W WOODWARD FISCAL YEAR 2022 THIRD QUARTER RESULTS August 1, 2022 Q3 FY22 AGENDA ________ ________ ________ HIGHLIGHTS Dan Provaznik FIRST IMPRESSIONS & MARKET REVIEW Chip Blankenship FINANCIAL RESULTS & OUTLOOK Mark Hartman 2 | © WOODWARD, INC. PROPRIETARY © WOODWARD, INC. | --- | --- ...

Woodward, Inc. (NASDAQ:WWD) Q3 2022 Earnings Conference Call August 1, 2022 4:30 PM ET Company Participants Dan Provaznik - Director, Investor Relations Chip Blankenship - Chairman and CEO Mark Hartman - Chief Financial Officer Conference Call Participants Robert Spingarn - Melius Research Pete Skibitski - Alembic Global Matt Akers - Wells Fargo David Strauss - Barclays Chris Howe - Barrington Research Gautam Khanna - Cowen Sheila Kahyaoglu - Jefferies Michael Ciarmoli - Truist Securities Noah Poponak - Gol ...

PART I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Woodward, Inc.'s unaudited condensed consolidated financial statements for March 31, 2022, show **$1.13 billion** in net sales and **$78.2 million** in net earnings for the six months [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Net sales for the three months ended March 31, 2022, increased slightly to **$586.8 million**, while net earnings decreased to **$47.9 million** Condensed Consolidated Statements of Earnings (Unaudited) | Metric | Three-Months Ended March 31, 2022 (in millions) | Three-Months Ended March 31, 2021 (in millions) | Six-Months Ended March 31, 2022 (in millions) | Six-Months Ended March 31, 2021 (in millions) | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $586.8 | $581.3 | $1,128.4 | $1,118.9 | | **Earnings before income taxes** | $54.1 | $78.5 | $91.8 | $126.1 | | **Net earnings** | $47.9 | $68.3 | $78.2 | $109.9 | | **Diluted earnings per share** | $0.74 | $1.04 | $1.21 | $1.68 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets decreased to **$3.89 billion** from **$4.09 billion**, primarily due to reduced cash and cash equivalents Key Balance Sheet Items (Unaudited) | Metric | March 31, 2022 (in millions) | September 30, 2021 (in millions) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $208.4 | $448.5 | | **Total current assets** | $1,331.4 | $1,464.7 | | **Total assets** | $3,890.5 | $4,091.0 | | **Total current liabilities** | $369.0 | $366.3 | | **Long-term debt** | $728.2 | $734.1 | | **Total liabilities** | $1,838.7 | $1,876.2 | | **Total stockholders' equity** | $2,051.9 | $2,214.8 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for the six months ended March 31, 2022, significantly decreased to **$50.1 million** from **$219.0 million** in the prior year Cash Flow Summary (Unaudited) | Metric | Six-Months Ended March 31, 2022 (in millions) | Six-Months Ended March 31, 2021 (in millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $50.1 | $219.0 | | **Net cash (used in) provided by investing activities** | ($12.8) | $0.6 | | **Net cash used in financing activities** | ($276.8) | ($87.8) | | **Net change in cash and cash equivalents** | ($240.1) | $134.3 | - Payments for repurchases of common stock were **$273.5 million** in the first six months of fiscal 2022, compared to zero in the same period of 2021[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, financial instruments, debt, and segment performance, including **$709.2 million** in Aerospace revenue and **$419.2 million** in Industrial revenue for the six months ended March 31, 2022 - The company's remaining performance obligations related to firm orders were **$1.45 billion** as of March 31, 2022, up from **$1.28 billion** as of September 30, 2021, with the majority relating to the Aerospace segment[35](index=35&type=chunk) - In January 2022, the Board authorized a new **$800 million** stock repurchase program, terminating the previous **$500 million** program; during the first half of fiscal 2022, the company repurchased **2,047 shares** for **$245.4 million** under the new authorization[109](index=109&type=chunk) Net Sales by Segment (Six-Months Ended March 31) | Segment | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | **Aerospace** | $709.2 | $686.4 | | **Industrial** | $419.2 | $432.6 | | **Total** | $1,128.4 | $1,118.9 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting ongoing COVID-19 impacts, supply chain constraints, and labor shortages, which negatively affected Q2 2022 sales by approximately **$100 million**, while maintaining strong liquidity - The company's financial performance in the first half of fiscal 2022 was adversely affected by industry-wide COVID-19 related disruptions, including supply chain constraints, labor shortages, and customer-initiated shipment delays[133](index=133&type=chunk) - On April 16, 2022, CEO Thomas A. Gendron announced his retirement effective May 9, 2022, with Charles Blankenship, Jr. appointed as the new CEO, President, and Chairman of the Board[136](index=136&type=chunk)[137](index=137&type=chunk) - Sales to Russia were less than **1%** of total sales in the first six months of fiscal 2022 and 2021, but the company acknowledges potential indirect impacts from the Russia-Ukraine conflict such as supply chain disruptions and inflationary