MOOG INC.

Moog operates within the aerospace and defense and industrial markets, designing, manufacturing, and integrating high-performance precision motion and fluid controls and control systems. The company faces considerable competition across tier one and tier two suppliers as well as vertically integrated primes, with competition based on product quality, reliability, price, design and engineering capabilities, product development, conformity to customer specifications, timeliness of delivery, effectiveness of the distribution organization, and quality of support after the sale. Competitors to the Military and Commercial Aircraft segments specialize in precision flight control and control systems manufacturing, while competitors to the space market specialize in thrust vector controls and spacecraft engines, mechanisms, avionics, and structure systems and components. Competitors in the defense market produce turreted weapons, missile steering actuation, and power and data transfer systems and components, and competitors to the Industrial segment include other industrial precision controls and medical device manufacturers.

Moog believes it competes effectively on all principal points of competition. The company maintains a patent portfolio of issued or pending patents worldwide covering electrohydraulic, electromechanical, electronics, hydraulics, components, and methods of operation and manufacture related to motion control and actuation systems, as well as patents related to wind turbines, robotics, vibration control, and medical devices. The patent portfolio related to certain medical devices is significant to the company's position in that market as several of these products work exclusively together, providing future revenue opportunities. The company's twelve-month backlog as of September 27, 2025 was $3.0 billion ¹, an increase of 20% compared to September 28, 2024 ².

Moog generates revenue through the design, manufacture, and systems integration of high-performance precision motion and fluid controls and control systems for aerospace and defense and industrial markets. Revenue is recognized either over time using the cost-to-cost method of accounting, which represented 64% of total revenue for the year ended September 27, 2025 ³, or at the point in time control transfers to the customer, which represented 36% of revenue ⁴. The over-time method is predominantly used in Space and Defense, Military Aircraft, and Commercial Aircraft, while the point-in-time method is used most frequently in Industrial. Principal customers are Original Equipment Manufacturers (OEMs) and end users for whom the company provides aftermarket support, with aerospace and defense OEM customers collectively representing 61% of 2025 sales ⁵. Aftermarket sales accounted for 14% of total sales in 2025 ⁶.

The company operates through four segments: Space and Defense, Military Aircraft, Commercial Aircraft, and Industrial. The Space and Defense segment reported net sales of $1,113 million ⁷ and operating profit of $131 million ⁸ with an operating margin of 11.8% ⁹ in 2025. This segment serves the defense market with primary and secondary flight controls and components for military aircraft, tactical and strategic missile steering controls, and defense ground vehicle systems including turreted weapon systems, and the space market with satellite avionics, propulsion and positioning controls and components, launcher thrust vector controls and components, and integrated space vehicles. The Military Aircraft segment reported net sales of $888 million ¹⁰ and operating profit of $99 million ¹¹ with an operating margin of 11.1% ¹² in 2025. The Commercial Aircraft segment reported net sales of $904 million ¹³ and operating profit of $112 million ¹⁴ with an operating margin of 12.4% ¹⁵ in 2025, serving the commercial aircraft market with primary and secondary flight controls and components. The Industrial segment reported net sales of $956 million ¹⁶ and operating profit of $108 million ¹⁷ with an operating margin of 11.3% ¹⁸ in 2025, serving the industrial market with components and systems for heavy industrial machinery, flight simulation motion control systems, energy exploration and generation products, material and automotive structural and fatigue testing systems, and liquid cooling pumps used in data centers, as well as the medical market with pumps and sets for enteral clinical nutrition and infusion therapy, slip rings used in CT scan medical equipment, and various components used in ultrasonic sensors and surgical handpieces.

