Woodward, Inc. (NASDAQ: WWD) today reported financial results for
its third quarter of fiscal year 2023. (All amounts are presented
on an as reported (U.S. GAAP) basis unless otherwise indicated. All
per share amounts are presented on a fully diluted basis. All
comparisons are made to the same period of the prior year unless
otherwise stated.)
Highlights
- Net sales were $801 million,
compared to $614 million, an increase of 30 percent.
- Net earnings were $85 million, or
$1.37 per share, compared to net earnings of $39 million, or $0.64
per share.
- Net cash provided by operating
activities was $156 million for the first nine months of fiscal
2023, compared to $86 million. Free cash flow1 for the first nine
months of fiscal 2023 was $98 million, compared to $49 million.
Adjusted free cash flow1 was $103 million for the first nine months
of fiscal 2023, compared to $52 million.
“We delivered significant sales growth and margin expansion in
the third quarter driven by continued strong end market demand and
our improved ability to deliver to our customers. As expected, our
strategic investments are resulting in operational improvements and
efficiency gains,” said Chip Blankenship, Chairman and Chief
Executive Officer. "Both our Aerospace and Industrial businesses
are improving, and our output is increasing. Industrial further
benefited from increased on-highway natural gas truck production in
China. While the environment remains dynamic, we anticipate a
strong finish to the year and are raising our full-year
outlook.”
Third Quarter Company
Results
Net sales for the third quarter of fiscal 2023 were $801
million, compared to $614 million, an increase of 30 percent.
Net earnings were $85 million, or $1.37 per share, for the third
quarter of 2023, compared to $39 million, or $0.64 per share.
EBIT1 was $117 million for the third quarter of 2023, compared
to $58 million.
The effective tax rate was 20.0 percent for the third quarter of
2023, compared to 21.6 percent.
Segment Results
Aerospace
Aerospace segment net sales for the third quarter of fiscal 2023
were $481 million, compared to $402 million, an increase of 19.6
percent.
Commercial OEM and aftermarket sales increased significantly
compared to the prior year, driven by higher OEM production rates,
continued recovery in passenger traffic, increasing aircraft
utilization, and price realization. Defense sales were down
compared to the prior year due to continued weakness in guided
weapons, partially offset by higher defense aftermarket sales.
Segment earnings for the third quarter of 2023 were $83 million,
compared to $57 million. Segment earnings as a percent of segment
net sales were 17.3 percent for the third quarter of 2023, compared
to 14.1 percent. The increase in segment earnings was primarily a
result of price realization and higher commercial OEM and
aftermarket volume, partially offset by higher annual incentive
compensation.
Industrial
Industrial segment net sales for the third quarter of fiscal
2023 were $320 million, compared to $213 million, an increase of
50.6 percent. The increase in Industrial segment net sales for the
third quarter of 2023 was driven by higher volumes across all
markets and price realization.
Industrial segment earnings for the third quarter of 2023 were
$58 million, or 18.2 percent of segment net sales, compared to $21
million, or 9.9 percent of segment net sales. Industrial segment
earnings increased due to higher volume, price realization, and
favorable product mix, partially offset by higher annual incentive
compensation.
Industrial sales and earnings benefited from significantly
increased on-highway natural gas truck production in China,
although future demand beyond the fourth quarter remains
uncertain.
Nonsegment
Nonsegment expenses were $24 million for the third quarter of
fiscal 2023, compared to $19 million.
Year-to-Date Results
Net sales for the first nine months of 2023 were $2.14 billion,
compared to $1.74 billion. Net earnings for the first nine months
of 2023 were $150 million, or $2.44 per share, compared to $118
million, or $1.84 per share. Adjusted net earnings1 for the first
nine months of 2023 were $176 million, or $2.87 per share, compared
to $122 million, or $1.91 per share.
EBIT for the first nine months of 2023 was $213 million,
compared to $166 million. Adjusted EBIT1 for the first nine months
of 2023 was $247 million, compared to $172 million.
The effective tax rate was 15.8 percent for the first nine
months of 2023, compared to 17.2 percent. The adjusted effective
tax rate1 for the first nine months of 2023 was 17.3 percent,
compared to 17.6 percent.
