Financial Data and Key Metrics Changes - Woodward reported record net sales of $915 million for the third quarter, an increase of 8% year over year, with earnings per share at $1.76, also up 8% year over year [21][28] - The aerospace segment achieved record sales of $596 million, a 15% increase from $518 million, while industrial segment sales decreased by 3% to $319 million [21][24] - Year-to-date cash provided by operating activities was $238 million, down from $297 million, with capital expenditures at $79 million compared to $72 million [27][28] Business Line Data and Key Metrics Changes - Aerospace segment earnings were $126 million, with margins expanding by 140 basis points to 21.1% of segment sales, driven by price realization and higher volumes [23] - Defense OEM sales surged by 56%, while commercial services sales rose by 30%, exceeding expectations [22] - Industrial sales, excluding China on highway, grew by 9%, with oil and gas and marine transportation both up 16% [24][25] Market Data and Key Metrics Changes - Aerospace services showed sustained strong growth, with legacy engine LRU overhauls increasing compared to last year [14] - The marine demand remained exceptionally strong, with more than half of new ship orders including alternative fuel specifications [19] - The industrial segment's gas turbine portfolio performed well, particularly in LNG and broader oil and gas applications, confirming growth predictions [17] Company Strategy and Development Direction - The company is focused on safety, quality, delivery, and cost improvements, with a significant investment in a new manufacturing facility for the Airbus A350 spoiler actuation production [10][12] - Recent acquisition of Safran's North American electromechanical actuation business strengthens Woodward's position in the market [12][29] - The company plans to increase capital allocation to CapEx in 2026 and 2027 to support future growth and productivity [13][29] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about sustained demand across aerospace and industrial segments despite supply chain challenges [13][20] - The macro environment is being navigated with vigilance, focusing on resilience and customer service amid tariffs and geopolitical matters [20] - The company expects continued momentum in growth drivers across both segments into 2026 and beyond [19] Other Important Information - The company raised its full-year sales and earnings guidance based on strong year-to-date performance and a stable macro environment [9][30] - Free cash flow expectations were lowered due to increased working capital needs, with a revised range of $315 million to $350 million [31] Q&A Session All Questions and Answers Question: Clarification on LEAP and GTF aftermarket volumes - Management confirmed that LEAP and GTF aftermarket volumes are now approaching legacy volumes, with a forecasted crossover around 2028 [35][36] Question: Drivers behind sequential margin decline in Aerospace - The decline was attributed to a mix shift towards lower-margin defense OE products, with expectations for margin improvement in the fourth quarter [38][39] Question: Details on aerospace investments impacting margins - Investments were aimed at driving productivity and improving operational efficiency, with a focus on increasing manufacturing capabilities [46][47] Question: Impact of the Safran acquisition on results - The acquisition is seen as a strategic move to grow capabilities in electromechanical actuation systems, with no immediate macro impact on aerospace [73][76] Question: Expectations for China On Highway sales - Sales are expected to be around $10 million in the fourth quarter, reflecting ongoing economic challenges [92][97] Question: Insights on the A350 spoiler win and expected chipset content - The A350 program includes significant hardware content, with revenue expected to start in 2028 [81][84] Question: Comments on defense demand sustainability - Management feels positive about defense demand through at least the first half of 2026, with ongoing strong performance in smart defense products [88]

Financial Data and Key Metrics Changes - Woodward reported record net sales of $915 million, an increase of 8% year over year, with earnings per share at $1.76, also up 8% year over year [7][20][30] - The aerospace segment achieved record sales of $596 million, a 15% increase from $518 million, with margins expanding by 140 basis points to 21.1% [7][20][22] - Industrial segment sales decreased by 3% to $319 million, primarily due to a 69% decline in China On Highway sales, while core industrial sales grew by 9% [23][24] Business Line Data and Key Metrics Changes - Aerospace segment earnings were $126 million, with margins expanding due to price realization and higher volumes, despite inflationary pressures [22] - Defense OEM sales surged by 56%, driven by increased demand for smart defense programs, while commercial services sales rose by 30% [20][21] - Industrial segment earnings decreased to $48 million, with margins at 14.9%, impacted by lower China On Highway volumes [25][26] Market Data and Key Metrics Changes - Aerospace services showed sustained strong growth, with legacy engine LRU overhauls increasing compared to last year [13] - Marine demand remained strong, with over half of new ship orders including alternative fuel specifications [18] - The gas turbine portfolio performed well, particularly in LNG and broader oil and gas applications, driven by growing global electric power