Moog Inc. (MOG) 2025 Annual Report Summary
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended September 27, 2025. Moog Inc. is a global designer and manufacturer of high-performance precision motion and fluid controls for aerospace, defense, and industrial markets. The company operates through four segments: Space and Defense, Military Aircraft, Commercial Aircraft, and Industrial. In 2025, Moog acquired COTSWORKS, Inc. and divested non-core assets in its Industrial segment.
Key Financial Metrics
| Metric | 2025 | 2024 (Revised) | 2023 (Revised) |
|---|---|---|---|
| Net Sales | $3,861 million | $3,609 million | $3,316 million |
| Gross Margin | 27.4% | 28.1% | 27.1% |
| Net Earnings | $235 million | $209 million | $175 million |
| Diluted EPS | $7.33 | $6.45 | $5.47 |
| Operating Cash Flow | $273 million | $198 million | $140 million |
| Total Backlog | $6.01 billion | $5.06 billion | $5.15 billion |
| 12-Month Backlog | $3.00 billion | $2.50 billion | $2.42 billion |
| Total Debt | $946 million | $877 million | N/A |
| Cash & Equivalents | $62 million | $62 million | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 7% to $3.86 billion, driven by demand in Commercial Aircraft and defense growth in Space and Defense and Military Aircraft. This was partially offset by a 4% decline in Industrial sales due to divestitures.
- Profitability: Net earnings rose 13% to $235 million. Gross margin decreased to 27.4% from 28.1%, primarily due to the absence of a $14 million Employee Retention Credit benefit recorded in 2024.
- Backlog Expansion: Total backlog grew 19% to $6.01 billion, with the 12-month backlog increasing 20% to $3.0 billion, reflecting strong order intake in military and commercial programs.
- Financial Restatements: The company revised prior period financial statements (2023 and 2024) to correct misstatements related to revenue recognition on long-term aftermarket service contracts in the Commercial Aircraft segment and warranty cost understatements. These corrections were not material to prior periods individually but would have been material to 2025 if not corrected retrospectively.
Guidance, Outlook, and Risks
- Internal Control Material Weakness: Management and the independent auditor (Ernst & Young LLP) identified a material weakness in internal controls over financial reporting. This weakness relates to the design and operation of controls over long-term aftermarket service revenue contracts in the Commercial Aircraft segment, specifically regarding the completeness and accuracy of key inputs for revenue and contract loss recognition. The auditor issued an adverse opinion on internal controls.
- Remediation: Moog is implementing a remediation plan including targeted controls, enhanced IT data controls, and additional training for personnel.
- Customer Concentration: Sales to The Boeing Company represented 10% of 2025 sales. U.S. Government contracts accounted for 38% of total sales.
- Market Risks: The company faces risks related to government funding levels, supply chain constraints, raw material inflation, and potential contract terminations. Fixed-price contracts (90% of over-time sales) expose the company to cost overrun risks.
- Capital Allocation: The company continues to prioritize organic growth, opportunistic acquisitions, and returning capital to shareholders via dividends and share repurchases (1.66 million shares remaining under authorization).
Investor Verification Checklist
- Internal Control Remediation: Verify the progress of the remediation plan for the material weakness in Commercial Aircraft revenue recognition controls.
- Restatement Impact: Review Note 25 to understand the full scope of the financial statement revisions for 2023 and 2024 and ensure all prior period data is adjusted correctly.
- Boeing Exposure: Monitor Boeing's production schedules and supply chain status, as they represent a significant portion of Commercial Aircraft revenue.
- Industrial Segment Performance: Assess the impact of recent divestitures on the Industrial segment's future revenue trajectory and margin profile.
- Debt Covenants: Confirm continued compliance with debt covenants, specifically the interest coverage ratio (min 3.0x) and leverage ratio (max 4.0x), given the increased debt levels from the new term loan.