Aerospace segment net sales for the first nine months of 2023
were $1.31 billion, compared to $1.11 billion. Aerospace segment
earnings for the first nine months of 2023 were $212 million, or
16.1 percent of segment net sales, compared to $167 million, or
15.1 percent of segment net sales.
Industrial segment net sales for the first nine months of 2023
were $824 million, compared to $632 million. Industrial segment
earnings for the first nine months of 2023 were $107 million, or
13.0 percent of segment net sales, compared to $62 million, or 9.8
percent of segment net sales.
Nonsegment expenses were $106 million for the first nine months
of 2023, compared to $64 million. Adjusted nonsegment expenses1
were $72 million for the first nine months of 2023, compared to $58
million.
Cash Flow and Financial
Position
Net cash provided by operating activities was $156 million,
compared to $86 million. Payments for property, plant, and
equipment for the first nine months of 2023 were $57 million,
compared to $37 million.
Free cash flow was $98 million for the first nine months of
fiscal 2023, compared to $49 million. Adjusted free cash flow was
$103 million for the first nine months of fiscal 2023, compared to
$52 million. The increase in free cash flow and
adjusted free cash flow was primarily due
to increased earnings, partially offset by higher capital
expenditures.
During the first nine months of fiscal 2023, $64 million was
returned to stockholders in the form of $38 million of dividends
and $26 million of repurchased shares under a board authorized
share repurchase program.
Total debt was $751 million at June 30, 2023, compared to $766
million at June 30, 2022. Debt-to-EBITDA1 leverage at June 30,
2023, was 1.7 times EBITDA, compared to 2.0 times EBITDA.
Fiscal Year 2023 Outlook
We continue to expect year-over-year improvements in the fourth
quarter of fiscal 2023. Due to continued strong end market demand
and our improved ability to deliver for our customers, we are
raising certain aspects of our full-year guidance.
Woodward, Inc. and Subsidiaries |
Revised Guidance |
(in millions, except per share amount, basis points and
percentages) |
|
|
|
|
|
Prior |
|
Revised |
|
FY23 guidance issued on, |
|
FY23 guidance issued on, |
|
May 1st, 2023 |
|
July 31st, 2023 |
Total
Company |
|
|
|
Sales |
$2,700 - $2,800 |
|
$2,850 - $2,900 |
Adjusted Effective Tax
Rate |
~16% |
|
~18% |
Adjusted Free Cash Flow |
$200 - $250 |
|
No change |
Capital Expenditures |
~$80 |
|
No change |
Adjusted EPS |
$3.50 - $3.75 |
|
$4.05 - $4.25 |
|
|
|
|
Segment
Data |
|
|
|
Aerospace |
|
|
|
Sales Growth |
14% - 19% |
|
16% - 18% |
Segment Earnings (% of
Sales) |
Up 150bps - 200bps |
|
No change |
Industrial |
|
|
|
Sales Growth |
14 - 19% |
|
28% - 30% |
Segment Earnings (% of
Sales) |
Flat |
|
Up 340bps – 440bps |
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. ET,
July 31, 2023, to provide an overview of the financial performance
for the third quarter of fiscal year 2023, business highlights, and
outlook for the remainder of fiscal 2023. You are invited to listen
to the live webcast of our conference call, or a recording, and
view or download accompanying presentation slides at our website,
www.woodward.com2.
You may also listen to the call by dialing 1-888-440-4531
(domestic) or 1-646-960-0808 (international). Participants should
call prior to the start time to allow for registration; the
Conference ID is 4278216. An audio replay will be available by
telephone from 7:30 p.m. ET on July 31, 2023 until 11:59 p.m. ET on
August 14, 2023. The telephone number to access the replay is
1-800-770-2030 (domestic) or 1-647-362-9199 (international),
reference access code 4278216.
A webcast presentation will be available on the website by
selecting “Investors/Events & Presentations”. The call and
presentation will remain accessible on the website for 14 days.
About Woodward, Inc.
Woodward is the global leader in the design, manufacture, and
service of energy conversion and control solutions for the
aerospace and industrial equipment markets. Together with our
customers, we are enabling the path to a cleaner, decarbonized
world. Our innovative fluid, combustion, electrical, propulsion and
motion control systems perform in some of the world’s harshest
environments. Woodward is a global company headquartered in Fort
Collins, Colorado, USA. Visit our website at www.woodward.com.
