Woodward (WWD) Q1 2026 earnings summary

Executive summary

• First quarter FY2026 net sales rose 29% year-over-year to $996 million, with net earnings up 54% to $134 million and EPS of $2.17, driven by strong demand and disciplined execution in both Aerospace and Industrial segments.

• Margin expansion was supported by higher commercial services in Aerospace and robust demand in power generation, transportation, and oil & gas for Industrial.

• Operational execution, supply chain improvements, and innovation contributed to outperformance, though inventory turns are expected to remain elevated through 2026.

• Strategic decision made to wind down the China On-Highway product lines by year-end, aligning with long-term industrial growth strategy.

• Gross margin improved to 29.3% from 24.5% year-over-year, reflecting operational leverage and favorable mix.

Financial highlights

• Net sales reached $996 million, up 29% year-over-year; net earnings were $134 million, up 54%; EPS was $2.17, up from $1.42; adjusted EPS was $2.17, up 61%.

• Free cash flow for the quarter was $70 million, up from $1 million a year ago.

• Aerospace segment sales were $635 million, up 29%, with commercial services sales up 50%; Industrial segment sales were $362 million, up 30%, with transportation up 55%.

• Segment margins: Aerospace improved by 420 bps to 23.4%; Industrial rose 410 bps to 18.5%.

• Gross margin expanded to 29.3%; operating margin rose to 17.0%.

Outlook and guidance

• Full-year FY26 consolidated sales growth guidance raised to 14–18%; EPS guidance increased to $8.20–$8.60.

• Aerospace sales growth expected at 15–20% with margins of 22–23%; Industrial sales growth at 11–14% with margins of 16–17%.

• Free cash flow guidance maintained at $300–$350 million; capital expenditures expected at ~$290 million.

• Capital returns through dividends and share repurchases expected between $650 million and $700 million for the year.

• Wind-down of China On-Highway business to be completed by year-end, incurring $20–25 million in restructuring costs, mainly in 2026.