MOOG INC.

Previous wording

•Industrial market - various components and systems used in various applications including: heavy industrial machinery used for metal forming and pressing, flight simulation motion control systems, energy exploration and generation products, material and automotive structural and fatigue testing systems, as well as for the electrification of construction vehicles.

Current wording

•Industrial market - various components and systems used in various applications including heavy industrial machinery used for metal forming and pressing, flight simulation motion control systems, energy exploration and generation products, material and automotive structural and fatigue testing systems, high efficiency pumps used in data center cooling applications, as well as for the electrification of construction vehicles.

Previous wording

Under ASC 606, 65% of revenue was recognized over time for the three months ended March 29, 2025, 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, 63% of revenue was recognized over time for the three months ended June 28, 2025, 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 three months ended March 29, 2025, 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 createdhas 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 28, 2025, 37% 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 createdhas 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. Over time, we strive to have a balanced approach to capital allocation in order to maximize shareholder returns. Investing for organic growth through increased capital expenditures is a key element of our capital allocation strategy. With the anticipation of several significant programs that will provide long-term revenue growth starting in a few years, our investments in our facilities will continue at elevated levels to ensure we are well prepared for these opportunities. Also, we have repurchased shares opportunistically and remain committed to our dividend policy.

Current wording

We focus on improving shareholder value through strategic revenue growth, both organic and acquired, improving operating efficiencies and utilizing low cost manufacturing facilities without compromising quality. Over time, we strive to have a balanced approach to capital allocation in order to maximize shareholder returns. Investing for organic growth through increased capital expenditures is a key element of our capital allocation strategy. Also, we have repurchased shares opportunistically, acquired businesses and remain committed to our dividend policy.

Previous wording

Net sales increased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024, driven by demand in Commercial Aircraft and by defense market growth in Military Aircraft and Space and Defense. These increases were partially offset by a decrease in Industrial, driven by the lost sales associated with our simplification actions.

Current wording

Net sales increased in the third quarter and in the first three quarters of 2025 compared to the third quarter and the first three quarters of 2024, driven by demand in Commercial Aircraft and by defense market growth in Space and Defense and Military Aircraft. These increases were partially offset by a decrease in Industrial, driven by the lost sales associated with our divestitures and simplification actions.

Previous wording

Gross margin decreased in the second quarter of 2025 compared to the second quarter of 2024. In the second quarter of 2024, we had a one-time benefit of $14 million from the Employee Retention Credit associated with the CARES Act. Gross margin decreased in the first half of 2025 compared to the first half of 2024, driven by the out-of-period warranty expense in Commercial Aircraft in the first quarter of 2025 and by the benefit of the Employee Retention Credit in the first half of 2024.

Current wording

Gross margin decreased in the third quarter of 2025 compared to the third quarter of 2024, driven by inventory write-downs of $6 million, primarily within Industrial and Military Aircraft. Gross margin decreased in the first three quarters of 2025 compared to the first three quarters of 2024. This was driven by a one-time benefit of $14 million from the Employee Retention Credit associated with the CARES Act in the first three quarters of 2024, inventory write-downs of $8 million within Industrial and Military Aircraft in the first three quarters of 2025 and an $8 million out-of-period adjustment related to warranty expense in Commercial Aircraft in the first quarter of 2025.

Previous wording

Research and development expenses decreased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024 due to the timing of activities, primarily in Industrial.

Current wording

Research and development expenses decreased in the third quarter and in the first three quarters of 2025 compared to the third quarter and the first three quarters of 2024 due to lower level of activity, primarily in Industrial.

Previous wording

The twelve-month backlog in the second quarter of 2025 compared with the second quarter of 2024 was relatively flat. Within Space and Defense, we had higher orders across our satellite programs, as well as across our defense programs. This was partially offset by twelve-month backlog decreases in Commercial Aircraft and Industrial. The twelve-month backlog in Commercial Aircraft decreased due to the timing of OEM orders. The twelve-month backlog in Industrial decreased due to divestitures and the timing of a large order in the second quarter of 2024.

Current wording

The twelve-month backlog increased in the third quarter of 2025 compared with the third quarter of 2024. Within Space and Defense, we had higher orders across the entire portfolio of the business, reflecting strong business capture and broad-based growth in both Space and Defense. The twelve-month backlog in Military Aircraft increased due to the timing of orders across legacy and new OEM programs. The twelve-month backlog in Industrial increased due to changes in foreign currency exchange rates, partially offset by divestitures. Commercial Aircraft twelve-month backlog decreased in the third quarter of 2025. The timing of commercial OEM orders decreased backlog, partially offset by orders associated with increased amounts of long-term contracts in commercial aftermarket.