On July 1, 2025, Moog acquired COTSWORKS, Inc. for a purchase price, net of cash acquired, of $61,473 ¹⁹, which was paid in cash and the issuance of Moog Class A shares valued at $20,294 ²⁰. COTSWORKS designs and manufactures rugged optical components and subsystems for harsh environment applications, primarily serving the commercial, military, aerospace, and industrial markets, and is included in the Space and Defense segment. On October 20, 2023, the company acquired Data Collection Limited for a purchase price, net of acquired cash, of $5,911 ²¹. In the fourth quarter of 2024, the company recorded losses in Asset impairment and fair value adjustment of $14,897 ²² related to selling a motors business in the Czech Republic and a hydraulic systems business in Luxembourg that were included in the Industrial segment, with the sales completed on September 30, 2024. During 2025, the company repurchased $142,497 ²³ of Class A and B shares under the share repurchase program authorized by the Board of Directors, which permits the purchase of up to 3 million common shares ²⁴, with approximately 1.7 million common shares remaining under this authorization ²⁵. The company paid dividends of $36,430 ²⁶ in 2025, or $1.15 per share ²⁷.

Net sales for 2025 were $3,861 million ²⁸, compared to $3,609 million ²⁹ in 2024 and $3,316 million ³⁰ in 2023, representing a 7% increase year-over-year. Net earnings were $235,028 ³¹ in 2025, compared to $208,786 ³² in 2024 and $175,156 ³³ in 2023, a 13% increase. Diluted earnings per share were $7.33 ³⁴ in 2025, compared to $6.45 ³⁵ in 2024 and $5.47 ³⁶ in 2023, a 14% increase. Gross margin was 27.4% ³⁷ in 2025, compared to 28.1% ³⁸ in 2024 and 27.1% ³⁹ in 2023. Net cash provided by operating activities was $273 million ⁴⁰ in 2025, compared to $198 million ⁴¹ in 2024 and $140 million ⁴² in 2023.

Moog's long-term strategies to achieve financial objectives focus on pricing and simplification initiatives. The pricing strategy seeks recognition for the value delivered to customers across markets. Simplification initiatives, guided by 80/20 principles, include shaping the product and business portfolio to invest in growth areas and divest non-core assets, rationalizing the global footprint to meet current and future business volumes, focusing factories to meet the specific needs of each market, and investing in automation and technologies to improve operational efficiency. The company aims to improve shareholder value through strategic revenue growth, both organic and acquired, manufacturing and operating efficiencies, and utilizing low-cost manufacturing facilities without compromising quality.

Within the aerospace and defense market, Moog has a growing development program order book for future generation aircraft and turret programs, and strives to embed its technologies within high-performance military programs of the future, including the Textron Bell MV-75. The company maintains positions on numerous high priority programs, including the Lockheed Martin F-35 Lightning II. The large installed base of products leads to attractive aftermarket sales and service opportunities. In the space market, launch vehicle and satellite components and systems will continue to benefit from increased investments in civil, U.S. defense, and commercial space markets. In the industrial market, the company's medical devices and medical component offerings benefit from advances in medical technology and treatments that drive demand. The company also sees growth in liquid cooling pumps used in data centers, as the twelve-month backlog in Industrial increased due to increased orders in medical and liquid cooling pumps used in data centers.

Gross margin decreased in 2025 compared to 2024, driven by a benefit of $14 million from the Employee Retention Credit associated with the CARES Act in 2024 ⁴³. Gross margin increased in 2024 compared to 2023, driven by improved performance on space vehicle development programs, a $14 million benefit from the Employee Retention Credit associated with the CARES Act ⁴⁴, and the results of pricing and simplification initiatives across all segments. Selling, general and administrative expenses as a percentage of sales increased in 2025 compared to 2024, driven by expenses associated with the settlement of a legal dispute of $12 million ⁴⁵ and increased business capture activities. The company is modernizing operations through productivity-enhancing technologies and targeted talent development to strengthen operational performance.

