of acquired cash, of $6 million. DCL specializes in manufacturing and operating pavement surveying equipment and providing innovative solutions for measuring and managing pavements. This operation is included in our Military Aircraft segment.

Previous wording

On September 30, 2022, we sold a sonar business based in the United Kingdom previously included in our Industrial segment. We have cumulatively received net proceeds of $13 million and recorded a loss of $15 million, net of transaction costs. The transaction is subject to adjustments associated with amounts currently held in escrow.

Current wording

On September 30, 2022, we sold a sonar business based in the United Kingdom previously included in our Industrial segment. We have cumulatively received net proceeds of $15 million and recorded a loss of $15 million, net of transaction costs.

Previous wording

Gross margin increased in the second quarter of 2024 compared to the second quarter of 2023. In the second quarter of 2024, we benefited $14 million from the Employee Retention Credit associated with the CARES Act. Also, improved performance on our space vehicle development programs and the results of our simplification initiatives in Military Aircraft increased gross margin. Gross margin the first half of 2024 increased due to the same factors as the second quarter. These increases were partially offset by the absence of a favorable sales mix last year in Commercial Aircraft.

Current wording

Gross margin increased in the third quarter of 2024 compared to the third quarter of 2023, driven by improved performance on our space vehicle development programs in Space and Defense and a favorable sales mix in Commercial Aircraft. Gross margin also increased in the first three quarters of 2024 compared to the first three quarters of 2023. In the second quarter of 2024, we benefited $14 million from the Employee Retention Credit associated with the CARES Act. In addition, in the first three quarters of 2024, improved performance on our space vehicle development programs and the results of our pricing and simplification initiatives across all of our segments increased gross margin.

Previous wording

Research and development expenses in the first half of 2024 increased compared to the same period of 2023. Activity supporting our new growth programs in both Space and Defense and in Industrial increased research and development expense $11 million, and was partially offset by a $3 million reduction in Military Aircraft.

Current wording

Research and development expenses were higher through the first three quarters of 2024 compared to the same periods of 2023. Activities supporting our new growth programs in Space and Defense and Industrial were partially offset by a reduction in Military Aircraft.

Previous wording

Selling, general and administrative expenses as a percentage of sales decreased in the second quarter and in the first half of 2024 compared to the second quarter and the first half of 2023, reflecting the higher sales volume.

Current wording

Selling, general and administrative expenses as a percentage of sales decreased in the third quarter and in the first three quarters of 2024 compared to the same periods of 2023, reflecting the higher sales volume.

Previous wording

Interest expense increased in the second quarter and in the first half of 2024 compared to the second quarter and the first half of 2023 due to higher debt balances, as well as higher rates on those outstanding debt balances.

Current wording

Interest expense increased in the first three quarters of 2024 compared to the first three quarters of 2023 due to higher rates on outstanding debt balances, as well as higher debt balances.

Previous wording

As we continue to simplify our operations and product portfolios, we incurred charges for impairments and for various restructuring activities in 2024 and 2023. In the second quarter of 2024, we incurred $6 million of impairments in Military Aircraft and $8 million of restructuring and other charges in Industrial and Military Aircraft. The second quarter of 2023 included $3 million of charges for various restructuring activities and impairments across all of our segments. The first half of 2024 included the first quarter's restructuring charges from Industrial. The first half of 2023 included the gain from the sale of three buildings in Industrial, partially offset by restructuring and other charges, primarily in Industrial.

Current wording

In the third quarter of 2024, we incurred $6 million of restructuring charges, an inventory write-down and other charges, primarily in Industrial. In the third quarter of 2023, we incurred $2 million of restructuring and other charges. The first three quarters of 2024 included $22 million of restructuring charges, impairment charges, inventory write-downs and other charges, primarily in Military Aircraft and Industrial. The first three quarters of 2023 included the gain from the sale of three buildings in Industrial, partially offset by restructuring and other charges across all of our segments.

