Woodward Reports Fiscal Year 2021 Results
Woodward reported its fiscal year 2021 and Q4 results, showcasing net sales of $2.25 billion, down 10% from $2.50 billion in 2020. Q4 net sales increased by 7% to $570 million. Earnings per share for the year were $3.18, compared to $3.74 in 2020. Notably, free cash flow rose to $427 million from $302 million. CEO Thomas A. Gendron highlighted resilience amidst COVID-19 impacts and supply chain disruptions. For fiscal 2022, sales are projected between $2.45 and $2.65 billion, with earnings per share forecasted between $3.55 and $3.95.
- Q4 net sales increased 7% to $570 million.
- Free cash flow rose to $427 million from $302 million.
- Fiscal 2022 sales expected between $2.45 and $2.65 billion.
- Earnings per share projected between $3.55 and $3.95.
- Fiscal year net sales decreased 10% from $2.50 billion in 2020.
- Earnings per share fell to $3.18 from $3.74 in 2020.
- Sales negatively impacted by $32 million due to supply chain disruptions.
- Industrial segment sales decreased 7% from $905 million in 2020.
FORT COLLINS, Colo., Nov. 18, 2021 (GLOBE NEWSWIRE) -- Woodward, Inc. (NASDAQ:WWD) today reported financial results for its fiscal year 2021 and fourth quarter ending September 30, 2021.
All amounts are presented on an as reported U.S. GAAP basis unless otherwise indicated. All per share amounts are presented on a fully diluted basis. All comparisons are made to the same period of the prior year unless otherwise stated.
Fourth Quarter 2021 Overview
- Net sales were
$570 million , compared to$531 million . - Earnings per share were
$0.76 , compared to$0.89 . - Adjusted earnings per share1 were
$0.82 , compared to$0.75 .
Fiscal Year 2021 Overview
- Net sales were
$2.25 billion , compared to$2.50 billion . - Earnings per share were
$3.18 , compared to$3.74 . - Adjusted earnings per share were
$3.24 compared to$3.96 . - Net cash provided by operating activities was
$465 million , compared to$349 million . Free cash flow1 and adjusted free cash flow1 were$427 million for 2021. For fiscal year 2020 free cash flow was$302 million and adjusted free cash flow was$315 million .
“We delivered solid performance in 2021 despite the continuing impacts of COVID-19 on our markets. Supply chain disruptions and regional market volatility were experienced across the company; however, our effective cost control measures and strong working capital management enabled us to mitigate these impacts and generate robust free cash flow,” said Thomas A. Gendron, Chairman and Chief Executive Officer. “Looking into fiscal 2022, we expect continued improvement in most of our end markets, although we also expect uncertainty and volatility around the pace of recovery to persist. We continue to be resilient against a challenging macroeconomic backdrop and remain focused on maintaining our strong financial position to allow us to capitalize on future market opportunities.”
Company Results
Net sales for the fourth quarter of fiscal 2021 were
Net earnings for the fourth quarter of 2021 were
Adjusted net earnings1 for the fourth quarter of 2021 were
Net sales for fiscal 2021 were
Adjusted net earnings were
EBIT1 was
EBIT was
The effective tax rate for the fourth quarter of 2021 was 18.2 percent, compared to 16.0 percent in the prior year. The adjusted effective tax rate1 was 18.8 percent, compared to 13.8 percent for the fourth quarter of 2020.
The full year effective tax rate for 2021 was 15.1 percent, compared to 14.7 percent for the prior year. The adjusted effective tax rate for the full year 2021 was 15.3 percent, compared to 17.8 percent for fiscal year 2020.
Segment Results
Aerospace
Aerospace segment net sales for the fourth quarter of fiscal 2021 were
Both commercial OEM and aftermarket sales for the fourth quarter of 2021 increased due to higher OEM aircraft production rates and continued recovery in domestic passenger traffic. However, defense aftermarket sales were lower compared to a strong prior year quarter.
