Projections Conference Call
10 / 30 / 2001Highlights
Recent Conference Calls
The biggest change in our forecast has to do with the Joint Strike Fighter. When we put our original forecast together, we believed that the decision on the Joint Strike Fighter would be delayed and we had only counted on $2 million in sales in fiscal ’02. Based on what happened last week, it now appears that the program is going to go forward as planned, and as scheduled. That being the case, we think there’s a good possibility that we’ll see revenues this year of over $13 million. We’re the contract lead of a team that includes Parker-Hannifin and Hamilton Sundstrand to design and develop electro-hydrostatic flight controls. It’s a big task, it’s cost plus, and we expect to get started shortly after the first of the calendar year. So, that’s an $11 million change to our forecast. Secondly, we continue to see additional opportunities in repair and overhaul business, pressured by the new emphasis on readiness on the part of the Military. We’re expecting our aftermarket business in military aircraft to go to $95 million in ’02, a $9 million increase over our last forecast. Beyond that, we’ll see a little more activity on a number of different programs, including the F-16 and the F-2 Fighter in Japan.
Moving to the Space part of the business, we are now projecting revenues of $111 million. We were projecting $108 million. There are a number of small puts and takes, but the change can really be described as a result of two major items. We acquired the Space Mechanisms product line of Tecstar which we expect will provide about $6 million worth of revenue mostly in the satellites product line. So, that’s a pick-up of $6 million. But our revenues in the tactical missile business will be about $3 million less than we anticipated because of production breaks in both Hellfire and TOW that are larger than previously forecast.
Moving to the Industrial business, we were anticipating that our Industrial business would grow to $279 million. We’ve moderated that projection just a little bit. We’re now looking for $272 million and the downward change is all in our estimate of sales to the plastics industry, controls for machines used in making plastics. There seems to be a substantial slowdown in that business, so we have reduced our forecast by about $12 million. On the other hand, we include in our Industrial numbers sales on controls for what we used to call ground vehicles. These are industrial electric control systems that are used to aim tank guns and howitzers. We’re now changing that terminology to call them combat controls. We’ve had some additional success in that business and we’re anticipating selling almost $25 million worth of combat controls, as opposed to our earlier estimate of $19 million.
So, in summary, after some rather substantial swings up and down, reduced sales of original equipment to Boeing Commercial Airplane and the schedule delays in the Hawker Horizon, almost offset by the start-up of the Joint Strike Fighter development program, reductions in repair and overhaul revenues in the commercial airlines, offset by increased activity in military readiness, some production breaks in tactical missiles, more than offset by a small acquisition in the Space business, and a reduction in sales in industrial controls for plastics machinery, partially offset by increased revenue on combat controls. Lot of puts and takes resulting in a new sales forecast of $743 million.
Turning to earnings, we had been projecting earnings of $31.4 million, or $2.37 per share. Having gone through our numbers very carefully, we now think that our sales increase will be 6% instead of 8%, and we’ll achieve earnings of $30.7 million, or $2.32 per share, a 10% increase over the estimate we have out for fiscal ’01. We have a more favorable mix or business, we’ll have the benefit of lower interest rates, and we’ll see some slight improvement in our tax rate.
All in all, we regard it as a remarkable outcome that, after the tragic events of 11 September, and the impact that will be felt in our commercial airplane and commercial airline business, as a result of increased emphasis and acceleration of activities in our military business, our Company is still able to move forward with respectable sales growth and a double-digit increase in earnings per share. Once again, the balance and diversity of our revenue base support our consistent pattern of revenue and earnings growth.
Moving to the Space part of the business, we are now projecting revenues of $111 million. We were projecting $108 million. There are a number of small puts and takes, but the change can really be described as a result of two major items. We acquired the Space Mechanisms product line of Tecstar which we expect will provide about $6 million worth of revenue mostly in the satellites product line. So, that’s a pick-up of $6 million. But our revenues in the tactical missile business will be about $3 million less than we anticipated because of production breaks in both Hellfire and TOW that are larger than previously forecast.
Moving to the Industrial business, we were anticipating that our Industrial business would grow to $279 million. We’ve moderated that projection just a little bit. We’re now looking for $272 million and the downward change is all in our estimate of sales to the plastics industry, controls for machines used in making plastics. There seems to be a substantial slowdown in that business, so we have reduced our forecast by about $12 million. On the other hand, we include in our Industrial numbers sales on controls for what we used to call ground vehicles. These are industrial electric control systems that are used to aim tank guns and howitzers. We’re now changing that terminology to call them combat controls. We’ve had some additional success in that business and we’re anticipating selling almost $25 million worth of combat controls, as opposed to our earlier estimate of $19 million.
So, in summary, after some rather substantial swings up and down, reduced sales of original equipment to Boeing Commercial Airplane and the schedule delays in the Hawker Horizon, almost offset by the start-up of the Joint Strike Fighter development program, reductions in repair and overhaul revenues in the commercial airlines, offset by increased activity in military readiness, some production breaks in tactical missiles, more than offset by a small acquisition in the Space business, and a reduction in sales in industrial controls for plastics machinery, partially offset by increased revenue on combat controls. Lot of puts and takes resulting in a new sales forecast of $743 million.
Turning to earnings, we had been projecting earnings of $31.4 million, or $2.37 per share. Having gone through our numbers very carefully, we now think that our sales increase will be 6% instead of 8%, and we’ll achieve earnings of $30.7 million, or $2.32 per share, a 10% increase over the estimate we have out for fiscal ’01. We have a more favorable mix or business, we’ll have the benefit of lower interest rates, and we’ll see some slight improvement in our tax rate.
All in all, we regard it as a remarkable outcome that, after the tragic events of 11 September, and the impact that will be felt in our commercial airplane and commercial airline business, as a result of increased emphasis and acceleration of activities in our military business, our Company is still able to move forward with respectable sales growth and a double-digit increase in earnings per share. Once again, the balance and diversity of our revenue base support our consistent pattern of revenue and earnings growth.
© Moog Inc.
