Woodward, Inc. WWD reported first-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.35, which declined 7% year over year. The figure beat the Zacks Consensus Estimate by 18.4%.

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Quarterly net sales declined 2% year over year to $773 million and missed the consensus estimate by 0.7%. The weakness in sales related to China on-highway natural gas trucks and a stoppage in deliveries of certain product lines to Boeing were main reasons for the year-over-year decline in revenues.

WWD has reiterated all guidance for fiscal 2025 except for adjusted tax rate and earnings per share. It now expects adjusted effective tax rate to be 19% compared with 20% earlier. Adjusted EPS is expected to be between $5.85 and $6.25 (previous projected range: $5.75-$6.25). 

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Post this announcement, the stock fell 2.9% in after-market trading session yesterday. In the past year, shares of WWD have gained 32.4% compared with the aerospace defense equipment industry’s growth of 36.9%.

WWD’s Segment Results

Aerospace: Net sales were $494 million, up 7% year over year. We predicted the metric to be $501.7 million.

Defense OEM and defense aftermarket sales were up 21% and 8%, respectively, year over year.  Commercial aftermarket sales increased 19%, attributed to robust passenger traffic and higher legacy aircraft utilization. 

Commercial OEM sales fell 10% year over year to $154 million, due to the impact from the Boeing work stoppage and supply-chain challenges. 

Segmental earnings were $95 million, up from $79 million a year ago. The increase in segment earnings was a result of price realization which was partly offset by inflationary pressure, lower volumes and unfavorable sales mix. 

Woodward, Inc. Stock Price, Consensus and EPS Surprise

Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote

Industrial: Net sales totaled $279 million, down 15% year over year. A 33% decline in transportation sales offset 7% revenue growth, witnessed in both power generation and oil and gas sectors. We expected the metric to be $278.3 million. 

Core industrial sales, which excludes China on-highway business, were up 7%. 

The transportation segment was extensively affected by weakness in China’s on-highway natural gas trucks business. This business was impacted by local economic troubles. Revenues were $10 million in the quarter under review. Also, within oil & gas, soaring domestic production levels in the United States were not translating into upstream service growth, due to low commodity pricing.

Segmental earnings were $40 million, down from $67 million in the year-ago quarter. Industrial earnings were affected by lower China on-highway volume and an unfavorable mix, which was partly offset by price realization.

WWD’s Margin Performance

Gross margin was down 150 basis points year over year to 24.5%.

Total costs and expenses were $670.9 million, down 0.9% year over year. Adjusted EBITDA was $135 million compared with $148 million a year ago.

WWD’s Cash Flow & Liquidity

As of Dec. 31, 2024, Woodward had $283.7 million in cash and cash equivalents with $483.2 million of long-term debt (less the current portion).

For the quarter ended Dec. 31, 2024, WWD generated $35 million of net cash from operating activities compared with $47 million reported in the prior-year period.

Free cash flow was $1 million compared with $5 million in the year-ago period. This downtick was due to lower earnings, which was partly offset by reduced capital expenditures.

In the quarter under review, WWD returned $50 million to its shareholders in the form of $15 million of dividends and $35 million worth of share repurchases. 

WWD also hiked quarterly dividend by 12% to 28 cents per share. This dividend will be paid on March 6, 2025, to its shareholders on record as of Feb. 20.

WWD’s Fiscal Guidance

WWD continues to expect fiscal 2025 sales to be between $3.3 billion and $3.5 billion. Aerospace segment revenues are anticipated to increase in the range of 6-13%. Industrial segment revenues are expected to decline in the band of 7-11%.

Free cash flow is anticipated to be between $350 million and $400 million.

WWD’s Zacks Rank

Woodward currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Companies Within Aerospace

Textron Inc. TXT reported fourth-quarter 2024 adjusted earnings of $1.34 per share, which beat the Zacks Consensus Estimate of $1.25 by 7.2%. However, the bottom line declined 16.3% from $1.60 in the year-ago quarter. Total revenues of $3.61 billion missed the Zacks Consensus Estimate of $3.74 billion by 3.5%. Revenues decreased 7.2% from the year-ago quarter’s level of $3.89 billion. Manufacturing revenues improved 7.2% year over year to $3.6 billion.

Teledyne Technologies Incorporated TDY reported fourth-quarter 2024 adjusted earnings of $5.52 per share, which surpassed the Zacks Consensus Estimate of $5.23 by 5.5%. The bottom line also improved 1.5% from $5.44 recorded a year ago. Total sales were $1.50 billion, which beat the Zacks Consensus Estimate of $1.45 billion by 3.7%. The top line also rose 5.4% from $1.43 billion reported a year ago. This improvement can be attributed to higher year-over-year sales recorded in all of its business segments.

HEICO Corporation’s HEI fourth-quarter fiscal 2024 EPS of 99 cents beat the Zacks Consensus Estimate of 97 cents by 2.1%. The bottom line also improved 33.8% from the prior-year quarter’s 74 cents. The company’s net sales increased 8.3% year over year to $1.01 billion. However, the figure missed the Zacks Consensus Estimate of $1.04 billion by 2.5%. The year-over-year upside was driven by record operating results from the Flight Support Group segment as well as strong contributions from HEI’s acquisitions in fiscal 2023 and 2024.

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