Previous wording

Twelve-month backlog increased in the second quarter of 2024 compared with the second quarter of 2023. Within Commercial Aircraft, we had higher orders in our aftermarket and OEM programs. In Space and Defense, we had higher orders for our new space vehicle programs, as well as across our U.S. and European defense programs. In Military Aircraft, we also had higher orders across various legacy programs as well as for the F-35 program. Partially offsetting these increases was a decline in Industrial's twelve-month backlog due to lower orders across our industrial automation and our medical device programs.

Current wording

Twelve-month backlog increased in the third quarter of 2024 compared with the third quarter of 2023, driven by long-term orders that moved into twelve-month backlog across both space and defense programs. Also, we had higher OEM orders in both Military Aircraft and in Commercial Aircraft. Partially offsetting these increases was a decline in Industrial's twelve-month backlog due to lower orders in our industrial automation market.

Previous wording

Space and Defense net sales increased in the second quarter and in the first half of 2024 compared to the second quarter and the first half of 2023 driven primarily by higher demand for defense applications.

Current wording

Space and Defense net sales increased in the third quarter and in the first three quarters of 2024 compared to the same periods of 2023, driven primarily by higher demand for defense applications.

Previous wording

In the second quarter of 2024, sales increased $19 million in our defense programs and $2 million in our space programs. Within our defense market, the ramp of new defense pursuits serving European needs, as well as emerging U.S. defense priorities, increased sales. We also had higher demand for our defense components products. Within our space market, higher activity for launch vehicles was partially offset by lower activity across our space vehicle programs.

Current wording

In the third quarter of 2024, sales increased $10 million in our defense programs and $6 million in our space programs. Within our defense market, higher U.S. demand for our component products and the ramp of new defense pursuits serving European needs increased sales. Within our space market, the production ramp of a launch vehicle program increased sales.

Previous wording

The sales increases in the first half of 2024 compared to the first half of 2023 were largely due to the same factors as the second quarter. The continued strong defense application demand across most of our programs increased sales $28 million in our defense programs and $6 million in our space programs.

Current wording

The sales increases in the first three quarters of 2024 compared to the first three quarters of 2023 were largely due to the same factors as the third quarter. The continued strong defense application demand across most of our programs increased sales $37 million in our defense programs. Also, sales increased $12 million in our space programs. Higher demand for launch vehicle and satellite components was partially offset by lower activity across our space vehicle programs.

Previous wording

Military Aircraft net sales increased in the second quarter and in the first half of 2024 compared to the second quarter and the first half of 2023.

Current wording

Military Aircraft net sales increased in the third quarter and in the first three quarters of 2024 compared to the same periods of 2023, driven by growth on development and production aircraft.

Previous wording

In the second quarter of 2024 compared to the second quarter of 2023, military OEM sales increased $15 million and military aftermarket sales increased $5 million. The ramp-up of activity continued on the FLRAA program, which increased OEM sales compared to the second quarter of 2023. Also, higher production sales on the F-35 program was mostly offset by lower amounts of funded development program activity. In military aftermarket, sales increased due to the sale of a mature product line as part of our simplification efforts.

Current wording

In the third quarter of 2024 compared to the third quarter of 2023, military OEM sales increased $29 million due to the ramp-up of activity on the FLRAA program and other OEM production programs. Also in the third quarter of 2024 compared to the third quarter of 2023, military aftermarket sales increased $2 million.

Previous wording

The sales increases in the first half of 2024 compared to the first half of 2023 were largely due to the same factors as the second quarter. Sales increased $24 million in military OEM programs and increased $5 million in military aftermarket programs.

Current wording

The sales increases in the first three quarters of 2024 compared to the first three quarters of 2023 were largely due to the same factors as the third quarter. Sales increased $52 million in military OEM programs and increased $7 million in military aftermarket programs.

Previous wording

Commercial Aircraft net sales increased in the second quarter and in the first half of 2024 compared to the second quarter and the first half of 2023 driven by the continued market demand for our widebody and other programs.

Current wording

Commercial Aircraft net sales increased in the third quarter and in the first three quarters of 2024 compared to the same periods of 2023.

Previous wording

Operating margin increased in the first half of 2024 compared to the first half of 2023 due largely to the same factors as the second quarter. Partially offsetting the operating margin is the absence of favorable retrofit activity from last year.