Segment earnings for the fourth quarter of 2021 were
For fiscal 2021, Aerospace segment net sales were
Industrial
Industrial segment net sales for the fourth quarter of fiscal 2021 were
Industrial sales for the fourth quarter of 2021 declined primarily due to lower industrial gas turbines sales as well as weakness in natural gas engines in China, partially offset by improvements in marine.
Industrial segment earnings for the fourth quarter of 2021 were
For fiscal year 2021, Industrial segment net sales were
Industrial segment earnings for 2021 were
For fiscal year 2020, Industrial segment earnings excluding RPS1 were
Nonsegment
Nonsegment expenses were
Nonsegment expenses totaled
Cash Flow and Financial Position
Net cash provided by operating activities for fiscal year 2021 was
Total debt was
During fiscal year 2021,
Fiscal Year 2022 Outlook
End markets and supply chain disruptions are anticipated to improve in fiscal year 2022, although the uncertainty and volatility around the pace of the recovery is expected to persist. Growth and profitability in both segments could be negatively affected if COVID-19 and supply chain disruptions do not improve, or if the pace of inflation puts additional pressure on labor and material costs.
Total net sales for fiscal 2022 are expected to be between
Aerospace segment earnings as a percent of segment net sales are expected to increase by approximately 200 to 300 basis points, primarily due to the increased sales volume in both commercial OEM and aftermarket, partially offset by lower guided weapon sales and the return of annual variable incentive compensation costs. Industrial segment earnings as a percent of segment net sales are expected to be approximately flat to up by 150 basis points, primarily due to the increased sales volume, partially offset by the return of annual variable incentive compensation costs.
The effective tax rate is expected to be approximately 21 percent.
Free cash flow is expected to be approximately
Earnings per share is expected to be between
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. EST, November 18, 2021, to provide an overview of the financial performance for the fourth quarter and fiscal year 2021, business highlights, and outlook for fiscal 2022. You are invited to listen to the live webcast of our conference call, or a recording, and view or download accompanying presentation slides at our website, www.woodward.com2.
You may also listen to the call by dialing 1-877-231-2582 (domestic) or 1-478-219-0714 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 7551843. An audio replay will be available by telephone from 7:30 p.m. EST on November 18, 2021 until 11:59 p.m. EST on December 2, 2021. The telephone number to access the replay is 1-855-859-2056 (domestic) or 1-404-537-3406 (international), reference access code 7551843.
A webcast presentation will be available on the website by selecting “Investors/Events & Presentations.” The call and presentation will remain accessible at the website for 14 days.
About Woodward, Inc.
Woodward is an independent designer, manufacturer, and service provider of control system solutions and components for the aerospace and industrial markets. The company's innovative fluid, combustion, electrical, and motion control systems help customers offer cleaner, more reliable, and more efficient equipment. Our customers include leading original equipment manufacturers and end users of their products. Woodward is a global company headquartered in Fort Collins, Colorado, USA. Visit our website at www.woodward.com.
