Woodward Reports Fourth Quarter and Fiscal Year 2012 Results

Woodward Reports Fourth Quarter and Fiscal Year 2012 Results 
FORT COLLINS, CO -- (Marketwire) -- 11/13/12 --  Woodward, Inc.
(NASDAQ: WWD) today reported record financial results for its fourth
quarter and fiscal year 2012. (All per share amounts are presented on
a fully diluted basis.) 
Fourth Quarter Fiscal 2012 Highlights 


 
--  Net sales for the fourth quarter of 2012 were $528.7 million, an
    increase of 8 percent from $489.3 million in the fourth quarter of
    last year.
--  Earnings per share were $0.66 in the fourth quarter of 2012, up 10
    percent from $0.60 in the fourth quarter of last year.
--  Total EBIT(1) for the quarter was $72.4 million compared to $64.8
    million in the fourth quarter of the prior year, an increase of 12
    percent.
--  Free cash flow(2) for the fourth quarter of 2012 was $59.8 million, an
    increase of 15 percent from $52.2 million for the fourth quarter of
    the prior year.

  
Woodward experienced a record quarter on higher sales and earnings over
the fourth quarter of the previous year and sharply higher over the
third quarter of fiscal 2012.  
"Woodward finished the year with strong sales and earnings, while
continuing our strategic investments in future growth," said Thomas
A. Gendron, Chairman and Chief Executive Officer. "Fourth quarter
profitability improved as we recovered from the impacts of the
unusual operational issues experienced in the third quarter." 
Net sales for the fiscal 2012 fourth quarter were $528.7 million, an
increase of 8 percent from $489.3 million for the 2011 fourth
quarter. Foreign currency exchange rates had an unfavorable impact of
approximately $10 million on net sales for the fourth quarter of
2012. 
EBIT was $72.4 million for the fourth quarter of 2012 compared to
$64.8 million for the fourth quarter of 2011, an increase of 12
percent. The current quarter EBIT was primarily impacted by the
increased sales volume and favorable price changes. Foreign currency
exchange rates had an insignificant impact on EBIT for the quarter. 
Net earnings for the 2012 fourth quarter were $46.1 million or $0.66
per share, an increase of 11 percent from $41.7 million, or $0.60 per
share in the 2011 fourth quarter.  
Quarterly Segment Results 
Aerospace  
Aer
ospace net sales for the fourth quarter of fiscal 2012 were $264.0
million, an increase of 9 percent from $241.7 million for the fourth
quarter a year ago. Segment earnings for the fourth quarter of 2012
increased to $47.9 million from $40.9 million for the same quarter a
year ago, an increase of 17 percent. Segment earnings as a percent of
segment net sales were 18.1 percent this quarter compared to 16.9
percent in the same quarter of the prior year.  
The sales increase was attributable to strength across all end
markets. Segment earnings were positively impacted by the higher
sales volumes and price increases, partially offset by investments in
research and development and manufacturing technology and capacity.  
Energy  
Energy net sales for the fourth quarter of fiscal 2012 were $264.7
million, an increase of 7 percent from $247.6 million for last year's
fourth quarter. Segment earnings for the fourth quarter increased to
$34.2 million, up 3 percent from $33.2 million for last year's fourth
quarter. Segment earnings as a percent of segment net sales were 12.9
percent this quarter compared to 13.4 percent in the same quarter of
the prior year.  
The sales increase was mainly related to growth in compressed natural
gas engines and strength in the wind turbine market primarily
associated with the impending expiration of government incentives.
Segment earnings benefitted from the increased sales volume and lower
research and development costs, largely offset by expenses primarily
associated with product warranty, increased accounts receivable
reserves, and overhead cost reduction initiatives. 
Nonsegment  
Nonsegment expenses totaled $9.7 million for the fourth quarter of
fiscal 2012, compared to $9.3 million for the same quarter last year.
Nonsegment expenses were 1.8 percent of consolidated net sales for
the fourth quarter of 2012, down from 1.9 percent of consolidated net
sales for the same quarter of the prior year.  
Full Year 2012 Results 
Net sales for fiscal 2012 were $1.87 billion, an increase of 9
percent from $1.71 billion last year. Net earnings for fiscal 2012
increased 7 percent to $141.6 million, or $2.01 per share, compared
with $132.2 million, or $1.89 per share, last year. Earnings per
share for fiscal year 2012 reflected both volume and price increases,
partially offset by $27.6 million of increased research and
development expense, as well as manufacturing costs, primarily
associated with recent aerospace awards.  
Full year segment results can be found in the tables included herein. 
Cash Flow and Financial Position 
Net cash generated from operating activities was $144.1 million for
fiscal 2012, compared to $114.6 million for the prior year primarily
as a result of improved working capital utilization. Free cash flow
was $79.2 million for 2012, compared to $66.4 million in 2011.
Capital expenditures for 2012 were $64.9 million compared with $48.3
million in 2011. 
Total debt declined to $392.2 million at September 30, 2012 from
$425.2 million at September 30, 2011. The ratio of
debt-to-debt-plus-equity was 28.0 percent at September 30, 2012, down
from 31.6 percent at September 30, 2011. 
Outlook 
"Overall economic uncertainty continues to impact the markets we
serve. We continue to anticipate market share growth in our Aerospace
segment, while in our Energy segment growth in natural gas offerings
is being offset by the significant decline in the wind turbine
market," said Mr. Gendron. "Therefore, we expect our sales to be
