Woodward (WWD) investor relations material

Executive summary

• Third quarter net sales rose 8% year-over-year to $915M, with net earnings up 6% to $108M and EPS up to $1.76, driven by robust Aerospace growth and disciplined execution.

• Aerospace segment achieved record sales, up 15% year-over-year, with margin expansion; Industrial sales declined 3% but core Industrial grew 9% excluding China On Highway and divested lines.

• Major Airbus A350 spoiler actuator contract win and Safran North American electromechanical actuation business acquisition strengthened long-term growth strategy.

• Full-year sales and earnings guidance raised based on strong year-to-date performance and improved macro clarity.

• Free cash flow guidance lowered due to higher working capital and capex needs to support growth.

Financial highlights

• Q3 net sales reached $915M (+8%); net earnings $108M (+6%); EPS $1.76, up from $1.63.

• Year-to-date net sales $2.57B (+4%); net earnings $304M (+5%); adjusted EPS $4.96.

• Free cash flow for nine months was $159M, down 29% year-over-year, reflecting higher working capital and capex.

• Gross margin for Q3 was 27.2%; SG&A expenses 9.7% of sales; effective tax rate 14.5%, down year-over-year.

• Debt leverage stood at 1.5x EBITDA; total debt at quarter-end was $933M.

Outlook and guidance

• FY25 consolidated sales guidance raised to $3.45B–$3.525B; adjusted EPS now $6.50–$6.75.

• Aerospace sales growth expected 11–13% with margin 21–21.5%; Industrial sales to decrease 5–7% with margin ~14.5%.

• Adjusted effective tax rate revised down to ~17%; free cash flow guidance lowered to $315M–$350M.

• Management expects continued strong Aerospace demand and sequential growth in Commercial OEM sales in Q4.

• Industrial segment faces ongoing uncertainty in China on-highway natural gas truck business.