demand [15] Company Strategy and Development Direction - The company is investing in a new manufacturing facility for the Airbus A350 spoiler actuation production, aligning with its organic growth strategy [10][29] - The acquisition of Safran's North American electromechanical actuation business strengthens Woodward's position in the industry [11][29] - Increased capital allocation to CapEx is expected in 2026 and 2027 to support future growth and productivity [12][29] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about aerospace demand despite supply chain challenges impacting aircraft deliveries [12] - The company is focused on developing resilience against tariffs, geopolitical matters, and supply chain dynamics [19] - Future growth is anticipated in both aerospace and industrial segments, with expectations of continued strong performance through 2026 and beyond [18][19] Other Important Information - The company returned over $62 million to shareholders in the third quarter, with expectations to exceed $235 million in total returns for 2025 [28] - Free cash flow for the first nine months of 2025 was $159 million, down from $225 million, primarily due to increased working capital [27][31] Q&A Session Summary Question: Clarification on third quarter sales increase - The reported sales increase of 8% was clarified to ensure accurate understanding [33] Question: LEAP and GTF aftermarket volumes - LEAP and GTF aftermarket volumes are approaching legacy volumes, with a forecasted crossover around 2028 [35][36] Question: Sequential margin decline in Aerospace - The sequential margin decline was attributed to a mix shift towards lower-margin defense OEM products [38][39] Question: Details on aerospace investments impacting margins - Investments in manufacturing aimed at driving productivity were highlighted, impacting margin dollars rather than margin rate [42][44] Question: Pricing in the quarter - Total business pricing was approximately 7%, with aerospace contributing slightly more than industrial [53] Question: Marine demand and share gains - Marine demand is driven by customer share gains and increased shipyard orders [57] Question: Impact of Safran deal on results - The acquisition is seen as a strategic move to grow capabilities in the electromechanical actuation space [70] Question: China On Highway expectations - Expectations for China On Highway sales in Q4 are around $10 million, reflecting ongoing economic challenges [90][75] Question: Future growth outlook - The company anticipates continued demand in the defense sector through at least the first half of 2026 [86]

Financial Performance - Third quarter fiscal year 2025 net sales increased by 8% year-over-year, from $848 million to $915 million[16] - Third quarter fiscal year 2025 net earnings increased by 6% year-over-year, from $102 million to $108 million[16] - Third quarter fiscal year 2025 earnings per share (EPS) increased by 8% year-over-year, from $1.63 to $1.76[16] - Year-to-date free cash flow was $159 million[8], a decrease of 29% compared to $225 million in the prior year[18] Segment Results - Aerospace segment sales increased by 15% in the third quarter, from $518 million to $596 million[28] - Aerospace segment earnings increased by 24% in the third quarter, from $102 million to $126 million[28] - Core Industrial sales increased by 9% in the third quarter, from $277 million to $303 million[47] - Industrial segment sales decreased by 3% in the third quarter, from $330 million to $319 million[45] Industrial Segment Challenges - Industrial segment earnings decreased by 20% in the third quarter, from $60 million to $48 million[45] - China on-highway natural gas truck sales significantly declined, impacting the Industrial segment[8, 20, 23] - China on highway natural gas truck sales decreased from $53.085 million to $16.589 million for the three months ended June 30, 2024 and 2025 respectively[72] Aerospace Market Dynamics - Commercial Services sales in Aerospace grew by 30%[35] - Defense OEM sales in Aerospace grew by 56%[36] Fiscal Year 2025 Guidance - Revised sales guidance for fiscal year 2025 is $3.45 billion to $3.525 billion[60] - Adjusted EPS guidance for fiscal year 2025 is $6.50 to $6.75[60]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Woodward reported strong Q3 FY2025 results, driven by robust demand and execution, leading to raised full-year guidance despite lowered free cash flow expectations [Third Quarter Overview](index=1&type=section&id=Third%20Quarter%20Overview) Woodward reported strong third-quarter fiscal year 2025 results, driven by robust demand in end markets and disciplined execution, with Aerospace seeing substantial growth and Industrial achieving double-digit growth in key areas despite a decline in China on-highway natural gas truck sales Third Quarter and Year-to-Date 2025 Key Financials | Metric | Third Quarter 2025 | Year-to-Date 2025 | | :--- | :--- | :--- | | Net Sales | $915M, 8% YoY | $2.6B, 4% YoY | | Net Earnings | $108M, 6% YoY | $304M, 5% YoY | | Earnings Per Share (EPS) | $1.76, 8% YoY | $4.96, 7% YoY | | Cash from Operations | $126M, -18% YoY | $238M, -20% YoY | | Free Cash Flow | $99M, -28% YoY | $159M, -29% YoY | - The Aerospace segment experienced substantial sales growth and margin expansion, primarily due to smart defense and commercial services, partially offset by lower commercial OEM and defense services[4](index=4&type=chunk) - The Industrial business delivered double-digit sales growth in oil and gas and marine