pressures[135](index=135&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For Q2 2022, consolidated net sales increased **1.0%** to **$586.8 million**, but net earnings fell **29.9%** to **$47.9 million**, with gross margin compressing to **22.7%** due to higher lower-margin sales and increased manufacturing costs - Aerospace segment net sales were negatively impacted by approximately **$60 million** in Q2 2022 due to ongoing industry-wide COVID-19 related disruptions[145](index=145&type=chunk)[162](index=162&type=chunk) - Industrial segment net sales were negatively impacted by approximately **$40 million** in Q2 2022 due to supply chain constraints and labor shortages[146](index=146&type=chunk)[167](index=167&type=chunk) - Gross margin decreased to **22.7%** in Q2 2022 from **25.3%** in Q2 2021, attributed to a higher mix of commercial OEM sales, increased manufacturing costs from COVID disruptions, and inefficiencies from hiring and training[148](index=148&type=chunk) [Segment Results](index=34&type=section&id=Segment%20Results) In Q2 2022, Aerospace segment sales grew **2.2%** to **$372.8 million** but earnings fell **13.3%** to **$59.8 million**, while Industrial segment sales decreased **1.2%** to **$214.1 million** with earnings dropping **38.2%** to **$17.2 million**, both impacted by inflation and manufacturing costs Aerospace Segment Performance (Q2) | Metric | 2022 (in millions) | 2021 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $372.8 | $364.7 | +2.2% | | **Segment Earnings** | $59.8 | $69.0 | -13.3% | | **Earnings as % of Sales** | 16.0% | 18.9% | -290 bps | Industrial Segment Performance (Q2) | Metric | 2022 (in millions) | 2021 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $214.1 | $216.6 | -1.2% | | **Segment Earnings** | $17.2 | $27.9 | -38.2% | | **Earnings as % of Sales** | 8.1% | 12.9% | -480 bps | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$208.4 million** in cash and **$989.6 million** available under its revolving credit facility as of March 31, 2022, despite a significant decrease in net cash from operations to **$50.1 million** for the first half of fiscal 2022 - As of March 31, 2022, the company had total outstanding debt of **$728.7 million** and additional borrowing availability of **$989.6 million** under its revolving credit facility[173](index=173&type=chunk) - In January 2022, the Board authorized a new **$800 million** stock repurchase program; in the first half of fiscal 2022, the company repurchased **2,047 shares** for **$245.4 million** under this new program[179](index=179&type=chunk) Free Cash Flow Reconciliation (Six-Months Ended March 31) | Metric | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $50.1 | $219.0 | | **Payments for property, plant and equipment** | ($24.2) | ($13.3) | | **Free cash flow (Non-U.S. GAAP)** | $26.0 | $205.7 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that its exposures to market risks, including interest rate, foreign currency, and commodity price risk, have not materially changed from those disclosed in its most recent Form 10-K - The company's market risks, including interest rate, foreign currency, and raw material costs, have not materially changed since the filing of its most recent Form 10-K[200](index=200&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2022, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[202](index=202&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[203](index=203&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Woodward is involved in various legal proceedings arising in the normal course of business, which management believes will not have a material effect on the company's liquidity, financial condition, or results of operations - The company is involved in routine claims and litigation, but management does not expect the outcomes to have a material impact on its financial condition or results of operations[205](index=205&type=chunk)[206](index=206&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes to the risk factors previously disclosed in its most recent Form 10-K - There have been no material changes to the risk factors disclosed in the company's most recent Form 10-K[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activities, including the authorization of a new **$800 million** program in January 2022 and the repurchase of approximately **2.4 million** shares for about **$119** per share during the quarter ended March 31, 2022 - In January 2022, the Board terminated the 2019 stock repurchase authorization and approved a new program for up to **$800 million**, ending in January 2024[209](index=209&type=chunk) Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Weighted Average Price Paid Per Share ($) | | :--- | :--- | :--- | | Jan 2022 | 363 | $110.27 | | Feb 2022 | 1,140,840 | $116.52 | | Mar 2022 | 907,313 | $123.94 | [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and interactive data files

M WOODWARD FISCAL YEAR 2022 SECOND QUARTER RESULTS May 2, 2022 Q2 FY22 AGENDA ________ ________ ________ HIGHLIGHTS Dan Provaznik MARKET REVIEW Tom Gendron FINANCIAL RESULTS & OUTLOOK Mark Hartman 2 | © WOODWARD, INC. PROPRIETARY © WOODWARD, INC. | --- ...

