Woodward Reports Fourth Quarter and Fiscal Year 2012 Results

FORT COLLINS, CO—(Marketwire – Nov 13, 2012) – 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 EBIT1 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 flow2 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

Aerospace 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.”