Cautionary Statement
Information in this press release 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 2022, including trends in our business, statements about the continued and expected or potential effects of the COVID-19 pandemic on our business, and the management of our business, our continued resilience against a challenging macroeconomic backdrop, the continued and expected uncertainty and volatility around the pace of recovery in our markets, the strength of our financial position and our ability to maintain our financial position, our ability to effectively capitalize on future market opportunities, and expectations related to the performance of our segments and specific markets within those segments, and our future sales, earnings, earnings per share, segment earnings as a percent of segment net sales, cash flows, working capital, and effective tax rate. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Factors that could cause actual results and the timing of certain events to differ materially from the forward-looking statements include, but are not limited to, the COVID-19 pandemic and related significant volatility in financial, product, service, commodities (including oil and gas) and other markets and industries (including the aviation industry); a decline in our customers’ business, or our business with, or financial distress of, Woodward’s significant customers; global economic uncertainty and instability in the financial markets; Woodward’s ability to manage product liability claims, product recalls or other liabilities associated with the products and services that Woodward provides; Woodward’s long sales cycle, customer evaluation process, and implementation period of some of its products and services; Woodward’s ability to implement and realize the intended effects of any restructuring efforts; Woodward’s ability to successfully manage competitive factors, including prices, competitor product development, industry consolidation, and commodity and other input cost increases; Woodward’s ability to manage expenses and product mix while responding to sales increases or decreases; the ability of Woodward’s suppliers to perform contractual obligations and to provide Woodward with materials of sufficient quality or quantity required to meet Woodward’s production needs at favorable prices or at all; Woodward’s ability to monitor its technological expertise and the success of, and/or costs associated with, its product development activities; consolidation in the aerospace market and our participation in a strategic joint venture with General Electric Company may make it more difficult to secure long-term sales in certain aerospace markets; Woodward’s debt obligations, debt service requirements, and ability to operate its business, pursue its business strategies and incur additional debt in light of covenants contained in its outstanding debt agreements; Woodward’s ability to manage additional tax expense and exposures; risks related to Woodward’s U.S. Government contracting activities, including liabilities resulting from legal and regulatory proceedings, inquiries, or investigations related to such activities; the potential of a significant reduction in defense sales due to decreases, delays or changes in the amount of U.S. Federal defense spending or other specific budget cuts impacting defense programs in which Woodward participates; changes in government spending patterns, priorities, subsidy programs and/or regulatory requirements; future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets; environmental liabilities related to manufacturing activities and/or real estate acquisitions; Woodward’s continued access to a stable workforce and favorable labor relations with its employees; physical and other risks related to Woodward’s operations and suppliers, including natural disasters and COVID-19 related