Current wording

Operating margin increased in the third quarter of 2024 compared to the third quarter of 2023 due to benefits from our pricing initiatives, higher sales volumes, as well as a more favorable sales mix. Operating margin increased in the first three quarters of 2024 compared to the first three quarters of 2023 due largely to the same factors as the third quarter. Partially offsetting the increases is the absence of favorable aftermarket retrofit activity from last year.

Previous wording

In the second quarter of 2024 compared to the second quarter of 2023, sales increased $13 million in our simulation and test market, primarily driven by demand for flight simulation systems supporting increased pilot training demand. Sales also increased $6 million in our energy market due to higher demand for our products and the timing of shipments. Partially offsetting the increase was a $10 million decline in industrial automation sales, reflecting the slowdown in orders we have seen in recent quarters.

Current wording

In the third quarter of 2024 compared to the third quarter of 2023, industrial automation sales decreased $15 million, reflecting the slowdown in orders we have seen in recent quarters. Partially offsetting the decrease were sales increases of $7 million in our energy market and $3 million in our simulation and test market, both due to higher demand for our products.

Previous wording

The sales increases in the first half of 2024 compared to the first half of 2023 were largely due to the same factors as the second quarter. Sales increased $22 million in our simulation and test market and $7 million in our energy market. Partially offsetting the increases was a $4 million decrease in our industrial automation market.

Current wording

In the first three quarters of 2024 compared to the first three quarters of 2023, sales increased $26 million in our simulation and test market. Higher demand for our flight simulation systems, which support the increased pilot training demand, and for our test products drove the sales increase in this market. Sales also increased $13 million in our energy market. Partially offsetting the increases was a $20 million sales decrease in our industrial automation market, driven by the same factors in the third quarter of 2024.

Previous wording

Operating margin increased in the second quarter of 2024 compared to the second quarter of 2023, as the Employee Retention Credit and the benefits from our pricing initiatives were partially offset by higher amounts of restructuring charges. Excluding $4 million of restructuring charges in the second quarter of 2024 and $1 million of restructuring and other charges in the second quarter of 2023, adjusted operating margins were 12.5% and 10.4%, respectively.

Current wording

Operating margin decreased in the third quarter of 2024 compared to the third quarter of 2023, driven by higher amounts of restructuring charges and an inventory write-down. Excluding restructuring charges of $3 million and an inventory write-down of $2 million in the third quarter of 2024, and excluding restructuring charges of $1 million in the third quarter of 2023, adjusted operating margins were 11.7% and 11.5%, respectively. The increase was attributable to benefits from pricing initiatives, offset by pressures associated with lower industrial automation sales and planned product transfers.

Previous wording

Operating margin decreased in the first half of 2024 compared to the first half of 2023 as last year included a $10 million gain related to the sales of three buildings as we consolidated operations. Excluding this gain and restructuring and other charges, adjusted operating margin in the first half of 2023 was 11.3%. Adjusted operating margin in the first half of 2024 was 12.5% after excluding $6 million of restructuring and other charges. The resulting increase in adjusted operating margin was driven by the benefits from our pricing initiatives as well as the Employee Retention Credit. These increases more than offset higher research and development expense associated with activity on new growth programs.

Current wording

Operating margin decreased in the first three quarters of 2024 compared to the first three quarters of 2023, as last year included a $10 million gain related to the sales of three buildings. Excluding this gain and restructuring and other charges, adjusted operating margin in the first three quarters of 2023 was 11.4%. Adjusted operating margin in the first three quarters of 2024 was 12.3% after excluding $9 million of restructuring charges and a $2 million inventory write-down. The increase in adjusted operating margin was driven by the benefits from our pricing initiatives, as well as the Employee Retention Credit. These increases were moderated by lower industrial automation sales and planned product transfers.

Previous wording

2024 Outlook –We expect higher sales in 2024, driven by the continued growth in our aerospace and defense markets. However in Industrial, a slowdown of orders will reduce sales. We also expect operating margin will increase due to the continued benefits of our pricing and simplification initiatives, as well as the Employee Retention Credit. Partially offsetting the incremental profit is expected higher interest expense and a higher tax rate. Excluding the impairment and restructuring charges in the first half of 2024, we expect adjusted diluted earnings per share will range between $7.05 and $7.45, with a midpoint of $7.25. Management believes that the adjusted outlook may be useful in evaluating the financial condition and results of operations of the Company.