Cautionary Statement
Information in this press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties, including,
but not limited to, our expectations of continued strong end market
demand, the continued improving performance of our Aerospace and
Industrial businesses and increasing output; our improving ability
to deliver for our customers; our operational improvements and
efficiency gains; and statements regarding our business and
financial outlook for the remainder of fiscal year 2023, including
our guidance for sales, adjusted earnings, adjusted earnings per
share, segment sales growth, segment earnings as a percent of
sales, adjusted effective tax rate, adjusted free cash flow, and
capital expenditures as well as our assumptions regarding our
outlook. Readers are cautioned that these forward-looking
statements are only predictions and are subject to risks,
uncertainties, and assumptions that are difficult to predict.
Factors that could cause actual results and the timing of certain
events to differ materially from the forward-looking statements
include, but are not limited to: (1) global economic uncertainty
and instability, including in the financial markets that affect
Woodward, its customers, and its supply chain; (2) risks related to
continued constraints and disruptions in the global supply chain
and labor markets; (3) Woodward’s long sales cycle; (4) risks
related to Woodward’s concentration of revenue among a relatively
small number of customers; (5) Woodward’s ability to implement and
realize the intended effects of any restructuring efforts; (6)
Woodward’s ability to successfully manage competitive factors
including expenses and fluctuations in sales; (7) changes and
consolidations in the aerospace market; (8) uncertainties related
to the COVID-19 pandemic; (9) Woodward’s financial obligations
including debt obligations and tax expenses and exposures; (10)
risks related to Woodward’s U.S. government contracting activities
including potential changes in government spending patterns; (11)
Woodward’s ability to protect its intellectual property rights and
avoid infringing the intellectual property rights of others; (12)
changes in the estimates of fair value of reporting units or of
long-lived assets; (13) environmental risks; (14) Woodward’s
continued access to a stable workforce and favorable labor
relations with its employees; (15) Woodward’s ability to manage
various regulatory and legal matters; (16) risks from operating
internationally; (17) cybersecurity and other technological risks;
and other risk factors and risks described in Woodward's filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K for the fiscal year ended September 30, 2022,
any subsequently filed Quarterly Report on Form 10-Q, as well as
its Quarterly Report on Form 10-Q for the third quarter ended June
30, 2023, which we expect to file shortly, and other risks
described in Woodward’s filings with the Securities and Exchange
Commission.
Woodward, Inc. and Subsidiaries |
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS |
(Unaudited - in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended |
|
|
Nine-Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
800,663 |
|
|
$ |
614,332 |
|
|
$ |
2,137,496 |
|
|
$ |
1,742,757 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
596,251 |
|
|
|
480,403 |
|
|
|
1,649,473 |
|
|
|
1,352,979 |
|
Selling, general, and administrative expenses |
|
64,983 |
|
|
|
46,490 |
|
|
|
203,748 |
|
|
|
152,920 |
|
Research and development costs |
|
35,033 |
|
|
|
32,224 |
|
|
|
100,034 |
|
|
|
90,000 |
|
Restructuring charges |