Moog's principal manufacturing facilities are located in the United States, Philippines, United Kingdom, Germany, Italy, Costa Rica, China, Netherlands, Japan, Canada, India, and Lithuania. The company has embarked on multi-year business information system transformation and standardization projects, which are complex and company-wide, involving new technologies. The company has taken actions to strengthen its supply chain, including making supplier changes and internalizing some processes. As of September 27, 2025, the company occupied 5,702,000 square feet of space ⁴⁶, with 4,201,000 square feet owned ⁴⁷ and 1,501,000 square feet leased ⁴⁸.

Capital expenditures were $144,731 ⁴⁹ in 2025, compared to $151,995 ⁵⁰ in 2024 and $177,309 ⁵¹ in 2023. Research and development expense was $94 million ⁵² in 2025, representing approximately 2.4% of sales ⁵³, compared to $113 million ⁵⁴ in 2024 and $107 million ⁵⁵ in 2023. The Board of Directors has authorized a share repurchase program that permits the purchase of up to 3 million common shares ⁵⁶ of Class A or Class B common stock, with approximately 1.7 million common shares remaining under this authorization ⁵⁷. The company paid dividends of $36,430 ⁵⁸ in 2025, or $1.15 per share ⁵⁹, and expects to continue to pay quarterly cash dividends for the foreseeable future.

The markets Moog serves are sensitive to fluctuations in general business cycles, global pandemics, domestic and foreign governmental tariffs, trade and monetary policies, and economic conditions and events. Boeing and Airbus are producing widebody aircraft at rates to support post-pandemic air traffic volumes while working through current supply-chain challenges, and any adjustments to their ramp schedules affect the demand for flight control systems. U.S. defense and other foreign governments' defense funding levels, driven in part by current global unrest, can fluctuate and affect defense and space programs. Industrial product demand depends on several factors including levels of capital investment, the pace of product innovations and technology upgrades, changing economic conditions, and the current and forecasted price of oil and natural gas. Inflated prices across various raw materials and third-party provided components and sub-assemblies have adversely impacted, and could continue to adversely impact, financial condition, operating profit, and cash flow. The tariffs recently implemented in the U.S. on steel, aluminum, and other raw materials, the potential of further tariffs, and potential retaliatory actions by other countries could increase costs and reduce availability of raw materials, adversely impacting sales, operating profit, and cash flow.

Moog operates in highly competitive markets where some competitors, especially in industrial and medical markets, are larger and have greater financial, marketing, production, and research and development resources, which could lead to pricing pressures or loss of market share. The company depends heavily on government contracts, with sales under U.S. Government contracts representing 38% of total sales in 2025 ⁶⁰, and these contracts may not be fully funded or may be terminated, which could reduce sales and increase costs. The loss of The Boeing Company as a customer, which totaled 10% of 2025 sales ⁶¹, or a significant reduction in sales to Boeing could adversely impact operating results. Inflated prices across various raw materials and third-party provided components have adversely impacted, and could continue to adversely impact, financial condition, operating profit, and cash flow. A material weakness was identified in the design and operation of controls over a distinct group of long-term aftermarket service revenue contracts in the Commercial Aircraft segment, leading to a conclusion that internal controls over financial reporting and disclosure controls and procedures were not effective as of September 27, 2025, and if remedial measures are insufficient, the consolidated financial statements may contain material misstatements.

Management's message emphasizes that Moog's culture, rooted in trust, integrity, and collaboration, is the foundation of the company's commitment to grow as a sustainable corporation. The company's long-term strategies to achieve financial objectives focus on pricing and simplification initiatives, with the aim of improving shareholder value through strategic revenue growth, both organic and acquired, manufacturing and operating efficiencies, and utilizing low-cost manufacturing facilities without compromising quality. In the near term, capital deployment prioritizes organic growth while opportunistically pursuing acquisitions that complement the business. Management believes the company can create long-term value for shareholders by continuing to invest in the business through both capital expenditures and investments in new market opportunities, while also continuing to explore opportunities to make strategic acquisitions and return capital to shareholders.