between $1.85 billion and $2.00 billion and earnings per share to be
between $2.15 and $2.35 per share for fiscal 2013." 
Non- U.S. GAAP Financial Measures: EBIT (earnings before interest and
taxes), EBITDA (earnings before interest, taxes, depreciation and
amortization) and free cash flow 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 to evaluate Woodward's operating performance without the impacts
of financing and tax related considerations. Management uses 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 uses free cash flow, which
is derived from net cash provided by operating activities less
payments for property, plant, and equipment, 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 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 and 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 and free cash flow may
differ from similarly titled measures used by other companies,
limiting their usefulness as comparative measures.  
(1) EBIT is defined as net earnings before interest and taxes.
 (2)
Free cash flow is derived from net cash provided by operating
activities less payments for property, plant, and equipment. 
Conference Call 
Woodward will hold an investor conference call at 4:30 p.m. EST,
November 13, 2012 to provide an overview of the financial performance
for the fourth quarter and fiscal 2012, business highlights, and
outlook for fiscal 2013. 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.com.  
You may also listen to the call by dialing 1-866-814-8482 (domestic)
or 1-703-639-1372 (international). Participants should call prior to
the start time to allow for registration; the Conference ID is
1592537. An audio replay will be available by telephone from 7:30
p.m. EST on November 13, 2012 until 11:59 p.m. EST on November 18,
2012. The telephone number to access the replay is 1-888-266-2081
(domestic) or 1-703-925-2533 (international), reference access code
1592537.  
A webcast presentation will be available on the website by clicking
the Investors tab, then the Calendar of Events menu selection and
associated webcast link. The call and presentation will remain
accessible at the website for 14 days. 
About Woodward, Inc. 
Woodward is an independent designer, manufacturer, and service
provider of control solutions for the aerospace and energy markets.
Our aerospace systems and components optimize the performance of
fixed wing and rotorcraft platforms in the commercial, business and
military aircraft, ground vehicles and other equipment. Our
energy-related systems and components enhance the performance of
industrial gas and steam turbines, reciprocating engines,
compressors, wind turbines, electrical grids and other energy-related
industrial equipment. The company's innovative fluid energy,
combustion control, electrical energy, and motion control systems
help customers offer cleaner, more reliable and more efficient
equipment. Our customers include leading original equipment
manufacturers and end users of their products. Woodward is
headquartered in Fort Collins, Colorado, USA. Visit our website at
www.woodward.com. 
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, statements regarding future sales, earnings, liquidity, relative
profitability, and the impact of economic conditions and downturns on
Woodward. 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,
a decline in business with, or financial distress of, our significant
customers; instability in the financial markets, sovereign credit
rating downgrades and uncertainty surrounding European sovereign and
other debt defaults, or other prolonged unfavorable economic and
other industry conditions; Woodward's ability to obtain financing, on
acceptable terms or at all; Woodward's long sales cycle and
implementation period of some of our products and services;
Woodward's ability to implement and realize the intended effects of
restructuring efforts; Woodward's ability to successfully manage
competitive factors; Woodward's ability to manage expenses while
responding to sales increases or decreases; the ability of Woodward's
subcontractors and suppliers to meet their obligations; the success
of, or expenses associated with, Woodward's product development
activities; Woodward's ability to integrate acquisitions and manage
costs thereto; Woodward's debt obligations, debt service requirements
and ability to operate its business and pursue its business
strategies in light of restrictive covenants in its outstanding debt
agreements; risks related to U.S. Government contracting activities;
reductions in defense sales due to a decrease in the amount of U.S.
Federal defense spending; future impairment charges resulting from
changes in the estimates of fair value of reporting units or of
long-lived assets; future subsidiary results or changes in domestic
and international tax statutes; environmental liabilities; Woodward's
continued access to a stable workforce and favorable labor relations;
the geographical location of a significant portion of our Aerospace
business in California, which historically has been susceptible to
natural disasters; Woodward's ability to successfully manage
regulatory, tax and legal matters; liabilities that may result from
legal and regulatory proceedings, inquiries, or investigations by
private or U.S. Government persons or entities; risks from operating
internationally including the impact on reported earnings from
fluctuations in foreign currency exchange rates; fair value of
defined benefit plan assets and assumptions used in determining
Woodward's retirement pension and other postretirement benefit
obligations and related expenses, and other risk factors described in
Woodward's Annual Report on Form 10-K for the year ended September
30, 2012 which we expect to file shortly. 