impacts, which could disrupt production; Woodward’s ability to successfully manage regulatory, tax, and legal matters; impacts of tariff regulations; risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and compliance with and changes in the legal and regulatory environments of the United States and the countries in which Woodward operates; industry risks, including increases in natural gas prices, unforeseen events that may reduce commercial aviation, such as diseases, epidemics, pandemics and natural disasters, and increasing emissions standards; any adverse effects on Woodward’s operations due to cybersecurity breaches or other information technology system interruptions or intrusions; and other risk factors described in Woodward's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended September 30, 2020 and any subsequently filed Quarterly Report on Form 10-Q, as well as its Annual Report on Form 10-K for the year ended September 30, 2021, which we expect to file shortly, and other risks described in Woodward’s filings with the Securities and Exchange Commission.
| Woodward, Inc. and Subsidiaries | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||
| (Unaudited - in thousands except per share amounts) | |||||||||||||||||||
| Three Months Ended September 30, | Year Ended September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Net sales | $ | 570,217 | $ | 531,264 | $ | 2,245,832 | $ | 2,495,665 | |||||||||||
| Costs and expenses: | |||||||||||||||||||
| Cost of goods sold | 436,434 | 407,480 | 1,694,774 | 1,855,422 | |||||||||||||||
| Selling, general and administrative expenses | 38,405 | 40,675 | 186,866 | 217,710 | |||||||||||||||
| Research and development costs | 27,703 | 27,105 | 117,091 | 133,134 | |||||||||||||||
| Impairment of assets sold | - | - | - | 37,902 | |||||||||||||||
| Restructuring charges | 5,008 | 3,176 | 5,008 | 22,216 | |||||||||||||||
| Gain on cross-currency interest rate swaps, net | - | - | - | (30,481 | ) | ||||||||||||||
| Interest expense | 8,730 | 9,309 | 34,282 | 35,811 | |||||||||||||||
| Interest income | (409 | ) | (424 | ) | (1,495 | ) | (1,764 | ) | |||||||||||
| Other (income) expense, net | (6,684 | ) | (24,175 | ) | (36,493 | ) | (56,166 | ) | |||||||||||
| Total costs and expenses | 509,187 | 463,146 | 2,000,033 | 2,213,784 | |||||||||||||||
| Earnings before income taxes | 61,030 | 68,118 | 245,799 | 281,881 | |||||||||||||||
| Income taxes | 11,125 | 10,879 | 37,150 | 41,486 | |||||||||||||||
| Net earnings | $ | 49,905 | $ | 57,239 | $ | 208,649 | $ | 240,395 | |||||||||||
| Earnings per share amounts: | |||||||||||||||||||
| Basic earnings per share | $ | 0.79 | $ | 0.92 | $ | 3.30 | $ | 3.86 | |||||||||||
| Diluted earnings per share | $ | 0.76 | $ | 0.89 | $ | 3.18 | $ | 3.74 | |||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||
| Basic | 63,500 | 62,501 | 63,287 | 62,267 | |||||||||||||||
| Diluted | 65,711 | 63,997 | 65,555 | 64,209 | |||||||||||||||
| Cash dividends per share paid to Woodward common stockholders | $ | 0.1625 | $ | 0.0813 | $ | 0.5688 | $ | 0.6050 | |||||||||||
| Woodward, Inc. and Subsidiaries | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited - in thousands) | ||||||||||
| September 30, | September 30, | |||||||||
| 2021 | 2020 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 448,462 | $ | 153,270 | ||||||
| Accounts receivable | 523,051 | 537,987 | ||||||||
| Inventories | 419,971 | 437,943 | ||||||||
| Income taxes receivable | 12,071 | 28,879 | ||||||||
| Other current assets | 61,168 | 52,786 | ||||||||
| Total current assets | 1,464,723 | 1,210,865 | ||||||||
| Property, plant, and equipment, net | 950,569 | 997,415 | ||||||||
| Goodwill | 805,333 | 808,252 | ||||||||
| Intangible assets, net | 559,289 | 606,711 | ||||||||
| Deferred income tax assets | 14,066 | 14,658 | ||||||||
| Other assets | 297,024 | 265,435 | ||||||||