Previous wording

Space and Defense net sales increased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024, reflecting broad-based defense demand. Higher demand for components for satellites and missiles was partially offset by timing of activity on turrets.

Current wording

Space and Defense net sales increased in the third quarter and in the first three quarters of 2025 compared to the third quarter and first three quarters of 2024, reflecting broad-based defense demand. Higher demand for components for satellites and missiles was partially offset by timing of activity on spacecraft vehicles and turrets.

Previous wording

Operating margin decreased in the second quarter of 2025 compared to the second quarter of 2024. In the second quarter of 2025, we incurred $1 million of inventory write-down and restructuring charges. Excluding these charges, operating margin was 12.6%. The resulting decrease in operating margin was due to the one-time benefit from the Employee Retention Credit associated with the CARES Act in the second quarter of 2024.

Current wording

Operating margin decreased in the first three quarters of 2025 compared to the first three quarters of 2024. In the first three quarters of 2025, we incurred $4 million of restructuring and other charges. Excluding these charges, operating margin was 12.9%. The resulting decrease in operating margin was due to the one-time benefit from the Employee Retention Credit associated with the CARES Act in the second quarter of 2024, partially offset by strong sales growth and a favorable sales mix through the first three quarters of 2025.

Previous wording

Military Aircraft net sales increased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024.

Current wording

Military Aircraft net sales increased in the third quarter and in the first three quarters of 2025 compared to the third quarter and first three quarters of 2024.

Previous wording

In the second quarter of 2025 and in the first half of 2025, sales increased in military OEM programs $11 million and $36 million, respectively, driven by the ramp-up of activity on the FLRAA program and our new production work.

Current wording

In the third quarter of 2025 and in the first three quarters of 2025, sales increased in military OEM programs $16 million and $53 million, respectively, driven by the ramp-up of activity on the FLRAA program and our new production work.

Previous wording

Operating margin increased in the second quarter of 2025 compared to the second quarter of 2024. In the second quarter of 2025, we incurred other charges of $2 million. In the second quarter of 2024, we incurred $6 million of impairment charges and $4 million of restructuring and other charges. Excluding these charges, operating margins in the second quarters of 2025 and 2024 were 12.0% and 13.4%, respectively. The resulting decrease in operating margin was due to the one-time benefit from the Employee Retention Credit in the second quarter of 2024. In addition, stronger business operations were offset by the absence of the prior year’s gain from the sale of a mature product line.

Current wording

Operating margin decreased in the first three quarters of 2025 compared to the first three quarters of 2024. In the first three quarters of 2025, we incurred an $8 million charge associated with the termination of a product development effort in the third quarter and $3 million of other charges in previous quarters. In the first three quarters of 2024, we incurred $6 million of impairment charges and $5 million of restructuring and other charges. Excluding these charges, in the first three quarters of 2025 and first three quarters of 2024, operating margins were 11.5% and 12.0%, respectively. The resulting decrease in operating margin was due to the one-time benefit from the Employee Retention Credit in the second quarter of 2024 and the absence of the prior year’s gain from the sale of a mature product line.

Previous wording

Commercial Aircraft net sales increased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024.

Current wording

Commercial Aircraft net sales increased in the third quarter and in the first three quarters of 2025 compared to the third quarter and first three quarters of 2024.

Previous wording

In the first half of 2025, commercial aftermarket sales increased $29 million, due largely to the same factor as the second quarter. Commercial OEM sales increased $7 million.

Current wording

In the first three quarters of 2025, commercial aftermarket sales increased $58 million, and commercial OEM sales increased $8 million, both due largely to the same factors as the third quarter.

Previous wording

Operating margin decreased in the second quarter of 2025 compared to the second quarter of 2024, driven by our OEM customers’ experiencing disruptions and delays in their production, mostly offset by a favorable sales mix. Operating margin increased in the first half of 2025 compared to the first half of 2024, driven by a favorable sales mix, partially offset by an $8 million out-of-period warranty expense.

Current wording

Operating margin increased in the third quarter of 2025 compared to the third quarter of 2024, driven by the sale of a non-core product line and record-level aftermarket sales. These factors were partially offset by pressure associated with tariffs and an unfavorable sales mix within our OEM business related to production delays certain customers are experiencing. Operating margin increased in the first three quarters of 2025 compared to the first three quarters of 2024, driven by the same factors as the third quarter, partially offset by an $8 million out-of-period adjustment related to warranty expense in the first quarter.