Financial Data and Key Metrics Changes - Net sales for Q2 2022 were $587 million, an increase of 1% compared to $581 million in Q2 2021 [7] - Net earnings decreased to $48 million or $0.74 per share from $68 million or $1.04 per share in the prior year [8] - Adjusted net earnings for Q2 2022 were $47 million or $0.72 per share, with no adjustments in the prior year [8] - Net cash provided by operating activities for the first half of fiscal 2022 was $50 million, down from $219 million [9] - Free cash flow for the first half of fiscal 2022 was $26 million, compared to $206 million in the previous year [9] Business Line Data and Key Metrics Changes - Aerospace segment sales for Q2 2022 were $370 million, up 2%, but negatively impacted by approximately $60 million due to COVID-19 disruptions [27] - Commercial OEM and aftermarket sales increased by 21% and 40% respectively, driven by recovery in passenger traffic [28] - Defense OEM sales decreased by 28% primarily due to lower sales of guided weapons, while defense aftermarket sales were down 12% [28] - Industrial segment sales for Q2 2022 were $214 million, a decrease of 1%, impacted by approximately $40 million from COVID-19 disruptions and unfavorable foreign currency [31] Market Data and Key Metrics Changes - Commercial Aerospace is recovering, with U.S. and European domestic passenger traffic nearing pre-COVID levels, while China’s traffic has collapsed due to lockdowns [18] - Demand for gas turbines in power generation is strong in Asia, with increasing aftermarket activity [20] - The oil and gas market remains favorable due to elevated prices, leading to increased utilization and aftermarket demand [22] Company Strategy and Development Direction - The company is focused on addressing market recovery challenges while enhancing operational excellence and delivering shareholder value [24] - Long-term outlook remains positive, with expectations of recovery in markets and improved profitability in Aerospace and Industrial businesses [24] Management's Comments on Operating Environment and Future Outlook - Management anticipates ongoing market volatility due to COVID-19 disruptions, supply chain challenges, and inflationary pressures [15] - The company has reduced its fiscal year outlook due to these challenges but remains optimistic about long-term recovery [17] - Orders are up across nearly all market segments, indicating strong recovery momentum [14] Other Important Information - The company is experiencing labor inefficiencies due to onboarding approximately 400 new employees since January [15] - R&D costs for Q2 2022 were $32 million, or 5.5% of sales, compared to $28 million, or 4.8% of sales in the prior year [36] Q&A Session Summary Question: On OE sales and commercial aero profitability amidst inflationary pressures - Management confirmed that OE sales remain profitable and that price increases are being implemented to offset inflation [51] Question: Impact of inflation on aerospace margins - Management indicated that margin drops are due to inflation, mix issues, and labor efficiencies, with expectations for recovery in the second half of the year [66] Question: Update on supplier capacity issues and chip shortages - Management reported ongoing challenges with suppliers, particularly in semiconductors, with recovery expected in 2023 [72] Question: Changes in full-year revenue guidance - Management highlighted that the reduction in guidance was primarily due to impacts from China lockdowns and supply chain disruptions [109] Question: Confidence in second half sales improvement - Management expressed confidence in achieving sales improvement in the second half, with expectations for a stronger fourth quarter [100]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 FY2022, including earnings, balance sheets, cash flows, and equity, with detailed notes [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) Net sales slightly increased to **$541.6 million** in Q1 FY2022, but net earnings and diluted EPS declined due to higher costs Three-Months Ended December 31 (in thousands, except per share amounts) | Financial Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net sales | $541,586 | $537,619 | | Total costs and expenses | $503,840 | $490,035 | | Earnings before income taxes | $37,746 | $47,584 | | Net earnings | $30,305 | $41,570 | | Diluted earnings per share | $0.47 | $0.64 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to **$4.04 billion** as of December 31, 2021, while total liabilities decreased and stockholders' equity slightly increased Balance Sheet Summary (in thousands) | Account | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$4,035,240** | **$4,091,004** | | Total Current Assets | $1,446,731 | $1,464,723 | | **Total Liabilities** | **$1,811,808** | **$1,876,223** | | Total Current Liabilities | $329,508 | $366,257 | | Long-term debt | $729,826 | $734,122 | | **Total Stockholders' Equity** | **$2,223,432** | **$2,214,781** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities significantly decreased to **$39.3 million** in Q1 FY2022, primarily due to working capital changes, while financing cash outflow decreased Cash Flow Summary (in thousands) | Cash Flow Activity | Three-Months Ended Dec 31, 2021 | Three-Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $39,290 | $146,725 | | Net cash used in investing activities | ($13,115) | ($9,955) | | Net cash used in financing activities | ($46,688) | ($94,642) | | **Net change in cash and cash equivalents** | **($21,480)** | **$48,611** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue recognition, GE joint venture, financial instruments, debt, stock repurchases, and segment performance, supporting financial statements - The company's remaining performance obligations for firm orders totaled **$1.39 billion** as