Woodward Reports First Quarter Fiscal Year 2013 Results

Woodward Reports First Quarter Fiscal Year 2013 Results 
FORT COLLINS, CO -- (Marketwire) -- 01/22/13 --  Woodward, Inc.
(NASDAQ: WWD) today reported financial results for its first quarter
of fiscal year 2013. (All per share amounts are presented on a fully
diluted basis.) 
First Quarter Fiscal 2013 Highlights 


 
--  Net sales for the first quarter of 2013 were $408.3 million, compared
    to $407.9 million in the first quarter of last year.
--  Earnings per share were $0.39 in the first quarter of 2013 compared to
    $0.40 in the first quarter of last year.
--  Total EBIT(1) for the quarter was $44.9 million compared to $46.4
    million in the first quarter of the prior year, a decrease of 3
    percent.
--  Free cash flow(2) for the first quarter of 2013 was $10.1 million, an
    increase of $25.0 million from a net outflow of $14.9 million in the
    first quarter of the prior year.

  
"Sales in the first quarter of fiscal 2013 were affected by both normal
seasonal ordering patterns and increased fiscal and economic
volatility," said Thomas A. Gendron, Chairman and Chief Executive
Officer. "While global fiscal challenges during the coming year may
have a substantial impact on 2013, we continue to expect improved
results for the remainder of the year." 
Net sales for the fiscal 2013 first quarter were $408.3 million,
compared to $407.9 million for the 2012 first quarter.  
EBIT was $44.9 million for the first quarter of 2013 compared to
$46.4 million for the first quarter of 2012. The current quarter EBIT
was primarily impacted by continuing investments in Aerospace
manufacturing capacity and capability, as well as acquisition costs,
offset by decreased variable compensation. Foreign currency exchange
rates had a negative impact of approximately $2 million on EBIT for
the quarter. 
Net earnings for the 2013 first quarter were $27.4 million or $0.39
per share compared to $28.4 million, or $0.40 per share in the 2012
first quarter.  
On December 28, 2012, Woodward acquired from GE Aviation Systems the
hydraulic thrust reverser actuation systems business located in
Duarte, California (the "Duarte Business") for approximately $200
million in cash. The Duarte Business, which has been consolidated
into Woodward's Aerospace segment, had no impact on net sales, EBIT
or net earnings for the first quarter of 2013. 
Quarterly Segment Results 
Aerospace  
Aerospace net sales for the first quarter of fiscal 2013 were $211.4
million, an increase of 9 percent from $193.2 million for the first
quarter a year ago. Segment earnings for the first quarter of 2013
were $31.6 million compared to $27.1 million for the same quarter a
year ago, an increase of 17 percent. Segment earnings as a percent of
segment net sales were 14.9 percent this quarter compared to 14.0
percent in the same quarter of the prior year.  
The sales increase was due to commercial OEM sales and strong
military aftermarket sales. Segment earnings were positively impacted
by the higher sales volumes and lower variable compensation,
partially offset by expenses associated with improved manufacturing
capacity and capability.  
Energy  
Energy net sales for the first quarter of fiscal 2013 were $197.0
million, a decrease of 8 percent from $214.7 million for last year's
first quarter. Segment earnings for the first quarter were $23.9
million, compared to $26.7 million for last year's first quarter.
Segment earnings as a percent of segment net sales were 12.1 percent
this quarter compared to 12.4 percent in the same quarter of the
prior year.  
Strong sales of compressed natural gas systems were offset by a
significant decrease in wind turbine converter sales in North America
and softness in other reciprocating engine and industrial turbine
systems sales. Segment earnings were primarily impacted by the
decreased sales volume partially offset by reduced variable
compensation and improved pricing. 
Nonsegment  
Nonsegment expenses totaled $10.6 million for the first quarter of
fiscal 2013, compared to $7.4 million for the same quarter last year.
Nonsegment expenses were 2.6 percent of consolidated net sales for
the first quarter of 2013, up from 1.8 percent of consolidated net
sales for the same quarter of the prior year. Nonsegment expenses for
the quarter were primarily impacted by acquisition costs for the
Duarte Business. 
Cash Flow and Financial Position 
Net cash generated from operating activities was $40.0 million for
the first quarter of 2013, compared to $2.3 million for the prior
year quarter primarily the result of cash inflows from strong sales
in the fourth quarter of fiscal 2012. Free cash flow for the first
quarter of 2013 was $10.1 million compared to a net outflow of $14.9
million for the first quarter of 2012, an increase of $25.0 million.
Capital expenditures for the first quarter of 2013 were $29.9 million
compared with $17.3 million in the same quarter of 2012. 
Total debt was $590.0 million at December 31, 2012 and reflects new
debt in the quarter of $200.0 million used to finance the acquisition
of the Duarte Business. Excluding this new debt, total debt declined
to $390.0 million at December 31, 2012 from $392.2 million at
September 30, 2012.  
Outlook 
"Overall economic uncertainty continues to impact the markets we
serve. We still see market share growth in our Aerospace segment,
while in our Energy segment, growth in natural gas is being offset by
the significant decline in the wind turbine market," said Mr.
Gendron. "Including our recent acquisition, we now anticipate that
fiscal 2013 sales will be between $1.9 billion and $2.0 billion, and
earnings per share will be between $2.22 and $2.42 per share,
including approximately a $0.07 per share effect of the fiscal year
2012 retroactive impact of the U.S. research and experimentation
credit for fiscal 2013 that will be recognized in the second fiscal
quarter of this year." 
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 informati
on 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,
January 22, 2013 to provide an overview of the financial performance
for the first quarter, 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
1602558. An audio replay will be available by telephone from 7:30
p.m. EST on January 22, 2013 until 11:59 p.m. EST on January 27,
2013. The telephone number to access the replay is 1-888-266-2081
(domestic) or 1-703-925-2533 (international), reference access code
1602558. 
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 related 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 and any subsequently filed Quarterly Report on
Form 10-Q. 


