MOOG INC. 10-Q Summary: Fiscal Q2 2026
Business Context and Reporting Period
This filing covers the quarterly period ended March 28, 2026 (Fiscal Q2 2026). Moog Inc. is a global designer and manufacturer of high-performance precision motion and fluid control systems, operating primarily in aerospace and defense (76% of sales), with additional exposure to industrial and medical markets. The company operates through four segments: Space and Defense, Military Aircraft, Commercial Aircraft, and Industrial.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | 6 Months 2026 | 6 Months 2025 |
|---|---|---|---|---|
| Net Sales | $1,051,947 | $934,022 | $2,152,293 | $1,841,904 |
| Gross Profit | $287,555 | $256,618 | $581,795 | $501,696 |
| Gross Margin | 27.3% | 27.5% | 27.0% | 27.2% |
| Operating Profit | $137,937 | $109,051 | $273,383 | $212,655 |
| Net Earnings | $81,839 | $54,610 | $160,690 | $112,136 |
| Diluted EPS | $2.55 | $1.71 | $5.01 | $3.49 |
| Cash from Operations (6mo) | $84,826 (vs. $(92,894) prior year) | |||
| Total Debt (Long-term + Current) | $1,239,825 | |||
| Cash & Equivalents | $307,553 |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 13% in Q2 and 17% for the six-month period, driven by growth across all segments. Space and Defense sales rose 16% (Q2) and 23% (6mo), while Commercial Aircraft sales increased 15% (Q2) and 19% (6mo).
- Profitability: Net earnings surged 50% in Q2 and 43% for the six-month period. Operating profit margins improved in Space and Defense (13.8% vs 12.1%) and Military Aircraft (13.7% vs 11.1%).
- Margin Pressure: Gross margin decreased slightly (27.3% vs 27.5% in Q2) due to higher tariffs, particularly impacting the Commercial Aircraft segment, partially offset by profitable sales growth.
- Debt Restructuring: The company issued $500 million in 5.50% senior notes due 2034 and subsequently redeemed $500 million of 4.25% senior notes due 2027. The revolving credit facility was amended to extend maturity to 2031.
- Cash Flow: Operating cash flow turned positive ($85 million) for the six months ended March 28, 2026, compared to a negative $93 million in the prior year, driven by higher earnings and increased customer advances.
Outlook, Risks, and Unusual Items
- Backlog: Twelve-month backlog increased 33% to $3.31 billion, reflecting strong orders in Military Aircraft (MV-75 program), Commercial Aircraft (narrowbody/widebody), and Industrial (data center cooling pumps).
- Internal Control Weakness: The company disclosed a continuing material weakness in internal controls over financial reporting related to revenue recognition for distinct long-term aftermarket service contracts in the Commercial Aircraft segment. Management is implementing remediation steps, but controls are not yet deemed effective.
- Risks: Key risks include dependence on government contracts, geopolitical tensions affecting defense spending, supply chain constraints, and the impact of tariffs on margins.
- Dividends: A quarterly dividend of $0.30 per share was declared on April 23, 2026.
Investor Verification Checklist
- Remediation Progress: Verify the timeline and effectiveness of controls implemented to address the material weakness in Commercial Aircraft revenue recognition.
- Tariff Impact: Monitor the trajectory of gross margins in the Commercial Aircraft segment to assess the long-term impact of tariffs versus pricing power.
- Debt Service: Confirm the interest rate environment impact on the new 5.50% senior notes and the company's ability to service the $1.25 billion total debt load.
- Backlog Conversion: Track the conversion rate of the $3.31 billion backlog into revenue, specifically for the MV-75 and data center cooling programs.
- Inventory Levels: Review inventory trends ($931.8 million) to ensure no significant write-downs are required given the mix of long-term contracts.