transportation, which was offset by an expected decrease in China on-highway natural gas truck sales[4](index=4&type=chunk) [Guidance Update](index=1&type=section&id=Guidance%20Update) Based on strong year-to-date performance and a solid fourth-quarter outlook, Woodward is raising its full-year sales and earnings guidance, though full-year free cash flow guidance has been lowered due to demands supporting higher sales in a dynamic supply chain and production environment - Full-year sales and earnings guidance for FY2025 have been raised[5](index=5&type=chunk) - Full-year free cash flow guidance has been lowered due to demands to support higher sales in a dynamic supply chain and production environment[5](index=5&type=chunk) - The company remains focused on growth, operational excellence, and innovation to deliver sustained long-term shareholder value[5](index=5&type=chunk) [Company Financial Performance](index=1&type=section&id=Company%20Financial%20Performance) Woodward's Q3 FY2025 saw increased total sales and net earnings, but a decline in cash from operations and free cash flow, with varied segment performance [Total Company Results](index=1&type=section&id=Total%20Company%20Results) Woodward reported an 8.0% increase in total sales for the three months ended June 30, 2025, reaching $915 million, and a 4.1% increase year-to-date to $2,572 million, with net earnings also growing, but cash from operating activities and free cash flow saw significant declines for both periods Total Company Financial Results (Three Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Total Sales | $915 | $848 | 8.0% | | Net Earnings | $108 | $102 | 6.2% | | EPS | $1.76 | $1.63 | 8.0% | | EBIT | $137 | $132 | 4.1% | | Effective Tax Rate | 14.5% | 16.4% | -190 bps | | Cash from Operating Activities | $126 | $153 | -18.0% | | Capital Expenditures | $27 | $16 | 67.0% | | Free Cash Flow | $99 | $137 | -27.8% | | Dividends Paid | $17 | $15 | 10.7% | | Share Repurchases | $45 | $305 | - | Total Company Financial Results (Nine Months Ended June 30) | Metric | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Total Sales | $2,572 | $2,470 | 4.1% | | Net Earnings | $304 | $290 | 5.1% | | Adjusted Net Earnings | $294 | $293 | 0.6% | | EPS | $4.96 | $4.65 | 6.7% | | Adjusted EPS | $4.80 | $4.70 | 2.1% | | EBIT | $394 | $382 | 3.0% | | Adjusted EBIT | $381 | $386 | -1.4% | | Effective Tax Rate | 15.8% | 17.8% | -200 bps | | Adjusted Effective Tax Rate | 15.5% | 17.8% | -230 bps | | Cash from Operating Activities | $238 | $297 | -20.0% | | Capital Expenditures | $79 | $72 | 8.8% | | Free Cash Flow | $159 | $225 | -29.2% | | Dividends Paid | $48 | $43 | 10.9% | | Share Repurchases | $124 | $305 | - | | Total Debt | $933 | $923 | 1.1% | | EBITDA Leverage | 1.5x | 1.5x | - | [Segment Results](index=2&type=section&id=Segment%20Results) Segment performance varied, with Aerospace showing strong sales and margin growth, while Industrial experienced sales and earnings declines due to specific market factors [Aerospace Segment](index=2&type=section&id=Aerospace%20Segment) The Aerospace segment demonstrated strong performance with a 15.2% increase in sales for the third quarter and 11.9% year-to-date, with segment earnings growing by 23.5% for the quarter, leading to a 140 basis point expansion in segment margin, primarily driven by price realization and volume, despite strategic investments and inflation Aerospace Segment Sales (Three Months Ended June 30) | Category | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Commercial OEM | $175 | $190 | -7.6% | | Commercial Aftermarket | $215 | $166 | 30.0% | | Defense OEM | $150 | $97 | 55.7% | | Defense Aftermarket | $55 | $66 | -16.2% | | **Total Sales** | **$596** | **$518** | **15.2%** | | Segment Earnings | $126 | $102 | 23.5% | | Segment Margin % | 21.1% | 19.7% | 140 bps | Aerospace Segment Sales (Nine Months Ended June 30) | Category | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Commercial OEM | $497 | $545 | -8.8% | | Commercial Aftermarket | $581 | $467 | 24.4% | | Defense OEM | $401 | $281 | 42.7% | | Defense Aftermarket | $173 | $183 | -5.7% | | **Total Sales** | **$1,652** | **$1,476** | **11.9%** | | Segment Earnings | $345 | $279 | 23.6% | | Segment Margin % | 20.9% | 18.9% | 200 bps | - The increase in Aerospace segment earnings was primarily due to price realization and volume, partially offset by strategic investments in manufacturing capabilities, inflation, and unfavorable mix[9](index=9&type=chunk)[10](index=10&type=chunk) [Industrial Segment](index=2&type=section&id=Industrial%20Segment) The Industrial segment experienced a 3.2% decrease in sales for the third quarter and a 7.4% decrease year-to-date, with segment earnings declining by 20.3% for the quarter, resulting in a 320 basis point contraction in segment margin, mainly due to lower China on-highway volume and inflation, partially offset by price realization Industrial Segment Sales (Three Months Ended June 30) | Category | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Transportation | $163 | $144 | -12.0% | | Power Generation | $110 | $109 | -0.2% | | Oil and Gas | $66 | $57 | 16.1% | | **Total Sales** | **$319** | **$330** | **-3.2%** | | Segment Earnings | $48 | $60 | -20.3% | | Segment Margin % | 14.9% | 18.1% | -320 bps | Industrial Segment Sales (Nine Months Ended June 30) | Category | 2025 (Millions) | 2024 (Millions) | Year over Year Change | | :--- | :--- | :--- | :--- | | Transportation | $402 | $512 | -21.4% | | Power Generation | $326 | $315 | 3.5% | | Oil and Gas | $193 | $168 | 14.7% | | **Total Sales** | **$920** | **$994** | **-7.4%** | | Segment Earnings | $134 | $192 | -30.3% | | Segment Margin % | 14.5% | 19.3% | -480 bps | - The decrease in Industrial segment earnings was primarily due to lower China on-highway volume and inflation (for Q3) and unfavorable mix (for YTD), partially offset by price realization[12](index=12&type=chunk)[13](index=13&type=chunk) [Nonsegment Expenses](index=3&type=section&id=Nonsegment%20Expenses) Nonsegment expenses increased by 21.8% for the three months ended June 30, 2025, reaching $36 million, while adjusted nonsegment expenses for the nine months ended June 30, 2025, increased by 15.6% to $98 million Nonsegment Expenses (Millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Year over Year Change | | :--- | :--- | :--- | :--- | | Nonsegment Expenses | $(36) | $(30) | 21.8% | | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Year over Year Change | | :--- | :--- | :--- | :--- | | Nonsegment Expenses | $(85) | $(89) | -4.2% | | Adjusted Nonsegment Expenses | $(98) | $(85) | 15.6% | [Fiscal Year 2025 Guidance](index=3&type=section&id=Fiscal%20Year%202025%20Guidance) Woodward revised its FY2025 guidance, raising sales and adjusted EPS targets while lowering free cash flow expectations, with specific updates for both segments [Revised Full-Year Guidance](index=3&type=section&id=Revised%20Full-Year%20Guidance) Woodward has revised its full-year fiscal 2025 guidance, raising the sales outlook to $3,450 - $3,525 million and adjusted EPS to $6.50 - $6.75, with the adjusted effective tax rate now expected to be around 17%, while adjusted free cash flow guidance has been lowered to $315 - $350 million Revised FY25 Total Company Guidance | Metric | Prior FY25 Guidance (April 28, 2025) | Revised FY25 Guidance (July 28, 2025) | | :--- | :--- | :--- | | Sales | $3,375 - $3,500 | $3,450 - $3,525 | | Adjusted Effective Tax Rate | ~19% | ~17% | | Adjusted Free Cash Flow | $350 - $400 | $315 - $350 | | Capital Expenditures | ~$115 | No change | | Shares | ~61.5 | No change | | Adjusted EPS | $5.95 - $6.25 | $6.50 - $6.75 | [Segment-Specific Guidance](index=3&type=section&id=Segment-Specific%20Guidance) For fiscal year 2025, Aerospace segment sales growth guidance has been narrowed and raised to 11% to 13%, with segment earnings margin expected between 21% and 21.5%, while Industrial segment sales growth is now projected to be down 5% to 7%, an improvement from prior guidance, with segment earnings margin around 14.5% Revised FY25 Segment Guidance | Segment | Metric | Prior FY25 Guidance | Revised FY25 Guidance | | :--- | :--- | :--- | :--- | | **Aerospace** | Sales Growth | Up 8% to 13% | Up 11% to 13% | | | Segment Earnings (% of Sales) | 20% - 21% | 21% - 21.5% | | **Industrial** | Sales Growth | Down 7% to 9% | Down 5% to 7% | | | Segment Earnings (% of Sales) | 13% - 14% | ~14.5% | [Company Information](index=3&type=section&id=Company%20Information) This section details Woodward's investor conference call, corporate profile as a global energy control solutions leader, and a cautionary statement on forward-looking information [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Woodward will host an investor conference call on July 28, 2025, at 5:00 p.m. ET to discuss its fiscal year 2025 third-quarter financial performance, business highlights, and fiscal 2025 guidance, with the webcast, recording, and presentation slides available on the company's website - An investor conference call is scheduled for July 28, 2025, at 5:00 p.m. ET[18](index=18&type=chunk) - The call will cover financial performance for Q3 FY2025, business highlights, and fiscal 2025 guidance[18](index=18&type=chunk)[19](index=19&type=chunk) - Webcast, recording, and presentation slides will be accessible on www.woodward.com under 'Investors/Events & Presentations'[19](index=19&type=chunk)[20](index=20&type=chunk) [About Woodward, Inc.](index=4&type=section&id=About%20Woodward%2C%20Inc.) Woodward, Inc. is a global leader in designing, manufacturing, and servicing energy conversion and control solutions for the aerospace and industrial equipment markets, headquartered in Fort Collins, Colorado, focusing on delivering energy control solutions that power a clean future - Woodward is a global leader in energy conversion and control solutions for aerospace and industrial equipment markets[21](index=21&type=chunk) - The company's purpose is to design and deliver energy control solutions that enable a clean future[21](index=21&type=chunk) - Woodward specializes in innovative fluid, combustion, electrical, propulsion, and motion control systems[21](index=21&type=chunk) [Cautionary Statement](index=4&type=section&id=Cautionary%20Statement) This press release contains forward-looking statements subject to various risks and uncertainties, including global economic instability, supply chain disruptions, customer concentration, and regulatory matters, where actual results may differ materially from projections, and the company does not undertake to update these statements - The report contains forward-looking statements regarding growth, operational excellence, innovation, and fiscal year 2025 guidance[22](index=22&type=chunk) - Key risk factors include global economic uncertainty, supply chain and labor market constraints, long sales cycles, customer concentration, and changes in aerospace and government spending[22](index=22&type=chunk) - Woodward assumes no obligation