 
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                               
                                                    Three-Months Ended      
                                                       December 31,         
                                               ---------------------------- 
(Unaudited - in thousands except per share                                  
 amounts)                                           2012           2011     
                                               -------------  ------------- 
                                                                            
Net sales                                      $     408,339  $     407,896 
                                               -------------  ------------- 
Costs and expenses:                                                         
  Cost of goods sold                                 289,573        284,410 
  Selling, general, and administrative                                      
   expenses                                           36,418         38,570 
  Research and development costs                      30,018         30,794 
  Amortization of intangible assets                    7,667          8,258 
  Interest expense                                     6,456          6,308 
  Interest income                                        (68)          (126)
  Other (income) expense, net                           (262)          (494)
                                               -------------  ------------- 
Total costs and expenses                             369,802        367,720 
                                               -------------  ------------- 
Earnings before income taxes                          38,537         40,176 
Income taxes                                          11,169         11,760 
                                               -------------  ------------- 
Net earnings                                   $      27,368  $      28,416 
                                               =============  ============= 
                                                                            
Earnings per share amounts:                                                 
Basic earnings per share                       $        0.40  $        0.41 
Diluted earnings per share                     $        0.39  $        0.40 
                                               =============  ============= 
Weighted average common shares outstanding:                                 
Basic                                                 68,461         68,919 
Diluted                                               69,713         70,393 
                                               =============  ============= 
Cash dividends per share paid to Woodward                                   
 common stockholders                           $        0.08  $        0.07 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED BALANCE SHEETS                                       
                                                December 31,  September 30, 
(Unaudited - in thousands)                          2012           2012     
                                               -------------  ------------- 
                                                                            
Assets                                                                      
  Current assets:                                                           
    Cash and cash equivalents                  $      69,456  $      61,829 
    Accounts receivable                              300,062        354,386 
    Inventories                                      445,672        398,229 
    Income taxes receivable                            5,949          7,485 
    Deferred income tax assets                        41,146         40,277 
    Other current assets                              35,702         41,271 
                                               -------------  ------------- 
      Total current assets                           897,987        903,477 
  Property, plant, and equipment - net               265,497        234,505 
  Goodwill                                           544,393        461,374 
  Intangible assets - net                            307,143        235,563 
  Deferred income tax assets                           8,667          9,129 
  Other assets                                        25,130         15,916 
                                               -------------  ------------- 
Total assets                                   $   2,048,817  $   1,859,964 
                                               =============  ============= 
                                                                            
Liabilities and stockholders' equity                                        
  Current liabilities:                                                      
    Short-term borrowings                      $           -  $         329 
    Current portion of long-term debt                140,000          7,500 
    Accounts payable                                 112,183        124,914 
    Income taxes payable                              16,863         14,141 
    Deferred income tax liabilities                      800            800 
    Accrued liabilities                               97,738        132,184 
                                               -------------  ------------- 
      Total current liabilities                      367,584        279,868 
  Long-term debt, less current portion               450,000        384,375 
  Deferred income tax liabilities                     76,217         78,163 
  Other liabilities                                  115,386        109,443 
                                               -------------  ------------- 
  Total liabilities                                1,009,187        851,849 
  Stockholders' equity                             1,039,630      1,008,115 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $   2,048,817  $   1,859,964 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                             
                                                                            