| Total assets | $ | 4,091,004 | $ | 3,903,336 | ||||||
| Liabilities and stockholders’ equity | ||||||||||
| Current liabilities: | ||||||||||
| Current portion of long-term debt | 728 | 101,634 | ||||||||
| Accounts payable | 170,909 | 134,242 | ||||||||
| Income taxes payable | 11,481 | 4,662 | ||||||||
| Accrued liabilities | 183,139 | 151,794 | ||||||||
| Total current liabilities | 366,257 | 392,332 | ||||||||
| Long-term debt, less current portion | 734,122 | 736,849 | ||||||||
| Deferred income tax liabilities | 157,936 | 163,573 | ||||||||
| Other liabilities | 617,908 | 617,905 | ||||||||
| Total liabilities | 1,876,223 | 1,910,659 | ||||||||
| Stockholders’ equity | 2,214,781 | 1,992,677 | ||||||||
| Total liabilities and stockholders’ equity | $ | 4,091,004 | $ | 3,903,336 | ||||||
| Woodward, Inc. and Subsidiaries | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (Unaudited - in thousands) | ||||||||||
| For the Year Ended September 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Net cash provided by operating activities | $ | 464,669 | $ | 349,491 | ||||||
| Cash flows from investing activities: | ||||||||||
| Payments for purchase of property, plant, and equipment | (37,689 | ) | (47,087 | ) | ||||||
| Proceeds from sale of assets | 154 | 30,173 | ||||||||
| Proceeds from business divestiture | - | 10,443 | ||||||||
| Proceeds from sales of short-term investments | 16,575 | 12,700 | ||||||||
| Payments for purchases of short-term investments | (14,337 | ) | (13,109 | ) | ||||||
| Net cash used in investing activities | (35,297 | ) | (6,880 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Cash dividends paid | (36,041 | ) | (37,664 | ) | ||||||
| Proceeds from sales of treasury stock | 34,706 | 24,969 | ||||||||
| Payments for repurchases of common stock | (33,344 | ) | (13,346 | ) | ||||||
| Borrowings on revolving lines of credit and short-term borrowings | 74,400 | 1,248,135 | ||||||||
| Payments on revolving lines of credit and short-term borrowings | (74,400 | ) | (1,510,746 | ) | ||||||
| Payments of long-term debt and finance lease obligations | (101,639 | ) | (1,590 | ) | ||||||
| Net cash used in financing activities | (136,318 | ) | (290,242 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 2,138 | 1,828 | ||||||||
| Net change in cash and cash equivalents | 295,192 | 54,197 | ||||||||
| Cash and cash equivalents at beginning of year | 153,270 | 99,073 | ||||||||
| Cash and cash equivalents at end of year | $ | 448,462 | $ | 153,270 | ||||||
| Woodward, Inc. and Subsidiaries | ||||||||||||||||||||
| SEGMENT NET SALES AND EARNINGS | ||||||||||||||||||||
| (Unaudited - in thousands) | ||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Net sales: | ||||||||||||||||||||
| Aerospace | $ | 376,832 | $ | 336,308 | $ | 1,404,117 | $ | 1,590,963 | ||||||||||||
| Industrial | 193,385 | 194,956 | 841,715 | 904,702 | ||||||||||||||||
| Total consolidated net sales | $ | 570,217 | $ | 531,264 | $ | 2,245,832 | $ | 2,495,665 | ||||||||||||
| Segment earnings*: | ||||||||||||||||||||
| Aerospace | $ | 65,715 | $ | 58,492 | $ | 234,356 | $ | 310,137 | ||||||||||||
| As a percent of segment net sales | 17.4 | % | 17.4 | % | 16.7 | % | 19.5 | % | ||||||||||||
| Industrial | 20,747 | 18,681 | 108,672 | 100,321 | ||||||||||||||||
| As a percent of segment net sales | 10.7 | % | 9.6 | % | 12.9 | % | 11.1 | % | ||||||||||||
| Total segment earnings | 86,462 | 77,173 | 343,028 | 410,458 | ||||||||||||||||
| Nonsegment expenses | (17,111 | ) | (170 | ) | (64,442 | ) | (94,530 | ) | ||||||||||||
| EBIT | 69,351 | 77,003 | 278,586 | 315,928 | ||||||||||||||||
| Interest expense, net | (8,321 | ) | (8,885 | ) | (32,787 | ) | (34,047 | ) | ||||||||||||
| Consolidated earnings before income taxes | $ | 61,030 | $ | 68,118 | $ | 245,799 | $ | 281,881 | ||||||||||||