Current wording

2024 Outlook – We expect higher sales in 2024, driven by the continued growth in our aerospace and defense markets. We also expect operating margin will increase due to the continued benefits of our pricing and simplification initiatives, as well as the Employee Retention Credit. Partially offsetting the incremental profit is expected higher interest expense and a higher tax rate. Excluding the impairments, inventory write-downs and restructuring and other charges in the first three quarters of 2024, we expect adjusting operating margin will be 12.4% in 2024, compared to 10.9% in 2023. We expect adjusted diluted earnings per share will range between $7.30 and $7.50, with a midpoint of $7.40. Management believes that the adjusted outlook may be useful in evaluating the financial condition and results of operations of the Company.

Previous wording

2024 Outlook for Space and Defense – In 2024, we expect sales growth across both of our space and defense markets, primarily driven by the increased investment in defense spending in the U.S and in Europe. We expect operating margin will increase due to improved performance in our space vehicle programs and the benefit of the Employee Retention Credit.

Current wording

2024 Outlook for Space and Defense – In 2024, we expect sales growth across both of our space and defense markets, primarily driven by the increased investment in defense spending in the U.S and in Europe. We expect operating margin will increase due to improved performance in our space vehicle development programs and the benefit of the Employee Retention Credit, partially offset by higher expenses associated with pursuit activity of new growth programs.

Previous wording

2024 Outlook for Military Aircraft –In 2024, we expect sales growth in our OEM programs, in particular sales for the FLRAA program. We expect operating margin will increase due to having a full year of activity on the FLRAA program, the lower amounts of charges associated with funded development contracts which are winding down and the benefit from the sale of a mature product line. Partially offsetting the increase in operating margin are the higher amounts of impairment and restructuring charges in 2024 compared to 2023.

Current wording

2024 Outlook for Military Aircraft – In 2024, we expect sales growth in our OEM programs, in particular sales for the FLRAA program. We expect operating margin will increase due to having a full year of activity on the FLRAA program, the benefit from the sale of a mature product line and the lower amounts of charges associated with funded development contracts, which are winding down. Partially offsetting the increase in operating margin are the higher amounts of impairment and restructuring charges in 2024 compared to 2023. Excluding the asset impairments and restructuring and other charges in both years, adjusted operating margin is expected to be 11.9% in 2024 compared to 9.0% in 2023.

Previous wording

2024 Outlook for Commercial Aircraft –In 2024, we expect sales growth from our widebody OEM and aftermarket programs as build rates continue to ramp and as airlines increase their spares demand. We expect operating margin will decrease due to an unfavorable sales mix from higher amounts of lower margin OEM sales and as the prior year's favorable retrofit sales will not repeat.

Current wording

2024 Outlook for Commercial Aircraft –In 2024, we expect sales growth from the production ramp of our widebody and other programs. We expect operating margin will decrease due to an unfavorable sales mix from higher amounts of lower margin OEM sales and as the prior year's favorable retrofit sales will not repeat. These decreases will partially be offset by the benefits from pricing initiatives and higher sales volumes.

Previous wording

2024 Outlook for Industrial –In 2024, we expect a decrease in sales in our industrial automation market consistent with the reduction in incoming orders. We expect operating margin will increase due to the benefits of our pricing initiatives, the savings from our simplified operations and the benefit of the Employee Retention Credit.

Current wording

2024 Outlook for Industrial – In 2024, we expect a slight sales increase. We expect sales increases in our simulation and test market and our energy market, both due to higher demand for our products. These increases will be partially offset by a decrease in sales in our industrial automation market consistent with the reduction in incoming orders. We expect operating margin will increase due to the benefits of our pricing initiatives and the benefit of the Employee Retention Credit, partially offset by an unfavorable sales mix and planned product transfers. Excluding gains on the sale of buildings and restructuring and other charges in 2023, as well as restructuring and inventory write-down charges in 2024, adjusted operating margin is expected to be 12.5% in 2024 compared to 11.5% in 2023.