Previous wording

Industrial net sales decreased in the second quarter and in the first half of 2025 compared to the second quarter and first half of 2024, driven by the lost sales associated with our simplification efforts.

Current wording

Industrial net sales decreased in the third quarter of 2025 compared to the third quarter of 2024, driven by the lost sales associated with our divestitures we completed at the beginning of this fiscal year.

Previous wording

Operating margin increased in the second quarter of 2025 compared to the second quarter of 2024. The second quarters of 2025 and 2024 each included $4 million of restructuring and other charges. Excluding the impacts of these charges, operating margins in the second quarter of 2025 and 2024 were 13.4% and 12.5%, respectively. The resulting increase in operating margin was primarily due to simplification initiatives, which was partially offset by the one-time benefit from the Employee Retention Credit in the second quarter of 2024.

Current wording

Operating margin decreased in the first three quarters of 2025 compared to the first three quarters of 2024. The first three quarters of 2025 included restructuring and other charges of $9 million, inventory write-downs of $6 million and an asset impairment of $3 million. The first three quarters of 2024 included restructuring charges of $9 million and inventory write-downs of $2 million. Excluding the impacts of these charges, operating margins in the first three quarters of 2025 and 2024 were 13.4% and 12.3%, respectively. The resulting increase in operating margin was primarily due to simplification initiatives, which was partially offset by the one-time benefit from the Employee Retention Credit in the second quarter of 2024.

Previous wording

Net cash from operating activities in the first half of 2025 used more cash than net cash provided by operating activities in the first half of 2024. Accounts receivable used $141 million more of cash, driven by the timing of collections. The timing of income tax payments used $36 million more of cash. These uses were partially offset by physical inventories, which used $82 million less of cash.

Current wording

Net cash from operating activities in the first three quarters of 2025 provided less cash than net cash provided by operating activities in the first three quarters of 2024. Accounts receivable used $87 million more cash, driven by the timing of collections. The timing of income tax payments used $33 million more cash. These uses were partially offset by physical inventories, which used $64 million less cash, as the growth of physical inventories slowed in Space and Defense, Military Aircraft and Commercial Aircraft. Also, customer advances provided $36 million more cash, as we secured customer advances on multiple defense programs.

Previous wording

Net cash used by investing activities in the first half of 2025 included $70 million of capital expenditures and $13 million of proceeds from the sales of businesses.

Current wording

Net cash used by investing activities in the first three quarters of 2025 included $103 million of capital expenditures for investments in organic growth, which was partially offset by $13 million of proceeds from the sales of businesses.

Previous wording

Net cash used by investing activities in the first half of 2024 included $78 million of capital expenditures and a $6 million use of cash 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 provided by financing activities in the first half of 2025 included $291 million of net borrowings on our credit facilities. Financing activities also included $100 million for shares under the repurchase program authorized by the Board of Directors and $18 million of cash dividends.

Current wording

Net cash provided by financing activities in the first three quarters of 2025 included $206 million of net borrowings on our credit facilities. Financing activities included a use of cash of $100 million for shares under the repurchase program authorized by the Board of Directors, which is a component of the purchase of outstanding shares for treasury, and $27 million of cash dividends.

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 included a use of cash of $27 million of cash dividends.

Previous wording

At March 29, 2025, our cash balances were $63 million, which includes $60 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.

Current wording

At June 28, 2025, our cash balances were $59 million, the majority of which is 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 outstanding credit facility borrowings was 5.92% and is based on SOFR plus the applicable margin, which was 1.60% at March 29, 2025.

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 outstanding U.S. revolving credit facility borrowings was 5.92% and is based on SOFR plus the applicable margin, which was 1.60% at June 28, 2025. On May 30, 2025, we amended and restated our loan agreement to include a $250 million term loan with installment payments of $3 million in 2026, $9 million in 2027 and the remaining balance on the maturity date of

Previous wording

The U.S. revolving credit facility contains various covenants. The minimum for the interest coverage ratio, defined as the ratio of EBITDA to interest expense for the most recent four quarters, is 3.0. The maximum for the leverage ratio, defined as the ratio of net debt to EBITDA for the most recent four quarters, is 4.0. EBITDA is defined in the loan agreement as (i) the sum of net income, interest expense, income taxes, depreciation expense, amortization expense, other non-cash items reducing consolidated net income and non-cash equity-based compensation expenses minus (ii) other non-cash items increasing consolidated net income.

