Woodward's Q2 Earnings & Revenues Surpass Estimates, Stock Up

Core Insights - Woodward, Inc. (WWD) reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, a 4.3% increase year over year, exceeding the Zacks Consensus Estimate by 17.4% [1] - Quarterly net sales rose 5.8% year over year to $883.6 million, surpassing the consensus estimate by 6.4% [1] - The company raised the lower end of its sales and earnings guidance, reflecting confidence in navigating tariffs and current market conditions [2] Financial Performance - Aerospace segment net sales reached $561.7 million, up 12.9% year over year, driven by strong defense demand and a robust commercial after-market [3] - Defense OEM sales increased 52% to $138 million, while commercial after-market sales grew 23% [4] - Industrial segment net sales totaled $321.9 million, down 4.7% year over year, with transportation sales declining 18% due to a drop in China on-highway sales [5][6] Earnings and Margins - Segmental earnings for Aerospace were $125 million, up from $98 million a year ago, primarily driven by price realization and higher volumes [4] - Industrial segment earnings declined to $46 million from $65 million in the year-ago quarter, affected by lower China on-highway volume [7] - Gross margin decreased by 90 basis points year over year to 27.2% [8] Cash Flow and Shareholder Returns - As of March 31, 2024, WWD had $364.1 million in cash and cash equivalents and $489.8 million in long-term debt [11] - The company generated $78 million of net cash from operating activities, down from $97 million in the prior-year period [11] - Free cash flow was $59 million compared to $83 million in the year-ago period, with $61 million returned to shareholders through dividends and share repurchases [12] Fiscal 2025 Guidance - WWD raised the lower end of its sales guidance to between $3,375 million and $3,500 million, and adjusted EPS guidance to range from $5.95 to $6.25 [14] - Aerospace segment revenues are expected to increase by 8-13%, while industrial segment revenues are anticipated to decline by 7-9% [15]