Woodward, Inc. WWD reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.
Quarterly net sales grew 5.8% year over year to $883.6 million and surpassed the consensus estimate by 6.4%. This growth was driven by strong performance in the Aerospace segment as well as Core Industrial business.
Confident of navigating tariffs and current market conditions, the company raised the lower end of its sales and earnings guidance and reaffirmed its other full-year outlook, with a continued focus on sustainable growth and long-term shareholder value.
After this announcement, the stock grew 3.6% in the after-market trading session yesterday. In the past six months, shares of WWD have gained 14.8% compared with the Zacks Aerospace - Defense Equipment industry’s growth of 2%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Zacks Investment Research
Image Source: Zacks Investment Research
WWD’s Segment Results
Aerospace: Net sales were $561.7 million, up 12.9% year over year. We predicted the metric to be $525.2 million. Aerospace growth was fueled by strong defense demand and a robust commercial after-market, partially offset by softer commercial OEM and defense after-market sales.
Defense OEM sales increased 52% in the quarter to $138 million, driven by strong demand for smart defense programs. Commercial after-market sales grew 23%, driven by high legacy aircraft utilization, growing passenger traffic and rising concerns over soft forward bookings.
Woodward, Inc. Price, Consensus and EPS Surprise
Woodward, Inc. Price, Consensus and EPS Surprise
Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote
Commercial OEM sales declined 9% year over year to $167 million due to a measured production ramp aligned with customer demand following the Boeing work stoppage. Defense after-market sales were down 8%.
Segmental earnings were $125 million, up from $98 million a year ago. The earnings growth was primarily driven by price realization and higher volumes, partially offset by inflationary pressure and an unfavorable mix.
Industrial: Net sales totaled $321.9 million, down 4.7% year over year. We expected the metric to be $299.4 million. Within Industrial segment, Transportation sales declined 18% due to the anticipated drop in China on-highway sales. In the second quarter, China on-highway sales totaled $21 million, down $45 million from a year ago.
Core industrial sales, which excludes China on-highway business, were up 11%, driven by a 21% increase in Oil & Gas, a 13% increase in Marine Transportation, and a 4% increase in Power Generation.
Segmental earnings were $46 million, a decline from $65 million in the year-ago quarter. Industrial earnings were affected by lower China on-highway volume and an unfavorable mix, which was partly offset by price realization.
WWD’s Margin Performance
Gross margin was down 90 basis points year over year to 27.2%.
Total costs and expenses were $750.7 million, up 5% year over year. Adjusted EBITDA was $164 million compared with $164.4 million a year ago.
WWD’s Cash Flow & Liquidity
As of March 31, 2024, Woodward had $364.1 million in cash and cash equivalents with $489.8 million of long-term debt (less the current portion).
For the quarter ended March 31, 2024, WWD generated $78 million of net cash from operating activities compared with $97 million reported in the prior-year period. Free cash flow was $59 million compared with $83 million in the year-ago period. The decline in the first two quarters’ free cash flow was mainly due to higher working capital requirements.
In the quarter under review, WWD returned $61 million to its shareholders in the form of $17 million of dividends and $44 million worth of share repurchases.
In the first half of 2025, total returns to stockholders reached $111 million, including $79 million in share repurchases and $31 million in dividends.
WWD’s Fiscal 2025 Guidance
Woodward has raised the lower end of its sales and adjusted EPS guidance while maintaining the rest of its full-year outlook. This revision reflects the company’s strong performance year to date and the anticipated impact of announced tariffs.
WWD now expects fiscal 2025 sales to be between $3,375 million and $3,500 million compared with the prior guidance of $3,300 million to $3,500 million. Adjusted EPS is now expected to range from $5.95 to $6.25 compared with the previous guidance of $5.85 to $6.25.
Aerospace segment revenues are anticipated to increase in the range of 8-13% compared with 6-13% predicted earlier, whereas segment earnings (as a % of revenues) are still expected to be 20-21%. Industrial segment revenues are expected to decline in the band of 7-9% compared with 7-11% projected earlier, whereas segment earnings (as a % of revenues) are expected to be 13-14%.
Free cash flow is still anticipated to be between $350 million and $400 million.
WWD’s Zacks Rank
Woodward currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Other Companies
Teledyne Technologies Inc. TDY reported first-quarter 2025 adjusted earnings of $4.95 per share, which surpassed the Zacks Consensus Estimate of $4.92 by 0.6%. The bottom line of TDY also improved 8.8% from $4.55 recorded in the year-ago quarter.
In the past year, shares of Teledyne have gained 21.4%.
AAR Corp. AIR reported third-quarter fiscal 2025 adjusted earnings of 99 cents per share, which surpassed the Zacks Consensus Estimate of 96 cents by 3.1%. The bottom line of AIR improved 16.5% from the year-ago quarter’s level of 85 cents.
In the past six months, shares of AIR have decreased 11.7%.
AeroVironment AVAV came out with fiscal third-quarter earnings of 30 cents per share, missing the Zacks Consensus Estimate of 58 cents per share. This compares to AVAV’s earnings of 63 cents per share a year ago. These figures are adjusted for non-recurring items.
Shares of AVAV declined 6.3% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