|
- |
|
|
|
- |
|
|
|
5,172 |
|
|
|
- |
|
Interest expense |
|
12,175 |
|
|
|
8,533 |
|
|
|
36,162 |
|
|
|
25,036 |
|
Interest income |
|
(516 |
) |
|
|
(353 |
) |
|
|
(1,390 |
) |
|
|
(1,494 |
) |
Other (income) expense, net |
|
(13,001 |
) |
|
|
(3,252 |
) |
|
|
(33,431 |
) |
|
|
(18,813 |
) |
Total costs and expenses |
|
694,925 |
|
|
|
564,045 |
|
|
|
1,959,768 |
|
|
|
1,600,628 |
|
Earnings before income
taxes |
|
105,738 |
|
|
|
50,287 |
|
|
|
177,728 |
|
|
|
142,129 |
|
Income taxes |
|
21,139 |
|
|
|
10,841 |
|
|
|
28,012 |
|
|
|
24,472 |
|
Net
earnings |
$ |
84,599 |
|
|
$ |
39,446 |
|
|
$ |
149,716 |
|
|
$ |
117,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
amounts: |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
1.41 |
|
|
$ |
0.65 |
|
|
$ |
2.50 |
|
|
$ |
1.90 |
|
Diluted earnings per
share |
$ |
1.37 |
|
|
$ |
0.64 |
|
|
$ |
2.44 |
|
|
$ |
1.84 |
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
60,056 |
|
|
|
60,506 |
|
|
|
59,843 |
|
|
|
62,052 |
|
Diluted |
|
61,591 |
|
|
|
62,088 |
|
|
|
61,250 |
|
|
|
63,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per
share |
$ |
0.2200 |
|
|
$ |
0.1900 |
|
|
$ |
0.6300 |
|
|
$ |
0.5425 |
|
Woodward, Inc. and Subsidiaries |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited - in thousands) |
|
|
|
|
|
|
|
June 30, |
|
|
September 30, |
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
114,107 |
|
|
$ |
107,844 |
|
Accounts receivable |
|
732,805 |
|
|
|
609,964 |
|
Inventories |
|
531,834 |
|
|
|
514,287 |
|
Income taxes receivable |
|
37,973 |
|
|
|
5,179 |
|
Other current assets |
|
73,758 |
|
|
|
74,695 |
|
Total current assets |
|
1,490,477 |
|
|
|
1,311,969 |
|
Property, plant, and equipment, net |
|
910,544 |
|
|
|
910,472 |
|
Goodwill |
|
798,575 |
|
|
|
772,559 |
|
Intangible assets, net |
|
472,894 |
|
|
|
460,580 |
|
Deferred income tax assets |
|
25,133 |
|
|
|
23,447 |
|
Other assets |
|
311,940 |
|
|
|
327,419 |
|
Total
assets |
$ |
4,009,563 |
|
|
$ |
3,806,446 |
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Short-term debt |
$ |
23,500 |
|
|
$ |
66,800 |
|
Current portion of long-term debt |
|
75,914 |
|
|
|
856 |
|
Accounts payable |
|
223,091 |
|
|
|
230,519 |
|
Income taxes payable |
|
43,220 |
|
|
|
34,655 |
|
Accrued liabilities |
|
220,934 |
|
|
|
206,283 |
|
Total current liabilities |
|
586,659 |
|
|
|
539,113 |
|
Long-term debt, less current portion |
|
651,443 |
|
|
|
709,760 |
|
Deferred income tax liabilities |
|
138,180 |
|
|
|
127,195 |
|
Other liabilities |
|
547,491 |
|
|
|
529,256 |
|
Total liabilities |
|
1,923,773 |
|
|
|
1,905,324 |
|
Stockholders’ equity |
|
2,085,790 |
|
|
|
1,901,122 |
|
Total liabilities and
stockholders’ equity |
$ |
4,009,563 |
|
|
$ |
3,806,446 |
|
Woodward, Inc. and Subsidiaries |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
|
Nine-Months Ended |
|
|
June 30, |
|
|
2023 |
|
|
2022 |
|
Net cash provided by operating activities |
$ |
155,630 |
|
|
$ |
86,016 |
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
Payments for purchase of
property, plant, and equipment |
|
(57,142 |
) |
|
|
(37,105 |
) |
Proceeds from sale of
assets |
|
477 |
|
|
|
4 |
|
Proceeds from the sale of the
renewable power systems business and other related businesses |
|
- |
|
|
|
6,000 |
|
Payments for business
acquisition, net of cash acquired |
|
878 |
|
|
- |
|
Payments for purchase of
short-term investments |
|
(6,109 |
) |
|
|
(9,619 |
) |
Proceeds from sales of
short-term investments |
|
7,692 |
|
|
|
11,305 |
|
Net cash used in
investing activities |
|
(54,204 |
) |
|
|
(29,415 |
) |