Previous wording

Net cash used by investing activities in the first half of 2024 included $78 million of capital expenditures and $6 million associated with the acquisition of DCL.

Current wording

Net cash used by investing activities in the first three quarters of 2024 included $110 million of capital expenditures and $6 million associated with the acquisition of DCL.

Previous wording

Net cash used by investing activities in the first half of 2023 included $90 million of capital expenditures, including a $28 million building purchase, as we continue to prioritize internal investments to support core business growth. The first half of 2023 also included $20 million of proceeds from the sales of buildings and businesses.

Current wording

Net cash used by investing activities in the first three quarters of 2023 included $125 million of capital expenditures, including a $28 million building purchase. The first three quarters of 2023 also included $21 million of proceeds from the sales of buildings and businesses.

Previous wording

Net cash provided by financing activities in the first half of 2024 included $85 million of net borrowings on our credit facilities. Financing activities also included $18 million of cash dividends.

Current wording

Net cash provided by financing activities in the first three quarters of 2024 included $94 million of net borrowings on our credit facilities. Financing activities also included $27 million of cash dividends.

Previous wording

Net cash provided by financing activities in the first half of 2023 included $122 million of net borrowings on our credit facilities. Additionally, financing activities used $17 million of cash for dividend payments and $8 million for share repurchases.

Current wording

Net cash provided by financing activities in the first three quarters of 2023 included $175 million of net borrowings on our credit facilities. Additionally, financing activities used $25 million of cash for dividend payments and $10 million for share repurchases.

Previous wording

At March 30, 2024, our cash balances were $60 million, all of which was held outside of the U.S. by foreign operations. We regularly assess our cash needs, including repatriation of foreign earnings which may be subject to regulatory approvals and withholding taxes, where applicable by law.

Current wording

At June 29, 2024, our cash balances were $52 million, which includes $47 million held outside of the U.S. by foreign operations. We regularly assess our cash needs, including repatriation of foreign earnings which may be subject to regulatory approvals and withholding taxes, where applicable by law.

Previous wording

Our U.S. revolving credit facility, which matures on October 27, 2027, has a capacity of $1.1 billion and also provides an expansion option, which permits us to request an increase of up to $400 million to the credit facility upon satisfaction of certain conditions. The weighted-average interest rate on the majority of the outstanding credit facility borrowings was 6.85% and is principally based on SOFR plus the applicable margin, which was 1.60% at March 30, 2024.

Current wording

Our U.S. revolving credit facility, which matures on October 27, 2027, has a capacity of $1.1 billion and also provides an expansion option, which permits us to request an increase of up to $400 million to the credit facility upon satisfaction of certain conditions. The weighted-average interest rate on the majority of the outstanding credit facility borrowings was 6.92% and is principally based on SOFR plus the applicable margin, which was 1.60% at June 29, 2024.

Previous wording

At March 30, 2024, we had $679 million of unused capacity, including $646 million from the U.S. revolving credit facility after considering standby letters of credit and other limitations.

Current wording

At June 29, 2024, we had $670 million of unused capacity, including $637 million from the U.S. revolving credit facility after considering standby letters of credit and other limitations.

Previous wording

Our Receivables Purchase Agreement, which matures on December 11, 2026, allows the Receivables Subsidiary to sell receivables to the Purchasers in amounts up to a $125 million limit so long as certain conditions are satisfied. The receivables are sold to the Purchasers in consideration for the Purchasers making payments of cash. Each Purchaser’s share of capital accrues yield at a variable rate plus an applicable margin, which totaled 6.38% as of March 30, 2024.

Current wording

Our Receivables Purchase Agreement, which matures on December 11, 2026, allows the Receivables Subsidiary to sell receivables to the Purchasers in amounts up to a $125 million limit so long as certain conditions are satisfied. The receivables are sold to the Purchasers in consideration for the Purchasers making payments of cash. Each Purchaser’s share of capital accrues yield at a variable rate plus an applicable margin, which totaled 6.39% as of June 29, 2024.