to update forward-looking statements, except as required by applicable law[22](index=22&type=chunk) [Detailed Financial Statements](index=4&type=section&id=Detailed%20Financial%20Statements) This section presents unaudited condensed consolidated statements of earnings, balance sheets, cash flows, and detailed segment net sales and earnings for the reported periods [Condensed Consolidated Statement of Earnings](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Earnings) The condensed consolidated statement of earnings provides a detailed breakdown of revenues, costs, and net earnings for the three and nine months ended June 30, 2025 and 2024, showing increases in net sales and net earnings across both periods Condensed Consolidated Statement of Earnings (Unaudited – In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $915,446 | $847,688 | $2,571,800 | $2,469,761 | | Cost of goods sold | $666,287 | $617,702 | $1,892,908 | $1,801,037 | | Selling, general, and administrative expenses | $88,703 | $73,812 | $242,241 | $229,770 | | Research and development costs | $41,088 | $38,728 | $108,525 | $105,987 | | Interest expense | $11,234 | $11,516 | $35,464 | $34,482 | | Interest income | $(838) | $(1,728) | $(3,236) | $(4,494) | | Other (income) expense, net | $(17,864) | $(14,438) | $(65,755) | $(49,461) | | Total costs and expenses | $788,610 | $725,592 | $2,210,147 | $2,117,321 | | Earnings before income taxes | $126,836 | $122,096 | $361,653 | $352,440 | | Income taxes | $18,388 | $20,021 | $57,165 | $62,765 | | Net earnings | $108,448 | $102,075 | $304,488 | $289,675 | | Diluted earnings per share | $1.76 | $1.63 | $4.96 | $4.65 | | Cash dividends paid per share | $0.28 | $0.25 | $0.81 | $0.72 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Woodward reported total assets of $4,711,850 thousand, an increase from $4,368,915 thousand at September 30, 2024, primarily driven by higher cash and cash equivalents, accounts receivable, and inventories, with total liabilities also increasing while stockholders' equity grew significantly Condensed Consolidated Balance Sheets (Unaudited – In thousands) | Asset/Liability/Equity | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $473,159 | $282,270 | | Accounts receivable | $829,581 | $770,066 | | Inventories | $657,121 | $609,092 | | Total current assets | $2,061,157 | $1,743,611 | | Property, plant, and equipment, net | $942,103 | $940,715 | | Goodwill | $813,779 | $806,643 | | Total assets | $4,711,850 | $4,368,915 | | Short-term debt | $353,000 | $217,000 | | Current portion of long-term debt | $76,020 | $85,719 | | Accounts payable | $284,029 | $287,457 | | Total current liabilities | $1,010,198 | $923,510 | | Long-term debt, less current portion | $503,851 | $569,751 | | Total liabilities | $2,243,284 | $2,192,499 | | Stockholders' equity | $2,468,566 | $2,176,416 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended June 30, 2025, net cash provided by operating activities decreased to $237,976 thousand from $297,329 thousand in the prior year, while investing activities saw a net cash outflow of $27,518 thousand, a significant improvement largely due to proceeds from business divestitures, and financing activities resulted in a net cash outflow of $26,126 thousand Condensed Consolidated Statements of Cash Flows (Unaudited – In thousands, Nine Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $237,976 | $297,329 | | Net cash used in investing activities | $(27,518) | $(68,239) | | Net cash used in financing activities | $(26,126) | $(58,970) | | Net change in cash and cash equivalents | $190,889 | $170,885 | | Cash and cash equivalents at end of period | $473,159 | $308,332 | - Payments for purchase of property, plant, and equipment increased to **$78,537 thousand in 2025** from $72,193 thousand in 2024[27](index=27&type=chunk) - Proceeds from business divestitures significantly contributed to investing activities in 2025, totaling **$48,043 thousand**[27](index=27&type=chunk) [Segment Net Sales and Net Earnings (Detailed)](index=6&type=section&id=Segment%20Net%20Sales%20and%20Net%20Earnings%20%28Detailed%29) This section provides a detailed breakdown of net sales and earnings for the Aerospace and Industrial segments, showing Aerospace sales growth and margin expansion, while Industrial sales and earnings declined for both the three and nine months ended June 30, 2025 Segment Net Sales (Unaudited – In thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Aerospace | $595,990 | $517,560 | $1,651,601 | $1,475,828 | | Industrial | $319,456 | $330,128 | $920,199 | $993,933 | | Total consolidated net sales | $915,446 | $847,688 | $2,571,800 | $2,469,761 | Segment Earnings (Unaudited – In thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Aerospace Earnings | $125,740 | $101,842 | $345,081 | $279,295 | | Aerospace % of sales | 21.1% | 19.7% | 20.9% | 18.9% | | Industrial Earnings | $47,622 | $59,717 | $133,786 | $191,842 | | Industrial % of sales | 14.9% | 18.1% | 14.5% | 19.3% | | Total segment earnings | $173,362 | $161,559 | $478,867 | $471,137 | | Nonsegment expenses | $(36,130) | $(29,675) | $(84,986) | $(88,709) | | EBIT | $137,232 | $131,884 | $393,881 | $382,428 | [Non-GAAP Reconciliations](index=7&type=section&id=Non-GAAP%20Reconciliations) This section reconciles U.S. GAAP to non-U.S. GAAP adjusted measures, including net earnings, income tax, EBIT, EBITDA, non-segment expenses, and free cash flow, with explanations [Net Earnings to Adjusted