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
Cash dividends paid |
|
(37,762 |
) |
|
|
(33,572 |
) |
Proceeds from sales of
treasury stock |
|
26,888 |
|
|
|
20,283 |
|
Payments for repurchases of
common stock |
|
(26,369 |
) |
|
|
(440,233 |
) |
Borrowings on revolving lines
of credit and short-term borrowings |
|
1,538,900 |
|
|
|
477,400 |
|
Payments on revolving lines of
credit and short-term borrowings |
|
(1,582,200 |
) |
|
|
(428,200 |
) |
Payments of debt financing
costs |
|
(2,236 |
) |
|
|
- |
|
Payments of long-term debt and
finance lease obligations |
|
(536 |
) |
|
|
(644 |
) |
Net cash used in
financing activities |
|
(83,315 |
) |
|
|
(404,966 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
(11,848 |
) |
|
|
(396 |
) |
Net change in cash and
cash equivalents |
|
6,263 |
|
|
|
(348,761 |
) |
Cash and cash equivalents at
beginning of year |
|
107,844 |
|
|
|
448,462 |
|
Cash and cash equivalents at
end of period |
$ |
114,107 |
|
|
$ |
99,701 |
|
Woodward, Inc. and Subsidiaries |
|
SEGMENT NET SALES AND EARNINGS |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, |
|
|
Nine-Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Net
sales: |
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace |
$ |
480,531 |
|
|
$ |
401,712 |
|
|
$ |
1,313,233 |
|
|
|
$ |
1,110,904 |
|
Industrial |
|
320,132 |
|
|
|
212,620 |
|
|
|
824,263 |
|
|
|
|
631,853 |
|
Total consolidated net
sales |
$ |
800,663 |
|
|
$ |
614,332 |
|
|
$ |
2,137,496 |
|
|
|
$ |
1,742,757 |
|
Segment
earnings*: |
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace |
$ |
83,075 |
|
|
$ |
56,566 |
|
|
$ |
211,823 |
|
|
|
$ |
167,458 |
|
As a percent of segment net
sales |
|
17.3 |
% |
|
|
14.1 |
% |
|
|
16.1 |
% |
|
|
|
15.1 |
% |
Industrial |
|
58,197 |
|
|
|
21,102 |
|
|
|
107,170 |
|
|
|
|
62,029 |
|
As a percent of segment net
sales |
|
18.2 |
% |
|
|
9.9 |
% |
|
|
13.0 |
% |
|
|
|
9.8 |
% |
Total segment
earnings |
|
141,272 |
|
|
|
77,668 |
|
|
|
318,993 |
|
|
|
|
229,487 |
|
Nonsegment expenses |
|
(23,875 |
) |
|
|
(19,201 |
) |
|
|
(106,493 |
) |
|
|
|
(63,816 |
) |
EBIT |
|
117,397 |
|
|
|
58,467 |
|
|
|
212,500 |
|
|
|
|
165,671 |
|
Interest expense, net |
|
(11,659 |
) |
|
|
(8,180 |
) |
|
|
(34,772 |
) |
|
|
|
(23,542 |
) |
Consolidated earnings
before income taxes |
$ |
105,738 |
|
|
$ |
50,287 |
|
|
$ |
177,728 |
|
|
|
$ |
142,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*This schedule
reconciles segment earnings, which exclude certain costs, to
consolidated earnings before taxes. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for property,
plant and equipment |
$ |
13,096 |
|
|
$ |
12,955 |
|
|
$ |
57,142 |
|
|
|
$ |
37,105 |
|
Depreciation
expense |
$ |
20,551 |
|
|
$ |
20,618 |
|
|
$ |
61,212 |
|
|
|
$ |
62,674 |
|
Woodward, Inc. and Subsidiaries |
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET
EARNINGS1 |
(Unaudited - in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended |
|
|
Three-Months Ended |
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Before Income Tax |
|
|
Net of Income Tax |
|
|
Per Share, Net of Income Tax |
|
|
Before Income Tax |
|
|
Net of Income Tax |
|
|
Per Share, Net of Income Tax |
Net earnings (U.S. GAAP) |
$ |
105,738 |
|
|
$ |
84,599 |
|
|
$ |
1.37 |
|
|
$ |
50,287 |
|
|
$ |
39,446 |
|
|
$ |
0.64 |