Previous wording

The defense market is dependent on military spending for development and production programs. We have a growing development program order book for future generation aircraft and turret programs, and we strive to embed our technologies within these high-performance military programs of the future, including the Textron Bell FLRAA. Aircraft production programs are typically long-term in nature, offering predictable capacity needs and future revenues. We maintain positions on numerous high priority programs, including the Lockheed Martin F-35 Lightning II. The large installed base of our products leads to attractive aftermarket sales and service opportunities. The tactical and strategic missile, missile defense and defense controls markets are dependent on many of the same market conditions as military aircraft, including overall military spending and program funding levels. At times when there are perceived threats to national security, U.S. defense spending can increase; at other times, defense spending can decrease. Future levels of defense spending have increased in the near-term given the current global tensions, and are subject to presidential and congressional approval.

Current wording

The defense market is dependent on military spending for development and production programs. We have a growing development program order book for future generation aircraft and turret programs, and we strive to embed our technologies within these high-performance military programs of the future, including the Textron Bell FLRAA. Aircraft production programs are typically long-term in nature, offering predictable capacity needs and future revenues. We maintain positions on numerous high priority programs, including the Lockheed Martin F-35 Lightning II. The large installed base of our products leads to attractive aftermarket sales and service opportunities. The tactical and strategic missile, missile defense and defense controls markets are dependent on many of the same market conditions as military aircraft, including overall military spending and program funding levels. At times when there are perceived threats to national security, U.S. and European defense spending can increase; at other times, defense spending can decrease. Future levels of defense spending have increased in the near-term given the current global tensions, and are subject to governmental approvals.

Previous wording

The commercial OEM aircraft market has depended on a number of factors, including both the last decade's increasing global demand for air travel and increasing fuel prices. Both factors contributed to the demand for new, more fuel-efficient aircraft with lower operating costs that led to large production backlogs for Boeing and Airbus. Domestic air travel has recovered from the impact of the COVID-19 pandemic, and international travel utilizing primarily widebody aircraft is close to 2019 levels. Boeing and Airbus continue to increase their widebody aircraft production rates with the post-pandemic air traffic volumes, and any adjustments to their ramp schedules affects the demand for our flight control systems.

Current wording

The commercial OEM aircraft market depends on a number of factors, including both the last decade's increasing global demand for air travel and increasing fuel prices. Both factors contributed to the demand for new, more fuel-efficient aircraft with lower operating costs that led to large production backlogs for Boeing and Airbus. Domestic air travel has recovered from the impact of the COVID-19 pandemic, and international travel utilizing primarily widebody aircraft is close to 2019 levels. Boeing and Airbus continue to increase their widebody aircraft production rates with the post-pandemic air traffic volumes, and any adjustments to their ramp schedules affects the demand for our flight control systems.

Previous wording

The commercial aftermarket is driven by usage and the age of the existing aircraft fleet for passenger and cargo aircraft, which drives the need for maintenance and repairs. We have seen a recovery in the demand volume for our maintenance services and spare parts after the COVID-19 pandemic. Since there were very few new A350 and 787 entries into service during the pandemic, our sales that are generated after the warranty period were delayed. However, the recent surge in demand for spares and repairs, driven by increased fleet utilization and limited availability of new aircraft, is increasing our aftermarket activity.

Current wording

The commercial aftermarket is driven by usage and the age of the existing aircraft fleet for passenger and cargo aircraft, which drives the need for maintenance and repairs. We have seen a recovery in the demand volume for our maintenance services and spare parts after the COVID-19 pandemic. Since there were very few new A350 and 787 entries into service during the pandemic, our sales that are generated after the warranty period were delayed. However, the recent surge in demand for spares and repairs, driven by increased fleet utilization and the limited availability of new aircraft, is increasing our aftermarket activity.

Previous wording

The industrial market we serve with our industrial automation products is influenced by several factors including capital investment levels, the pace of product innovation, economic conditions, cost-reduction efforts, technology upgrades and the subsequent effects of the COVID-19 pandemic. We experienced challenges from changing demands from customers that have changed their industrial product orders.

Current wording

The industrial market we serve with our industrial automation products is influenced by several factors including capital investment levels, the pace of product and technology innovation, economic conditions and cost-reduction efforts and are placed in customers' facilities that serve the automotive market.