Current wording

The loan agreement for the U.S. revolving credit facility and term loan contains various covenants. The minimum for the interest coverage ratio, defined as the ratio of EBITDA to interest expense for the most recent four quarters, is 3.0. The maximum for the leverage ratio, defined as the ratio of net debt to EBITDA for the most recent four quarters, is 4.0. EBITDA is defined in the loan agreement as (i) the sum of net income, interest expense, income taxes, depreciation expense, amortization expense, other non-cash items reducing consolidated net income and non-cash equity-based compensation expenses minus (ii) other non-cash items increasing consolidated net income.

Previous wording

At March 29, 2025, we had $455 million of unused capacity, including $432 million from the U.S. revolving credit facility after considering standby letters of credit and other limitations.

Current wording

At June 28, 2025, we had $790 million of unused capacity, including $766 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 5.37% as of March 29, 2025.

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 5.38% as of June 28, 2025.

Previous wording

A common factor throughout our markets is the continuing demand for technologically advanced products.

Current wording

We operate within the aerospace and defense market and the industrial market. A common factor throughout our markets is the continuing demand for technologically advanced products.

Previous wording

Our aerospace and defense businesses represented 73% of our 2024 sales. Our defense market, which represented 51% of our 2024 sales, is directly affected by defense funding levels and product demand, which have recently increased. Our commercial aircraft market, which represented 22% of our 2024 sales, is aligning with our customers' current plans.

Current wording

Our aerospace and defense businesses represented 73% of our 2024 sales. Our defense market, which represented 51% of our 2024 sales, is directly affected by defense funding levels and product demand, which have recently increased. Our commercial aircraft market, which represented 22% of our 2024 sales, is aligning with our customers' current plans. Within our various industrial markets, which collectively represented 27% of our 2024 sales, our customers are affected by a broad range of factors.

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. 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.

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 MV-75 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 depends on a number of factors, including both the 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. Boeing and Airbus are producing widebody aircraft at rates to support the current air traffic volumes, as well as working through their current supply-chain challenges. Any adjustments to their production rates affects the timing of the demand for our flight control systems.

Current wording

The commercial OEM aircraft market depends on a number of factors, including both the 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. Boeing and Airbus are producing widebody aircraft at rates to support their projected demand while working through their current supply-chain constraints. Any adjustments to their production rates affect the timing of the demand for our flight control systems.

Previous wording

The space market is comprised of three customer markets: civil, U.S. Department of Defense and commercial space. The civil market, namely NASA, is driven by investment for commercial and exploration activities. The U.S. Department of Defense market is driven by government-authorized levels of defense spending, including funding for defense-related satellite and space vehicle technologies. Levels of U.S. defense spending could increase as there is growing emphasis on space as the next frontier of potential future conflicts. The commercial space market is driven by demand for small satellites, which increases the demand for increased launch vehicle capacity. Our launch vehicle and satellite components and systems will continue to benefit from increased investments in each of these markets.

Current wording

The space market is comprised of three customer markets: civil, U.S. Department of Defense and commercial space. The civil market, namely NASA, is driven by investment for exploration activities. The U.S. Department of Defense market is driven by government-authorized levels of defense spending, including funding for defense-related satellite and space vehicle technologies. Levels of U.S. defense spending could increase as there is growing emphasis on space as the next frontier of potential future conflicts. The commercial space market is driven by demand for small satellites, which increases the demand for increased launch vehicle capacity. Our launch vehicle and satellite components and systems will continue to benefit from increased investments in each of these markets.

Previous wording

We are affected by the movement of foreign currencies compared to the U.S. dollar. About one-sixth of our 2024 sales were denominated in foreign currencies. During the first six months of 2025, average foreign currency rates generally weakened against the U.S. dollar compared to 2024. The translation of the results of our foreign subsidiaries into U.S. dollars decreased sales by $5 million compared to the same period one year ago.

Current wording

We are affected by the movement of foreign currencies compared to the U.S. dollar. About one-sixth of our 2024 sales were denominated in foreign currencies. During the first nine months of 2025, average foreign currency rates generally were the same against the U.S. dollar compared to 2024. The translation of the results of our foreign subsidiaries into U.S. dollars had no material impact on sales compared to the same period one year ago.