Non-U.S. GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific charge for excess and obsolete inventory |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Product rationalization |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Restructuring charge |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Non-recurring charge related to customer collections |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Certain non-restructuring separation costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Non-recurring matter unrelated to the ongoing operations of the
business |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Business development activities |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Total non-U.S. GAAP
adjustments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
Adjusted net earnings
(Non-U.S. GAAP) |
$ |
105,738 |
|
|
$ |
84,599 |
|
|
$ |
1.37 |
|
|
$ |
50,287 |
|
|
$ |
39,446 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Woodward, Inc. and Subsidiaries |
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET
EARNINGS1 |
(Unaudited - in thousands, except per share
amounts) |
|
|
|
Nine-Months Ended |
|
Nine-Months Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
Before Income Tax |
|
|
Net of Income Tax |
|
|
Per Share, Net of Income Tax |
|
Before Income Tax |
|
|
Net of Income Tax |
|
|
Per Share, Net of Income Tax |
Net earnings (U.S. GAAP) |
$ |
177,728 |
|
|
$ |
149,716 |
|
|
$ |
2.44 |
|
$ |
142,129 |
|
|
$ |
117,657 |
|
|
$ |
1.84 |
Non-U.S. GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific charge for excess and obsolete inventory2 |
|
11,995 |
|
|
|
9,016 |
|
|
|
0.15 |
|
|
- |
|
|
|
- |
|
|
|
- |
Product rationalization3 |
|
10,504 |
|
|
|
7,896 |
|
|
|
0.13 |
|
|
- |
|
|
|
- |
|
|
|
- |
Restructuring charge |
|
5,172 |
|
|
|
3,874 |
|
|
|
0.06 |
|
|
- |
|
|
|
- |
|
|
|
- |
Non-recurring charge related to customer collections4 |
|
4,997 |
|
|
|
3,761 |
|
|
|
0.06 |
|
|
- |
|
|
|
- |
|
|
|
- |
Certain non-restructuring separation costs4 |
|
2,208 |
|
|
|
1,661 |
|
|
|
0.03 |
|
|
- |
|
|
|
- |
|
|
|
- |
Non-recurring matter unrelated to the ongoing operations of the
business |
|
- |
|
|
|
- |
|
|
|
- |
|
|
3,272 |
|
|
|
2,454 |
|
|
|
0.04 |
Business development activities |
|
- |
|
|
|
- |
|
|
|
- |
|
|
2,982 |
|
|
|
2,236 |
|
|
|
0.03 |
Total non-U.S. GAAP
adjustments |
|
34,876 |
|
|
|
26,208 |
|
|
|
0.43 |
|
|
6,254 |
|
|
|
4,690 |
|
|
|
0.07 |
Adjusted net earnings
(Non-U.S. GAAP) |
$ |
212,604 |
|
|
$ |
175,924 |
|
|
$ |
2.87 |
|
$ |
148,383 |
|
|
$ |
122,347 |
|
|
$ |
1.91 |
(2) Presented in the line item "Cost of goods sold" in
Woodward's Condensed Consolidated Statement of Earnings.
(3) On a pre-tax basis, $5,822 is presented in the line item
"Cost of goods sold" and $4,682 is presented in the line item "
Selling, general and administrative" expenses in Woodward's
Condensed Consolidated Statement of Earnings. On an after-tax
basis, $4,374 is presented in the line item "Cost of goods sold"
and $3,522 is presented in the line item " Selling, general and
administrative" expenses in Woodward's Condensed Consolidated
Statement of Earnings.
(4) Presented in the line item "Selling, general and
administrative" expenses in Woodward's Condensed Consolidated
Statement of Earnings.
Woodward, Inc. and Subsidiaries |
|
RECONCILIATION OF NET EARNINGS TO
EBIT1AND ADJUSTED
EBIT1 |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
Three-Months Ended June 30, |
|
Nine-Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
2023 |
|
|
2022 |
|
Net earnings (U.S. GAAP) |
$ |
84,599 |
|
|
$ |
39,446 |
|
$ |
149,716 |
|
|
$ |
117,657 |
|
Income taxes |
|
21,139 |
|
|
|
10,841 |
|
|
28,012 |
|
|
|
24,472 |
|
Interest expense |
|
12,175 |
|
|
|
8,533 |
|
|
36,162 |
|
|
|
25,036 |
|
Interest income |
|
(516 |
) |
|
|
(353 |
) |
|
(1,390 |
) |
|
|
(1,494 |
) |
EBIT (Non-U.S.
