Moog sees higher cash balance after notes refi, extension of revolver

By Devika Patel

Knoxville, Tenn., Jan. 23 – Moog Inc. revamped the terms of its debt last quarter, refinancing some notes and extending the maturity of its revolver, which left the company with more cash on its balance sheet.

“During October, we extended the term of our $1.1 billion U.S. revolving credit facility through October 2024 and obtained more favorable terms,” vice president and chief financial officer Jennifer Walter said on the company’s fourth quarter and year ended Dec. 28, 2019 earnings conference call on Friday.

“This facility also has an accordion feature to facilitate up to $400 million of expansion should we be looking for that capacity in the future,” she said.

The company also completed a debt restructuring.

“Then in December, we issued $500 million of 4.25% senior notes with an eight-year maturity,” Walter said.

In conjunction with the issuance, we called our outstanding $300 million, up 5.25% senior notes and incurred a call premium of $4 million.

“We completed this redemption in January.

“We're pleased to have the solid debt structure fully in place,” she said.

The debt refinancing left the company with more cash on its balance sheet and only $50 million outstanding under its revolver.

“As of quarter end, we had both types of senior notes outstanding and just $50 million outstanding on the U.S. revolving credit facility,” Walter said.

“We also had $127 million of cash at quarter end compared to $93 million a quarter ago.

“The increase resulted from the timing associated with our debt refinancing activities,” she said.

Free cash flow in the first quarter was $15 million.

On Dec. 5, Moog said it planned to redeem its $300 million of outstanding 5¼% senior notes due 2022 and repay a portion of the outstanding borrowings under its senior bank credit facility using proceeds from an offering of new notes.

On Dec. 6, Moog priced an upsized $500 million issue of eight-year senior notes (Ba3/BB) at par to yield 4¼%.

The issue size increased from $400 million.

The yield printed at the tight end of the 4¼% to 4½% yield talk, which tightened from early guidance of 4½% to 4¾%.

At the time the upsized deal launched at 4¼%, it was playing to $3 billion of demand.

J.P. Morgan Securities LLC, BofA Securities Inc., HSBC Securities (USA) Inc., Citizens Capital Markets Inc. and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds were earmarked to redeem the company’s $300 million of outstanding 5¼% senior notes due 2022 and pay down its senior credit facility.

On Dec. 13, the company said it planned to use borrowings under its revolver to redeem its $300 million of its 5¼% senior notes due 2022.

The notes were slated to be redeemed on Jan. 13 at 101.313 plus accrued interest.

The East Aurora, N.Y.-based company is a manufacturer of hydraulic motion components.

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