| *This schedule reconciles segment earnings, which exclude certain costs, to consolidated earnings before taxes. | ||||||||||||||||||||
| Payments for property, plant and equipment | $ | 16,342 | $ | 8,015 | $ | 37,689 | $ | 47,087 | ||||||||||||
| Depreciation expense | $ | 21,387 | $ | 23,599 | $ | 87,631 | $ | 91,700 | ||||||||||||
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| RECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS1 | |||||||||||||||||||||||||
| (Unaudited - in thousands, except per share amounts) | |||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||
| September 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||
| Before Income Tax | Net of Income Tax | Per Share, Net of Income Tax | Before Income Tax | Net of Income Tax | Per Share, Net of Income Tax | ||||||||||||||||||||
| Earnings (U.S. GAAP) | $ | 61,030 | $ | 49,905 | $ | 0.76 | $ | 68,118 | $ | 57,239 | $ | 0.89 | |||||||||||||
| Non-U.S. GAAP adjustments: | |||||||||||||||||||||||||
| Gain on sale of properties | - | - | - | (11,131 | ) | (8,376 | ) | (0.13 | ) | ||||||||||||||||
| Merger and divestiture transaction costs | - | - | - | (2,299 | ) | (1,730 | ) | (0.03 | ) | ||||||||||||||||
| Restructuring charges | 5,008 | 3,736 | 0.06 | 3,176 | 2,421 | 0.04 | |||||||||||||||||||
| Gain on sale of disposal group | - | - | - | (2,025 | ) | (1,436 | ) | (0.02 | ) | ||||||||||||||||
| Total non-U.S. GAAP adjustments | 5,008 | 3,736 | 0.06 | (12,279 | ) | (9,121 | ) | (0.14 | ) | ||||||||||||||||
| Adjusted earnings (Non-U.S. GAAP) | $ | 66,038 | $ | 53,641 | $ | 0.82 | $ | 55,839 | $ | 48,118 | $ | 0.75 | |||||||||||||
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| RECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS1 | |||||||||||||||||||||||||
| (Unaudited - in thousands, except per share amounts) | |||||||||||||||||||||||||
| Year Ended | Year Ended | ||||||||||||||||||||||||
| September 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||
| Before Income Tax | Net of Income Tax | Per Share, Net of Income Tax | Before Income Tax | Net of Income Tax | Per Share, Net of Income Tax | ||||||||||||||||||||
| Earnings (U.S. GAAP) | $ | 245,799 | $ | 208,649 | $ | 3.18 | $ | 281,881 | $ | 240,395 | $ | 3.74 | |||||||||||||
| Non-U.S. GAAP adjustments: | |||||||||||||||||||||||||
| Gain on sale of properties | - | - | - | (24,653 | ) | (18,551 | ) | (0.29 | ) | ||||||||||||||||
| Impairment of assets sold | - | - | - | 37,902 | 28,016 | 0.44 | |||||||||||||||||||
| Merger and divestiture transaction costs | - | - | - | 16,355 | 12,307 | 0.19 | |||||||||||||||||||
| Restructuring charges | 5,008 | 3,736 | 0.06 | 22,216 | 16,621 | 0.26 | |||||||||||||||||||
| Loss on sale of disposal group | - | - | - | 515 | 365 | 0.01 | |||||||||||||||||||
| Acceleration of stock compensation | - | - | - | 2,376 | 1,788 | 0.03 | |||||||||||||||||||
| Net gain on cross-currency interest rate swaps | - | - | - | (27,481 | ) | (26,904 | ) | (0.42 | ) | ||||||||||||||||
| Total non-U.S. GAAP adjustments | 5,008 | 3,736 | 0.06 | 27,230 | 13,642 | 0.22 | |||||||||||||||||||
| Adjusted earnings (Non-U.S. GAAP) | $ | 250,807 | $ | 212,385 | $ | 3.24 | $ | 309,111 | $ | 254,037 | $ | 3.96 | |||||||||||||
| Woodward, Inc. and Subsidiaries | ||||||||||||||||||||
| RECONCILIATION OF NET EARNINGS TO EBIT1 AND ADJUSTED EBIT1 | ||||||||||||||||||||
| (Unaudited - in thousands) | ||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Net earnings (U.S. GAAP) | $ | 49,905 | $ | 57,239 | $ | 208,649 | $ | 240,395 | ||||||||||||
| Income taxes | 11,125 | 10,879 | 37,150 | 41,486 | ||||||||||||||||
| Interest expense | 8,730 | 9,309 | 34,282 | 35,811 | ||||||||||||||||
| Interest income | (409 | ) | (424 | ) | (1,495 | ) | (1,764 | ) | ||||||||||||
| EBIT (Non-U.S. GAAP) | 69,351 | 77,003 | 278,586 | 315,928 | ||||||||||||||||
| Non-U.S. GAAP adjustments* | 5,008 | (12,279 | ) | 5,008 | 27,230 | |||||||||||||||