GAAP) |
|
117,397 |
|
|
|
58,467 |
|
|
212,500 |
|
|
|
165,671 |
|
Non-U.S. GAAP
adjustments* |
|
- |
|
|
|
- |
|
|
34,876 |
|
|
|
6,254 |
|
Adjusted EBIT
(Non-U.S. GAAP) |
$ |
117,397 |
|
|
$ |
58,467 |
|
$ |
247,376 |
|
|
$ |
171,925 |
|
|
|
|
|
|
|
|
|
|
|
|
*See Reconciliation
of Net Earnings to Adjusted Net Earnings1table above for the list
of Non-U.S. GAAP adjustments made in the applicable periods. |
|
Woodward, Inc. and Subsidiaries |
|
RECONCILIATION OF NET EARNINGS TO
EBITDA1AND ADJUSTED
EBITDA1 |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
|
Three-Months Ended June 30, |
|
|
Nine-Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net earnings (U.S. GAAP) |
$ |
84,599 |
|
|
$ |
39,446 |
|
|
$ |
149,716 |
|
|
$ |
117,657 |
|
Income taxes |
|
21,139 |
|
|
|
10,841 |
|
|
|
28,012 |
|
|
|
24,472 |
|
Interest expense |
|
12,175 |
|
|
|
8,533 |
|
|
|
36,162 |
|
|
|
25,036 |
|
Interest income |
|
(516 |
) |
|
|
(353 |
) |
|
|
(1,390 |
) |
|
|
(1,494 |
) |
Amortization of intangible
assets |
9,493 |
|
|
|
9,309 |
|
|
28,089 |
|
|
|
28,584 |
|
Depreciation expense |
20,551 |
|
|
|
20,618 |
|
|
61,212 |
|
|
|
62,674 |
|
EBITDA (Non-U.S.
GAAP) |
|
147,441 |
|
|
|
88,394 |
|
|
|
301,801 |
|
|
|
256,929 |
|
Non-U.S. GAAP
adjustments* |
|
- |
|
|
|
- |
|
|
|
34,876 |
|
|
|
6,254 |
|
Adjusted EBITDA
(Non-U.S. GAAP) |
$ |
147,441 |
|
|
$ |
88,394 |
|
|
$ |
336,677 |
|
|
$ |
263,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*See Reconciliation
of Net Earnings to Adjusted Net Earnings1table above for the list
of Non-U.S. GAAP adjustments made in the applicable periods. |
|
Woodward, Inc. and Subsidiaries |
|
RECONCILIATION OF NONSEGMENT EXPENSES TO ADJUSTED
NONSEGMENT EXPENSES1 |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30, |
|
|
Nine-Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Nonsegment expenses (U.S. GAAP) |
$ |
23,875 |
|
|
$ |
19,201 |
|
|
$ |
106,493 |
|
|
$ |
63,816 |
|
Specific charge for excess and
obsolete inventory |
|
- |
|
|
|
- |
|
|
|
(11,995 |
) |
|
|
- |
|
Product rationalization |
|
- |
|
|
|
- |
|
|
|
(10,504 |
) |
|
|
- |
|
Restructuring charge |
|
- |
|
|
|
- |
|
|
|
(5,172 |
) |
|
|
- |
|
Non-recurring charge related
to customer collections |
|
- |
|
|
|
- |
|
|
|
(4,997 |
) |
|
|
- |
|
Non-restructuring separation
costs |
|
- |
|
|
|
- |
|
|
|
(2,208 |
) |
|
|
- |
|
Non-recurring matter unrelated
to the ongoing operations of the business |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,272 |
) |
Business development
activities |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,982 |
) |
Adjusted nonsegment
expenses (Non-U.S. GAAP) |
$ |
23,875 |
|
|
$ |
19,201 |
|
|
$ |
71,617 |
|
|
$ |
57,562 |
|
Woodward, Inc. and Subsidiaries |
|
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO
FREE CASH FLOW1 AND ADJUSTED FREE
CASH FLOW1 |
|
(Unaudited - in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Nine-Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
Net cash provided by operating activities (U.S. GAAP) |
$ |
155,630 |
|
|
$ |
86,016 |
|
Payments for property, plant,
and equipment |
|
(57,142 |
) |
|
|
(37,105 |
) |
Free cash flow
(Non-U.S. GAAP) |
|
98,488 |
|
|
|
48,911 |
|
Cash paid for business
development activities |
|
- |
|
|
|
2,982 |
|
Cash paid for restructuring
charges |
|
3,594 |
|
|
|
505 |
|
Cash paid for certain
non-restructuring separation costs |
|
977 |
|
|
|
- |
|
Adjusted free cash
flow (Non-U.S. GAAP) |
$ |
103,059 |
|
|
$ |
52,398 |
|
1Adjusted and Non-U.S. GAAP Financial Measures: Adjusted net
earnings, adjusted earnings per share, adjusted EBIT, adjusted
EBITDA, adjusted effective tax rate, and adjusted nonsegment
expenses exclude, as applicable, (i) a specific charge for excess
and obsolete inventory, (ii) product rationalization, (iii) a
restructuring charge, (iv) a non-recurring charge related to
customer collections, (v) certain non-restructuring separation
costs, (vi) a charge in connection with a non-recurring matter
unrelated to the ongoing operations of the business, and a partial
reversal of such charge in a subsequent period, and (vii) costs
related to business development activities. The product
rationalization adjustment pertains to a non-recurring write-off of
