Moog management says leverage will drop below targeted range in 2019

By Devika Patel

Knoxville, Tenn., April 26 – Moog Inc. expects its leverage ratio will fall below the company’s targeted range of 2x to 2.5x net debt to EBITDA by the end of 2019. The company’s current leverage stands at 2.1x.

“With respect to leverage, we’ve previously shared that our target leverage is between 2x and 2.5x, that’s net debt divided by EBITDA,” vice president and chief financial officer Donald R. Fishback said on the company’s second quarter ended March 30 earnings conference call on Friday.

“We’re within our target range at 2.1x at the end of Q2 and, with respectable free cash flow forecasted for the balance of 2019, we expect to be below our target range by the end of the year, everything else unchanged,” he said.

The company’s free cash flow last year was used for acquisitions and share buybacks.

“The free cash flow that we’ve generated over the past 12 months has been consumed by acquisitions and share buybacks,” Fishback said.

Free cash flow for the second quarter was $9 million.

Interest expense in the second quarter was $10 million, compared to last year’s $9 million, “up due to higher borrowing rates,” Fishback said.

At quarter-end, the company had $520 million of availability under its $1.1 billion revolving credit facility, which terms out in 2021.

The company’s $300 million 5¼% debt matures in 2022.

Moog is an East Aurora, N.Y.-based designer, manufacturer and integrator of precision control components and systems.

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