of December 31, 2021, with the majority related to the Aerospace segment and expected to be recognized within two years[33](index=33&type=chunk) - The company's equity interest in the earnings of its joint venture with General Electric (GE) contributed **$4.7 million** to other income in Q1 FY2022, up from **$2.4 million** in Q1 FY2021[48](index=48&type=chunk) - In January 2022, the Board authorized a new **$800 million** stock repurchase program, terminating the previous **$500 million** authorization from 2019; in Q1 FY2022, the company repurchased **$26.7 million** of its common stock[102](index=102&type=chunk)[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2022 financial performance, covering COVID-19 impacts, operational results, segment performance, liquidity, and capital resources [Overview](index=27&type=section&id=Overview) Q1 FY2022 saw market recovery signs but faced supply chain and labor disruptions, with consolidated net sales slightly increasing driven by Aerospace - The COVID-19 pandemic and related disruptions, including supply chain constraints and labor shortages, continue to adversely impact operations and caused some customer-initiated shipment delays[125](index=125&type=chunk) Q1 FY2022 vs Q1 FY2021 Performance | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Net Sales | $541.6M | $537.6M | | Aerospace Sales | $336.4M | $321.7M | | Industrial Sales | $205.2M | $216.0M | | Consolidated Net Earnings | $30.3M | $41.6M | | Diluted EPS | $0.47 | $0.64 | | Adjusted Diluted EPS | $0.56 | $0.64 | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Consolidated net sales rose to **$541.6 million**, but gross margin declined due to mix shift, while SG&A increased and R&D decreased - Aerospace segment sales increased **4.6%** to **$336.4 million**, driven by recovering global passenger traffic and increased aircraft production rates, though negatively impacted by approximately **$42 million** due to supply chain and labor disruptions[134](index=134&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) - Industrial segment sales decreased **5.0%** to **$205.2 million**, primarily due to weakness in natural gas engine sales in China and unfavorable foreign currency impacts, with approximately **$28 million** negative impact from COVID-related disruptions[135](index=135&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Gross margin declined to **22.6%** from **25.3%** year-over-year, attributed to increased Aerospace commercial OEM sales volume which carry lower margins[137](index=137&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Strong liquidity with **$427.0 million** cash, but operating cash flow decreased; a new **$800 million** stock repurchase program was authorized - As of December 31, 2021, the company had **$427.0 million** in cash and cash equivalents, total debt of **$730.3 million**, and **$989.1 million** of borrowing availability under its revolving credit facility[131](index=131&type=chunk)[156](index=156&type=chunk) Cash Flow Comparison (Q1 FY2022 vs Q1 FY2021, in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $39,290 | $146,725 | | Free cash flow (Non-GAAP) | $26,167 | $139,462 | - The Board terminated the 2019 stock repurchase authorization and approved a new **$800 million** program in January 2022, which will run for two years[160](index=160&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including interest rate, foreign currency, and raw material costs, with no material changes since the last 10-K - The company's primary market risks include interest rate risk, foreign currency exchange rate risk, and raw material cost changes; there have been no material changes in these risks since the last annual report[178](index=178&type=chunk)[179](index=179&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal controls during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2021[181](index=181&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[182](index=182&type=chunk) [PART II – OTHER INFORMATION](index=37&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management expecting no material impact on financial condition or operations - Woodward is involved in routine legal proceedings and claims, but management believes any resulting liabilities will not materially impact the company's liquidity, financial condition, or operations[184](index=184&type=chunk)[185](index=185&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the most recent Annual Report on Form 10-K - The risk factors disclosed in the company's most recent Form 10-K have not materially changed[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **233,204** shares at **$114.69** per share in October 2021, under a publicly announced plan Issuer Purchases of Equity Securities (October 2021) | Period | Total Shares Purchased | Weighted-Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plan | | :--- | :--- | :--- | :--- | | Oct 1 - Oct 31, 2021 | 233,204 | $114.69 | 233,178 | - In January 2022, the Board terminated the 2019 stock repurchase authorization and approved a new **$800 million** program to run through January 2024[188](index=188&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section indexes exhibits filed with the 10-Q, including credit agreement amendments, officer certifications, and interactive data

Woodward, Inc. (NASDAQ:WWD) Q1 2022 Results Conference Call January 31, 2022 4:30 PM ET Company Participants Dan Provaznik - Director of Investor Relations Tom Gendron - Chairman and Chief Executive Officer Mark Hartman - Chief Financial Officer Conference Call Participants Sheila Kahyaoglu - Jefferies Robert Spingarn - Milius Research Christopher Glynn - Oppenheimer Michael Ciarmoli - Truist Securities Matt Akers - Los Fargo Pete Skibitski - Alembic Global David Strauss - Barclays Gautam Khanna - Cowen Chr ...