| Adjusted EBIT (Non-U.S. GAAP) | $ | 74,359 | $ | 64,724 | $ | 283,594 | $ | 343,158 | ||||||||||||
| *See Reconciliation of Earnings to Adjusted Earnings1 tables above for the list of Non-U.S. GAAP adjustments made in the applicable periods. | ||||||||||||||||||||
| Woodward, Inc. and Subsidiaries | |||||||||||||||||||
| RECONCILIATION OF NET EARNINGS TO EBITDA1 AND ADJUSTED EBITDA1 | |||||||||||||||||||
| (Unaudited - in thousands) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Net earnings (U.S. GAAP) | $ | 49,905 | $ | 57,239 | $ | 208,649 | $ | 240,395 | |||||||||||
| Income taxes | 11,125 | 10,879 | 37,150 | 41,486 | |||||||||||||||
| Interest expense | 8,730 | 9,309 | 34,282 | 35,811 | |||||||||||||||
| Interest income | (409 | ) | (424 | ) | (1,495 | ) | (1,764 | ) | |||||||||||
| Amortization of intangible assets | 10,338 | 9,977 | 41,893 | 39,458 | |||||||||||||||
| Depreciation expense | 21,387 | 23,599 | 87,631 | 91,700 | |||||||||||||||
| EBITDA (Non-U.S. GAAP) | 101,076 | 110,579 | 408,110 | 447,086 | |||||||||||||||
| Non-U.S. GAAP adjustments* | 5,008 | (12,279 | ) | 5,008 | 27,230 | ||||||||||||||
| Adjusted EBITDA (Non-U.S. GAAP) | $ | 106,084 | $ | 98,300 | $ | 413,118 | $ | 474,316 | |||||||||||
| *See Reconciliation of Earnings to Adjusted Earnings1 tables above for the list of Non-U.S. GAAP adjustments made in the applicable periods. | |||||||||||||||||||
| Woodward, Inc. and Subsidiaries | |||||||||||||||||||
| RECONCILIATION OF INDUSTRIAL SEGMENT NET SALES EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES1 | |||||||||||||||||||
| (Unaudited - in thousands) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Industrial segment net sales | $ | 193,385 | $ | 194,956 | $ | 841,715 | $ | 904,702 | |||||||||||
| Renewable power systems and related businesses sales | - | - | - | 67,663 | |||||||||||||||
| Industrial segment net sales excluding renewable power systems and related businesses | $ | 193,385 | $ | 194,956 | $ | 841,715 | $ | 837,039 | |||||||||||
| Woodward, Inc. and Subsidiaries | |||||||||||||||||||
| RECONCILIATION OF INDUSTRIAL SEGMENT EARNINGS EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES1 | |||||||||||||||||||
| (Unaudited - in thousands) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Industrial segment earnings | $ | 20,747 | $ | 18,681 | $ | 108,672 | $ | 100,321 | |||||||||||
| Renewable power systems and related businesses earnings | - | - | - | 3,602 | |||||||||||||||
| Industrial segment earnings excluding renewable power systems and related businesses | $ | 20,747 | $ | 18,681 | $ | 108,672 | $ | 96,719 | |||||||||||
| Woodward, Inc. and Subsidiaries | |||||||||||||||||||
| RECONCILIATION OF NONSEGMENT EXPENSES TO ADJUSTED NONSEGMENT EXPENSES1 | |||||||||||||||||||
| (Unaudited - in thousands) | |||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
| Nonsegment expenses (U.S. GAAP) | $ | 17,111 | $ | 170 | $ | 64,442 | $ | 94,530 | |||||||||||
| Gain on sale of properties | - | 11,131 | - | 24,653 | |||||||||||||||
| Impairment of assets sold | - | - | - | (37,902 | ) | ||||||||||||||
| Net gain (loss) on sale of disposal group | - | 2,025 | - | (515 | ) | ||||||||||||||
| Merger and divestiture transaction costs | - | 2,299 | - | (16,355 | ) | ||||||||||||||
| Restructuring charges | (5,008 | ) | (3,176 | ) | (5,008 | ) | (22,216 | ) | |||||||||||
| Net gain on cross-currency interest rate swaps | - | - | - | 27,481 | |||||||||||||||
| Acceleration of stock compensation | - | - | - | (2,376 | ) | ||||||||||||||
| Adjusted nonsegment expenses (Non-U.S. GAAP) | $ | 12,103 | $ | 12,449 | $ | 59,434 | $ | 67,300 | |||||||||||
| Woodward, Inc. and Subsidiaries | ||||||||||
| RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW1 | ||||||||||
| (Unaudited - in thousands) | ||||||||||
| Year Ended | ||||||||||
| September 30, | ||||||||||