 
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                               
                                                                            
                               --------------------  ---------------------- 
                                Three-Months Ended         Year Ended       
                                   September 30,          September 30,     
                               --------------------  ---------------------- 
(Unaudited - in thousands                                                   
 except per share amounts)        2012       2011       2012        2011    
                               ---------  ---------  ----------  ---------- 
                                                                            
Net sales                      $ 528,697  $ 489,294  $1,865,627  $1,711,702 
                               ---------  ---------  ----------  ---------- 
Costs and expenses:                                                         
  Cost of goods sold             366,990    340,015   1,303,344   1,198,153 
  Selling, general, and                                                     
   administrative expenses        45,528     39,322     164,512     148,903 
  Research and development                                                  
   costs                          36,077     35,572     143,274     115,633 
  Amortization of intangible                                                
   assets                          8,118  
    8,973      32,809      34,993 
  Interest expense                 6,532      6,238      26,003      25,399 
  Interest income                    (67)      (209)       (542)       (534)
  Other (income) expense, net       (366)       633      (1,580)      1,588 
                               ---------  ---------  ----------  ---------- 
Total costs and expenses         462,812    430,544   1,667,820   1,524,135 
                               ---------  ---------  ----------  ---------- 
Earnings before income taxes      65,885     58,750     197,807     187,567 
Income taxes                      19,766     17,060      56,218      55,332 
                               ---------  ---------  ----------  ---------- 
Net earnings                   $  46,119  $  41,690  $  141,589  $  132,235 
                               =========  =========  ==========  ========== 
                                                                            