Fiscal Year 2022 First Quarter Results January 31, 2022 Today's Agenda Highlights Market Review Financial Results & Outlook Q&A Dan Provaznik Tom Gendron Mark Hartman 2 | © WOODWARD, INC. PROPRIETARY Cautionary Statement Information in this presentation 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 our business and financial outlook for fiscal 2022, inclu ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 000-08408 WOODWARD, INC. (Exact name of registrant as specified in its charter) Delaware 36-1984010 (State or other jurisdiction of inc ...

Financial Data and Key Metrics Changes - Net sales for Q4 2021 were $570 million, a 7% increase from $531 million in Q4 2020. For the full year, net sales were $2.25 billion, down from $2.5 billion in the prior year [9][10] - Net earnings for Q4 2021 were $50 million ($0.76 per share), compared to $57 million ($0.89 per share) in Q4 2020. Adjusted net earnings for Q4 2021 were $54 million ($0.82 per share), up from $48 million ($0.75 per share) in the prior year [9][10] - Free cash flow for 2021 was $427 million, compared to $302 million in 2020, reflecting effective working capital management [10][31] Business Line Data and Key Metrics Changes - Aerospace segment sales for Q4 2021 were $371 million, a 12% increase from the prior year, driven by a 67% increase in commercial OEM sales and a 23% increase in aftermarket sales. However, defense OEM sales decreased by 6% and defense aftermarket sales decreased by 20% [21][22] - Industrial segment sales for Q4 2021 were $193 million, a slight decrease of 1% from $195 million in the prior year, primarily due to lower industrial gas turbine sales and weakness in natural gas engines in China [24][25] Market Data and Key Metrics Changes - The commercial aerospace market is recovering, with domestic travel nearing pre-COVID levels and international travel improving, although still lagging [14] - In the industrial market, demand for gas turbines is increasing, particularly in Asia, and there is strong demand for backup power for data centers [15] - The oil and gas sector has seen prices return to pre-2020 levels, leading to increased capital expenditures [17] Company Strategy and Development Direction - The company expects continued recovery in 2022, with a focus on capitalizing on market opportunities despite ongoing uncertainties related to COVID-19 and supply chain disruptions [13][33] - The aerospace outlook anticipates further improvements in build rates and recovery in flight traffic, while industrial growth is expected to be driven by higher demand for power generation equipment and increased ship utilization [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery across markets, with expectations for improved profitability in both aerospace and industrial segments in 2022 [19][33] - The company highlighted the importance of managing supply chain disruptions and indicated that improvements are anticipated in the second half of fiscal 2022 [52][116] Other Important Information - The effective tax rate for fiscal 2021 was 15.1%, with an expected increase to approximately 21% for the upcoming year [30][36] - The company returned $82 million to shareholders in fiscal 2021 through dividends and share repurchases, with $441 million remaining available under the share repurchase program [32] Q&A Session Summary Question: Guidance implications for industrial segment growth - Management indicated confidence in low double-digit growth due to recovery in turbo machinery and marine markets, with discussions of volume increases with customers [42] Question: Supply chain issues and revenue expectations - Management believes the worst of supply chain issues is behind them, with expectations for recovery in the second half of fiscal 2022 [50] Question: Decline in guided weapons sales - Management anticipates a decline in guided weapons sales, particularly JDAM, but expects some volume from foreign military sales [58][104] Question: Pricing dynamics in the aftermarket - Management confirmed that they are still able to achieve reasonable price increases in the aftermarket, with good pricing positions [109] Question: Working capital expectations - Management expects working capital needs to increase primarily in receivables as sales grow, while inventory management remains strong [92]