Earnings](index=7&type=section&id=Net%20Earnings%20to%20Adjusted%20Earnings) This reconciliation adjusts U.S. GAAP net earnings to non-U.S. GAAP adjusted net earnings by excluding specific items such as product rationalization, non-recurring gains, business development activities, and certain non-restructuring separation costs, resulting in adjusted net earnings of $294,404 thousand and adjusted EPS of $4.80 for the nine months ended June 30, 2025 Reconciliation of Net Earnings to Adjusted Earnings (Unaudited – In thousands, except per share amounts, Nine Months Ended June 30) | Metric | 2025 Net Earnings | 2025 Earnings Per Share | 2024 Net Earnings | 2024 Earnings Per Share | | :--- | :--- | :--- | :--- | :--- | | Net Earnings (U.S. GAAP) | $304,488 | $4.96 | $289,675 | $4.65 | | Product rationalization | $(20,524) | $(0.33) | - | - | | Non-recurring gain related to a previous acquisition | - | - | $(4,803) | $(0.08) | | Business development activities | $7,310 | $0.12 | $5,902 | $0.09 | | Certain non-restructuring separation costs | - | - | $2,666 | $0.05 | | Tax Effect of Non-U.S. GAAP Net Earnings Adjustments | $3,130 | $0.05 | $(729) | $(0.01) | | Total non-U.S. GAAP Adjustments | $(10,084) | $(0.16) | $3,036 | $0.05 | | Adjusted Net Earnings (Non-U.S. GAAP) | $294,404 | $4.80 | $292,711 | $4.70 | [Income Tax Expense to Adjusted Income Tax Expense](index=7&type=section&id=Income%20Tax%20Expense%20to%20Adjusted%20Income%20Tax%20Expense) The reconciliation shows the adjustment of U.S. GAAP income tax expense to non-U.S. GAAP adjusted income tax expense by accounting for the tax effect of non-U.S. GAAP net earnings adjustments, resulting in an adjusted income tax expense of $54,035 thousand and an adjusted income tax rate of 15.5% for the nine months ended June 30, 2025 Reconciliation of Income Tax Expense to Adjusted Income Tax Expense (Unaudited – In thousands, Nine Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Income tax expense (U.S. GAAP) | $57,165 | $62,765 | | Tax Effect of Non-U.S. GAAP Net Earnings Adjustments | $(3,130) | $729 | | Adjusted Income Tax Expense (Non-U.S. GAAP) | $54,035 | $63,494 | | Adjusted Income Tax Rate (Non-U.S. GAAP) | 15.5% | 17.8% | [Net Earnings to EBIT](index=8&type=section&id=Net%20Earnings%20to%20EBIT) This reconciliation converts U.S. GAAP net earnings to non-U.S. GAAP EBIT by adding back income tax expense, interest expense, and subtracting interest income, resulting in EBIT of $137,232 thousand for the three months ended June 30, 2025, and $393,881 thousand for the nine months Reconciliation of Net Earnings to EBIT (Unaudited – In thousands, Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings (U.S. GAAP) | $108,448 | $102,075 | | Income Tax Expense | $18,388 | $20,021 | | Interest Expense | $11,234 | $11,516 | | Interest Income | $(838) | $(1,728) | | EBIT (Non-U.S. GAAP) | $137,232 | $131,884 | Reconciliation of Net Earnings to EBIT and Adjusted EBIT (Unaudited – In thousands, Nine Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings (U.S. GAAP) | $304,488 | $289,675 | | Income Tax Expense | $57,165 | $62,765 | | Interest Expense | $35,464 | $34,482 | | Interest Income | $(3,236) | $(4,494) | | EBIT (Non-U.S. GAAP) | $393,881 | $382,428 | | Total non-U.S. GAAP Adjustments | $(13,214) | $3,765 | | Adjusted EBIT (Non-U.S. GAAP) | $380,667 | $386,193 | [Net Earnings to EBITDA](index=8&type=section&id=Net%20Earnings%20to%20EBITDA) This reconciliation adjusts U.S. GAAP net earnings to non-U.S. GAAP EBITDA by adding back income tax expense, interest expense, amortization of intangible assets, and depreciation expense, while subtracting interest income, resulting in EBITDA of $165,886 thousand for the three months ended June 30, 2025, and adjusted EBITDA of $464,763 thousand for the nine months Reconciliation of Net Earnings to EBITDA (Unaudited – In thousands, Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings (U.S. GAAP) | $108,448 | $102,075 | | Income Tax Expense | $18,388 | $20,021 | | Interest Expense | $11,234 | $11,516 | | Interest Income | $(838) | $(1,728) | | Amortization of intangible assets | $8,131 | $7,172 | | Depreciation Expense | $21,482 | $20,661 | | EBITDA (Non-U.S. GAAP) | $165,886 | $160,676 | Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (Unaudited – In thousands, Nine Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings (U.S. GAAP) | $304,488 | $289,675 | | Income Tax Expense | $57,165 | $62,765 | | Interest Expense | $35,464 | $34,482 | | Interest Income | $(3,236) | $(4,494) | | Amortization of Intangible Assets | $20,858 | $25,348 | | Depreciation Expense | $63,238 | $61,494 | | EBITDA (Non-U.S. GAAP) | $477,977 | $469,270 | | Total non-U.S. GAAP Adjustments | $(13,214) | $3,765 | | Adjusted EBITDA (Non-U.S. GAAP) | $464,763 | $473,035 | [Non-Segment Expenses to Adjusted Non-Segment Expenses](index=9&type=section&id=Non-Segment%20Expenses%20to%20Adjusted%20Non-Segment%20Expenses) This reconciliation adjusts U.S. GAAP non-segment expenses to non-U.S. GAAP adjusted non-segment expenses by excluding items such as product rationalization, non-recurring gains, business development activities, and certain non-restructuring separation costs, resulting in adjusted non-segment expenses of $(98,200) thousand for the nine months ended June 30, 2025 Reconciliation of Non-Segment Expenses to Adjusted Non-Segment Expenses (Unaudited – In thousands, Nine Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Non-Segment Expenses (U.S. GAAP) | $(84,986) | $(88,709) | | Product rationalization | $(20,524) | - | | Non-recurring gain related to a previous acquisition | - | $(4,803) | | Business development activities | $7,310 | $5,902 | | Certain non-restructuring separation costs | - | $2,666 | | Adjusted Non-Segment Expenses (Non-U.S. GAAP) | $(98,200) | $(84,944) | [Cash Flow from Operating Activities to Free Cash Flow](index=9&type=section&id=Cash%20Flow%20from%20Operating%20Activities%20to%20Free%20Cash%20Flow) This reconciliation derives non-U.S. GAAP free cash flow by subtracting payments for property, plant, and equipment from net cash provided by operating activities, resulting in free cash flow of $159,439 thousand for the nine months ended June 30, 2025, a decrease from $225,136 thousand in the prior year Reconciliation of Cash Flow from Operating Activities to Free Cash Flow (Unaudited – In thousands, Nine Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities (U.S. GAAP) | $237,976 | $297,329 | | Payments for property, plant, and equipment | $(78,537) | $(72,193) | | Free cash flow (Non-U.S. GAAP) | $159,439 | $225,136 | [Explanation of Non-U.S. GAAP Financial Measures](index=9&type=section&id=Explanation%20of%20Non-U.S.%20GAAP%20Financial%20Measures) Woodward uses non-U.S. GAAP financial measures like adjusted net earnings, EBIT, EBITDA, and free cash flow to provide a clearer view of its underlying business performance by excluding short-term or non-recurring items, which are used by management for evaluating performance, making business decisions, and are also frequently used by investors and analysts - Adjusted non-U.S. GAAP measures exclude product rationalization, non-recurring gains from acquisitions, business development activities, and certain non-restructuring separation costs[39](index=39&type=chunk)[40](index=40&type=chunk) - Management uses EBIT and adjusted EBIT to evaluate operating performance without the impacts of financing and tax considerations[41](index=41&type=chunk) - Free cash flow is used to review financial performance of business segments and evaluate cash generation levels, but it does not necessarily represent funds available for discretionary use[41](index=41&type=chunk)

Core Insights - Woodward, Inc. raised its 2025 sales and earnings guidance due to strong year-to-date performance and a positive outlook for the fourth quarter [1][5] - The company reported third-quarter net sales of $915 million, an 8% increase year-over-year, and year-to-date sales of $2.6 billion, a 4% increase [4][6] - Net earnings for the third quarter were $108 million, up 6% from the previous year, with earnings per share (EPS) of $1.76, an 8% increase [4][6] Financial Performance - Third-quarter net sales reached $915 million, compared to $848 million in the same quarter last year, marking an 8% increase [4][6] - Year-to-date net sales totaled $2.6 billion, up 4% from $2.47 billion in the prior year [4][6] - Net earnings for the third quarter were $108 million, a 6% increase from $102 million in the same quarter last year [4][6] - Year-to-date net earnings were $304 million, up 5% from $290 million in the previous year [4][6] - The company reported an adjusted EPS of $4.80 for the year-to-date period, a 2% increase from $4.70 [4][6] Segment Performance - The Aerospace segment generated significant sales growth of 15.2% in the third quarter, with total sales of $596 million compared to $518 million in the prior year [9][26] - The Industrial segment saw a slight decline in sales, with $319 million reported in the third quarter, down 3.2% from $330 million [11][26] - The Aerospace segment's earnings increased by 23.5% to $126 million, while the Industrial segment's earnings decreased by 20.3% to $48 million [9][11][26] Cash Flow and Guidance - Cash from operations decreased by 18% to $126 million in the third quarter, and free cash flow fell by 28% to $99 million [7][4] - The company is lowering its full-year free cash flow guidance due to increased demands in a dynamic supply chain environment [5] - Revised guidance for total company sales is now projected between $3.45 billion and $3.525 billion, with adjusted EPS expected to be between $6.50 and $6.75 [15]

Core Insights - Woodward, Inc. (WWD) is set to report its third-quarter fiscal 2025 results on July 28, with revenue expectations of $887.8 million, reflecting a 4.7% increase year-over-year, while earnings per share (EPS) are projected to decline by 0.6% to $1.62 [1][9] - The company has consistently exceeded earnings estimates in the past four quarters, with an average surprise of 15.6% [1][9] Revenue and Segment Performance - The Aerospace segment is anticipated to drive performance in the fiscal third quarter, supported by growth in the commercial aftermarket and increased defense activity [4] - The Industrial segment is experiencing strong demand for power generation and backup power for data centers, with a narrowed revenue decline projection of 7-9% for fiscal 2025 [5][6] - Revenue from the Aerospace segment is expected to rise by 10.3% to $571 million, while the Industrial segment is projected to decline by 7.8% to $304.4 million for the fiscal third quarter [6] Market Challenges - The on-highway natural gas truck market in China is facing volatility, with sales reported at $21 million in the last quarter and a full-year revenue expectation of only $40 million, down significantly from $175 million in fiscal 2024 [7][8] - Global macroeconomic weakness and rising costs are additional concerns impacting WWD's Industrial performance [7][9] Recent Developments - On July 21, 2025, WWD completed the acquisition of Safran's Electronics & Defense electromechanical actuation business, enhancing its capabilities in aircraft stabilization systems [10] - WWD was selected by Airbus to supply the electro-hydraulic Spoiler Actuation System for the A350 aircraft, which includes hardware delivery and long-term maintenance services [11] Earnings Prediction - The company's earnings model indicates a likely earnings beat, supported by a positive Earnings ESP of +4.29% and a Zacks Rank of 1 (Strong Buy) [12]