inventory and assets related to the elimination of certain product
lines. The specific charge for excess and obsolete inventory
pertains to a non-recurring write down of other excess inventory
that are not related to product rationalization. The non-recurring
charge related to customer collections pertains to a discrete
process issue that was identified and corrected. The Company
believes that these excluded items are short‐term in nature, not
directly related to the ongoing operations of the business, and
therefore, the exclusion of them illustrates more clearly how the
underlying business of Woodward is performing. Adjusted free cash
flow is free cash flow (defined below) plus the cash payments for
costs related to business development activities, restructuring
activities, and certain non-restructuring costs. Management
believes these adjustments to free cash flow better portray
Woodward’s operating performance. Our full-year guidance with
respect to non-U.S. GAAP measures as provided in this release
excludes, as applicable, costs, charges and payments related to (i)
a specific charge for excess and obsolete inventory, (ii) product
rationalization, (iii) restructuring activities, (iv) a
non-recurring charge related to customer collections, and (v)
certain non-restructuring separation costs.
EBIT (earnings before interest and taxes), EBITDA (earnings
before interest, taxes, depreciation and amortization), free cash
flow, adjusted free cash flow, adjusted net earnings, adjusted
earnings per share, adjusted EBIT, adjusted EBITDA, adjusted
effective tax rate, and adjusted nonsegment expenses are financial
measures not prepared and presented in accordance with accounting
principles generally accepted in the United States of America (U.S.
GAAP). Management uses EBIT and adjusted EBIT to evaluate
Woodward’s operating performance without the impacts of financing
and tax related considerations. Management uses EBITDA and adjusted
EBITDA in evaluating Woodward’s operating performance, making
business decisions, including developing budgets, managing
expenditures, forecasting future periods, and evaluating capital
structure impacts of various strategic scenarios. Management also
uses free cash flow, which is derived from net cash provided by or
used in operating activities less payments for property, plant, and
equipment, as well as adjusted free cash flow (as described above),
in reviewing the financial performance of Woodward’s various
business segments and evaluating cash generation levels. Securities
analysts, investors, and others frequently use EBIT, EBITDA and
free cash flow in their evaluation of companies, particularly those
with significant property, plant, and equipment, and intangible
assets that are subject to amortization. The use of any of these
non-U.S. GAAP financial measures is not intended to be considered
in isolation of, or as a substitute for, the financial information
prepared and presented in accordance with U.S. GAAP. Because EBIT,
EBITDA, adjusted EBIT, and adjusted EBITDA exclude certain
financial information compared with net earnings, the most
comparable U.S. GAAP financial measure, users of this financial
information should consider the information that is excluded. Free
cash flow does not necessarily represent funds available for
discretionary use and is not necessarily a measure of our ability
to fund our cash needs. Management’s calculations of EBIT, EBITDA,
adjusted net earnings, adjusted earnings per share, adjusted EBIT,
adjusted EBITDA, adjusted effective tax rate, adjusted nonsegment
expenses, free cash flow, and adjusted free cash flow may differ
from similarly titled measures used by other companies, limiting
their usefulness as comparative measures.
2Website, Facebook, Twitter: Woodward has used, and intends to
continue to use, its Investor Relations website, its Facebook page
and its Twitter handle as means of disclosing material non-public
information and for complying with its disclosure obligations under
Regulation FD.
Contact: |
Dan Provaznik Director, Investor
Relations970-498-3849Dan.Provaznik@woodward.com |
Woodward (NASDAQ:WWD)
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