                                                    Three-Months Ended      
                                                       December 31,         
                                               ---------------------------- 
(Unaudited - in thousands)                          2012           2011     
                                               -------------  ------------- 
Net cash provided by operating activities      $      39,974  $       2,328 
                                               -------------  ------------- 
                                                                            
Cash flows from investing activities:                                       
Payments for property, plant, and equipment          (29,894)       (17,254)
Business acquisitions, net of cash acquired         (198,860)             - 
Proceeds from sale of other assets                        11             60 
                                               -------------  ------------- 
Net cash used in investing activities               (228,743)       (17,194)
                                               -------------  ------------- 
                                                                            
Cash flows from financing activities:                                       
Cash dividends paid                                   (5,474)        (4,823)
Proceeds from sales of treasury stock                    876          2,211 
Payments for repurchases of common stock                   -         (4,663)
Excess tax benefits from stock compensation            2,088          1,691 
Proceeds from the issuance of long-term debt         200,000              - 
Payments of long-term debt                            (1,875)       (12,589)
Borrowings on revolving lines of credit and                                 
 short-term borrowings                                15,000         74,821 
Payments on revolving lines of credit and                                   
 short-term borrowings                               (15,329)       (64,858)
                                               -------------  ------------- 
Net cash provided by (used in) financing                                    
 activities                                          195,286         (8,210)
                                               -------------  ------------- 
Effect of exchange rate changes on cash and                                 
 cash equivalents                                      1,110         (1,083)
                                               -------------  ------------- 
Net change in cash and cash equivalents                7,627        (24,159)
Cash and cash equivalents at beginning of                                   
 period                                               61,829         74,539 
                                               -------------  ------------- 
Cash and cash equivalents at end of period     $      69,456  $      50,380 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                               
                                                                            
                                                    Three-Months Ended      
                                                       December 31,         
                                               ---------------------------- 
(Unaudited - in thousands)                          2012           2011     
                                               -------------  ------------- 
Net sales:                                                                  
Aerospace                                      $     211,389  $     193,226 
Energy                                               196,950        214,670 
                                               -------------  ------------- 
Total consolidated net sales                   $     408,339  $     407,896 
                                               =============  ============= 
Segment earnings*:                                                          
Aerospace                                      $      31,568  $      27,060 
As a percent of segment sales                           14.9%          14.0%
Energy                                                23,908         26,725 
As a percent of segment sales                           12.1%          12.4%
                                               -------------  ------------- 
Total segment earnings                                55,476         53,785 
Nonsegment expenses                                  (10,551)        (7,427)
                                               -------------  ------------- 
EBIT                                                  44,925         46,358 
Interest expense, net                                 (6,388)        (6,182)
                                               -------------  ------------- 
    Consolidated earnings before income taxes  $      38,537  $      40,176 
                                               =============  ============= 
                                                                            
Payments for property, plant and equipment     $      29,894  $      17,254 
Depreciation expense                                  10,273         10,169 
                                               =============  ============= 
                                                                            
*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      
                                                       December 31,         
                                               ---------------------------- 
(Unaudited - in thousands)                          2012           2011     
                                               -------------  ------------- 
Net earnings                                   $      27,368  $      28,416 
Income taxes                                          11,169         11,760 
Interest expense                                       6,456          6,308 
Interest income                                          (68)          (126)
                                               -------------  ------------- 
EBIT                                                  44,925         46,358 
Amortization of intangible assets                      7,667          8,258 
Depreciation expense                                  10,273         10,169 
                                               -------------  ------------- 
EBITDA                                         $      62,865  $      64,785 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
Woodward, Inc. and Subsidiaries                                             
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW               
                                                     Three-Months Ended     
                                                        December 31,        
                                               ---------------------------- 
(Unaudited - in thousands)                          2012           2011     
                                               -------------  ------------- 
                                                                            
Net cash provided by operating activities      $      39,974  $       2,328 
Payments for property, plant, and equipment          (29,894)       (17,254)
                                               -------------  ------------- 
Free cash flow                                 $      10,080  $     (14,926)
                                               =============  ============= 

  
CONTACT: 
Don Guzzardo
Director, Investor Relations & Treasury 
970-498-3580 
Woodward, Inc.
1000 East Drake Road
Fort Collins, Colorado 80525, USA
Tel: 970-482-5811
Fax: 970-498-3058 
 
 
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