Earnings per share amounts:                                                 
Basic earnings per share       $    0.67  $    0.61  $     2.06  $     1.92 
Diluted earnings per share     $    0.66  $    0.60  $     2.01  $     1.89 
                               =========  =========  ==========  ========== 
Weighted average common shares                                              
 outstanding:                                                               
Basic                             68,604     68,830      68,880      68,797 
Diluted                           69,878     70,062      70,307      70,140 
                               =========  =========  ==========  ========== 
Cash dividends per share paid                                               
 to Woodward common                                                         
 stockholders                  $    0.08  $    0.07  $     0.31  $     0.27 
                               =========  =========  ==========  ========== 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED BALANCE SHEETS                                       
                                                                            
                                              ------------------------------
                                                       September 30,        
(Unaudited - in thousands)                         2012            2011     
                                              --------------  --------------
                                                                            
Assets                                                                      
  Current assets:                                                           
    Cash and cash equivalents                 $       61,829  $       74,539
    Accounts receivable                              354,386         297,614
    Inventories                                      398,229         381,555
    Income taxes receivable                            7,485           2,456
    Deferred income tax assets                        40,277          38,270
    Other current assets                              41,271          23,359
                                              --------------  --------------
      Total current assets                           903,477         817,793
  Property, plant, and equipment - net               234,505         206,725
  Goodwill                                           461,374         462,282
  Intangible assets - net                            235,563         268,897
  Deferred income tax assets                           9,129          10,466
  Other assets                                        15,916          15,271
                                              --------------  --------------
Total assets                                  $    1,859,964  $    1,781,434
                                              ==============  ==============
                                                                            
Liabilities and stockholders' equity                                        
  Current liabilities:                                                      
    Short-term borrowings                     $          329  $            -
    Current portion of long-term debt                  7,500          18,374
    Accounts payable                                 124,914         123,453
    Income taxes payable                              14,141           5,440
    Deferred income tax liabilities                      800              74
    Accrued liabilities                              132,184         133,516
                                              --------------  --------------
      Total current liabilities                      279,868         280,857
    Long-term debt, less current portion             384,375         406,875
    Deferred income tax liabilities                   78,163          85,911
    Other liabilities                                109,443          88,694
                                              --------------  --------------
    Total liabilities                                851,849         862,337
    Stockholders' equity                           1,008,115         919,097
                                              --------------  --------------
Total liabilities and stockholders' equity    $    1,859,964  $    1,781,434
                                              ==============  ==============
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             
                                                                            
                                               ---------------------------- 
                                                        Year Ended          
                                                       September 30,        
                                               ---------------------------- 
(Unaudited - in thousands)                          2012           2011     
                                               -------------  ------------- 
Net cash provided by operating activities      $     144,113  $     114,623 
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
Payments for property, plant, and equipment          (64,900)       (48,255)
Business acquisitions, net of cash and                                      
 marketable securities acquired                            -        (38,698)
Business acquisitions, marketable securities                                
 acquired                                                  -         (8,463)
Proceeds from the sale of marketable                                        
 securities                                                -          8,217 
Proceeds from sale of other assets                       283             59 
                                               -------------  ------------- 
Net cash used in investing activities                (64,617)       (87,140)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
Cash dividends paid                                  (21,351)       (18,581)
Proceeds from sales of treasury stock       
           6,286          2,482 
Payments for repurchases of common stock             (44,110)        (6,837)
Excess tax benefits from stock compensation            3,990          3,558 
Payments of long-term debt                           (33,365)       (18,430)
Borrowings on revolving lines of credit and                                 
 short-term borrowings                               187,865        164,557 
Payments on revolving lines of credit and                                   
 short-term borrowings                              (187,591)      (182,728)
Payment of debt financing costs                       (2,185)             - 
                                               -------------  ------------- 
Net cash used in financing activities                (90,461)       (55,979)
                                               -------------  ------------- 
Effect of exchange rate changes on cash and                                 
 cash equivalents                                     (1,745)        (2,544)
                                               -------------  ------------- 
Net change in cash and cash equivalents              (12,710)       (31,040)
Cash and cash equivalents at beginning of                                   
 period                                               74,539        105,579 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $      61,829  $      74,539 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                               
                                                                            