Core Viewpoint - Woodward (WWD) is expected to report quarterly earnings of $1.62 per share, a slight decline of 0.6% year-over-year, while revenues are projected to increase by 4.7% to $887.75 million [1]. Earnings Projections - Analysts have revised the consensus EPS estimate upward by 2% over the past 30 days, indicating a collective reassessment of initial projections [2]. - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - The 'Segment external net sales- Industrial' is estimated at $299.84 million, reflecting a year-over-year decline of 9.2% [5]. - The 'Segment external net sales- Aerospace' is projected to be $589.56 million, indicating a year-over-year increase of 13.9% [5]. Segment Sales Projections - 'Aerospace segment net sales- Defense aftermarket' is expected to reach $65.62 million, showing no change from the prior year [6]. - 'Aerospace segment net sales- Commercial aftermarket' is projected at $192.43 million, reflecting a year-over-year increase of 16.1% [6]. - 'Aerospace segment net sales- Commercial OEM' is estimated at $198.05 million, indicating a 4.4% increase year-over-year [7]. - 'Aerospace segment net sales- Defense OEM' is expected to reach $135.84 million, reflecting a significant year-over-year increase of 40.7% [7]. Earnings by Segment - The estimated 'Segment earnings- Aerospace' is projected at $124.22 million, compared to $101.84 million in the same quarter last year [8]. - The average prediction for 'Segment earnings (loss)- Industrial' is $39.53 million, down from $59.72 million year-over-year [8]. Stock Performance - Over the past month, Woodward shares have returned +3.6%, compared to a +5.9% change in the Zacks S&P 500 composite [8]. - Woodward holds a Zacks Rank 2 (Buy), suggesting it is likely to outperform the overall market in the upcoming period [8].

Acquisition Overview - Woodward, Inc. has completed the acquisition of Safran's Electronics & Defense electromechanical actuation business, which operates in the United States, Mexico, and Canada [1] - The acquisition includes intellectual property, operational assets, skilled talent, and long-term customer agreements related to Horizontal Stabilizer Trim Actuation (HSTA) systems, crucial for aircraft stabilization [2][11] Product and Technology Integration - The A350 HSTA is highlighted as one of the most advanced electromechanical control systems in large commercial aviation, alongside other electromechanical products and electronic control units for commercial and business aircraft [3] - This acquisition enhances Woodward's electromechanical actuation portfolio and aligns with its Aerospace growth strategy, reinforcing its capabilities in primary flight control solutions [4][11] Financial and Operational Impact - The acquisition is considered non-material financially, and specific financial details were not disclosed, with plans for smooth integration for employees and customers [5][11] - Woodward is also investing in upgrading technologies and manufacturing units to enhance efficiency, including a $55 million transformation of its Aerospace Maintenance, Repair and Overhaul (MRO) facility [6][7] Sales and Earnings Outlook - For fiscal 2025, Woodward expects sales between $3,375 million and $3,500 million, with adjusted earnings per share projected to range from $5.95 to $6.25 [8] - The Aerospace segment revenues are anticipated to increase by 8-13%, while the Industrial segment revenues are estimated to decline by 7-9% [10] Market Performance - Woodward's shares have increased by 34.3% over the past six months, outperforming the Aerospace - Defense Equipment industry's growth of 19.7% [12]

Wall Street expects a year-over-year decline in earnings on higher revenues when Woodward (WWD) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 28. On the oth ...

Core Insights - Woodward has completed the acquisition of Safran's Electronics & Defense electromechanical actuation business, enhancing its aerospace capabilities [1][3] - The acquisition includes key technologies such as the Horizontal Stabilizer Trim Actuation (HSTA) systems, which are critical for aircraft stabilization, particularly for the Airbus A350 [1][2] - This strategic move is part of Woodward's growth strategy in the aerospace sector, aiming to create value for customers and shareholders [3] Company Overview - Woodward is a global leader in energy control solutions for aerospace and industrial markets, headquartered in Fort Collins, Colorado [5] - The company focuses on innovative control systems that operate in challenging environments, emphasizing a commitment to powering a clean future [5] Acquisition Details - The acquisition encompasses intellectual property, operational assets, talent, and long-term customer agreements [1] - Financial terms of the transaction are not disclosed as it is not considered financially material [4] - The integration process is expected to be managed efficiently to support both team members and customers [3]