Woodward's Q4 Earnings Surge 48% Y/Y, Revenues Beat, Shares Rise

Core Insights - Woodward, Inc. (WWD) reported a significant increase in adjusted net earnings per share (EPS) for Q4 fiscal 2025, reaching $2.09, a 48% year-over-year increase, surpassing the Zacks Consensus Estimate by 14.2% [1][11] - Quarterly net sales rose 16% year over year to $995 million, driven by strong performance in Aerospace and Industrial sectors, exceeding the consensus estimate by 6.4% [2][11] - For the full fiscal year, WWD's net sales totaled $3.6 billion, a 7% increase year over year, with adjusted EPS rising 13% to $6.89 [2] Financial Performance - Aerospace segment net sales were $661 million, up 19.6% year over year, with defense OEM sales increasing by 27% and defense services by 80% [5] - Industrial segment net sales reached $334 million, a 10.6% year-over-year increase, driven by power generation and oil & gas markets [6] - Gross margin improved by 360 basis points year over year to 27.9%, while total costs and expenses rose 11% to $835.5 million [9] Strategic Developments - WWD completed the acquisition of Safran's North American Electromechanical Actuation business, enhancing its technology portfolio [3] - The company launched a new three-year, $1.8 billion share repurchase program and divested its combustion product line to focus on high-growth areas [3][11] - WWD is constructing a highly automated aerospace manufacturing facility in Spartanburg County, SC, and was selected by Airbus for a significant contract [3] Cash Flow and Shareholder Returns - For fiscal 2025, WWD generated $471 million in net cash from operating activities, an increase from $439 million in the previous year [12] - Adjusted free cash flow was $340 million, slightly down from $343 million in fiscal 2024, primarily due to increased capital spending [13] - The company returned $238 million to shareholders through dividends and share repurchases during fiscal 2025 [14] Fiscal 2026 Guidance - Management anticipates continued strong demand in fiscal 2026, projecting consolidated net sales growth of 7% to 12% [15] - Aerospace segment earnings are expected to be 22% to 23% of segment sales, while Industrial segment earnings are projected at 14.5% to 15.5% [16] - Adjusted free cash flow is forecasted to be between $300 million and $350 million, with EPS expected to range from $7.5 to $8 [16]