                               --------------------  ---------------------- 
                                Three-Months Ended         Year Ended       
                                   September 30,          September 30,     
                               --------------------  ---------------------- 
(Unaudited - in thousands)        2012       2011       2012        2011    
                               ---------  ---------  ----------  ---------- 
Net sales:                                                                  
Aerospace                      $ 264,046  $ 241,701  $  896,083  $  843,032 
Energy                           264,651    247,593     969,544     868,670 
                               ---------  ---------  ----------  ---------- 
Total consolidated net sales   $ 528,697  $ 489,294  $1,865,627  $1,711,702 
                               =========  =========  ==========  ========== 
Segment earnings*:                                                          
Aerospace                      $  47,915  $  40,945  $  130,192  $  129,502 
As a percent of segment sales       18.1%      16.9%       14.5%       15.4%
Energy                            34,177     33,177     126,441     113,872 
As a percent of segment sales       12.9%      13.4%       13.0%       13.1%
                               ---------  ---------  ----------  ---------- 
Total segment earnings            82,092     74,122     256,633     243,374 
Nonsegment expenses               (9,742)    (9,343)    (33,365)    (30,942)
                               ---------  ---------  ----------  ---------- 
EBIT                              72,350     64,779     223,268     212,432 
Interest expense, net             (6,465)    (6,029)    (25,461)    (24,865)
                               ---------  ---------  ----------  ---------- 
  Consolidated earnings before                                              
   income taxes                $  65,885  $  58,750  $  197,807  $  187,567 
                               =========  =========  ==========  ========== 
                                                                            
Payments for property, plant                                                
 and equipment                 $  20,676  $  15,615  $   64,900  $   48,255 
Depreciation expense               6,629      9,121      35,808      40,400 
                               =========  =========  ==========  ========== 
*This schedule reconciles segment earnings, which exclude certain costs, to 
 consolidated earnings before taxes.                                        
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
RECONCILIATION OF NET EARNINGS TO EBIT AND EBITDA                           
                                                                            
                                 --------------------  -------------------- 
                                  Three-Months Ended        Year Ended      
                                     September 30,         September 30,    
                                 --------------------  -------------------- 
(Unaudited - in thousands)          2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net earnings                     $  46,119  $  41,690  $ 141,589  $ 132,235 
Income taxes                        19,766     17,060     56,218     55,332 
Interest expense                     6,532      6,238     26,003     25,399 
Interest income                        (67)      (209)      (542)      (534)
                                 ---------  ---------  ---------  --------- 
EBIT                                72,350     64,779    223,268    212,432 
Amortization of intangible                                                  
 assets                              8,118      8,973     32,809     34,993 
Depreciation expense                 6,629      9,121     35,808     40,400 
                                 ---------  ---------  ---------  --------- 
EBITDA                           $  87,097  $  82,873  $ 291,885  $ 287,825 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW               
                                                                            
                                 --------------------  -------------------- 
                                  Three-Months Ended        Year Ended      
                                     September 30,         September 30,    
                                 --------------------  -------------------- 
(Unaudited - in thousands)          2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                                                            
Net cash provided by operating                                              
 activities                      $  80,460  $  67,823  $ 144,113  $ 114,623 
Payments for property, plant,                                               
 and equipment                     (20,676)   (15,615)   (64,900)   (48,255)
                                 ---------  ---------  ---------  --------- 
Free cash flow                   $  59,784  $  52,208  $  79,213  $  66,368 
                                 =========  =========  =========  ========= 

  
CONTACT: 
Robert F. Weber, Jr.
Vic
e Chairman, Chief Financial Officer and Treasurer 
970-498-3112 
Woodward, Inc.
1000 East Drake Road
Fort Collins, Colorado 80525, USA
Tel: 970-482-5811
Fax: 970-498-3058 
 
 
Press spacebar to pause and continue. Press esc to stop.