| 2021 | 2020 | |||||||||
| Net cash provided by operating activities | $ | 464,669 | $ | 349,491 | ||||||
| Payments for property, plant, and equipment | (37,689 | ) | (47,087 | ) | ||||||
| Free cash flow (Non-U.S. GAAP) | 426,980 | 302,404 | ||||||||
| Cash proceeds from the sale of the Duarte facility | - | 30,089 | ||||||||
| Cash paid for merger and divestiture transaction costs | - | 19,853 | ||||||||
| Cash paid for restructuring charges | - | 18,065 | ||||||||
| Net cash proceeds from cross-currency interest rate swaps | - | (55,191 | ) | |||||||
| Adjusted free cash flow (Non-U.S. GAAP) | $ | 426,980 | $ | 315,220 | ||||||
1Adjusted and Non-U.S. GAAP Financial Measures: Adjusted net earnings, adjusted earnings per share, adjusted Industrial segment earnings, adjusted EBIT and EBITDA, adjusted effective tax rate, Industrial segment net sales excluding RPS, Industrial segment earnings excluding RPS, and adjusted nonsegment expenses exclude, as applicable, (i) the gain on sale of assets associated with the sale of the Company’s real property, (ii) the charge from the impairment of assets held for sale, and the gains or losses (as applicable depending on the period of comparison) associated with the Company’s divestiture of the renewable power systems and related businesses (which we refer to as “RPS” or the disposal group), (iii) costs associated with the previously proposed merger with Hexcel, (iv) transaction costs associated with the completed divestiture of the disposal group, (v) restructuring charges, (vi) acceleration of stock compensation expense related to restructuring activities, and (vii) the net gain on settlement of cross-currency interest rate swaps. Woodward believes that these items are short-term costs/benefits or are otherwise not related to the ongoing operations of the business and therefore, uses them to illustrate more clearly how the underlying business of Woodward is performing. Adjusted free cash flow is free cash flow (defined below) plus the cash proceeds from the sale of real property at our former Duarte operations, cash payments added back for merger and divestiture transaction costs and restructuring activities, and excluding cash proceeds from the settlement of our cross-currency interest rate swaps. Management believes these adjustments to free cash flow better portrays Woodward’s operating performance.
EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization), free cash flow, adjusted free cash flow, adjusted net earnings, adjusted net earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, Industrial segment sales excluding RPS, Industrial segment earnings excluding RPS, and adjusted nonsegment expenses are financial measures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Management uses EBIT and adjusted EBIT to evaluate Woodward’s operating performance without the impacts of financing and tax related considerations. Management uses EBITDA and adjusted EBITDA in evaluating Woodward’s operating performance, making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Management also uses free cash flow, which is derived from net cash provided by or used in operating activities less payments for property, plant, and equipment, as well as adjusted free cash flow (as described above), in reviewing the financial performance of Woodward’s various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use EBIT, EBITDA and free cash flow in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of any of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Because EBIT and EBITDA, and adjusted EBIT and EBITDA, exclude certain financial information compared with net earnings, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Management’s calculations of EBIT, EBITDA, adjusted net earnings, adjusted earnings per share, adjusted EBIT and EBITDA, adjusted effective tax rate, adjusted nonsegment expenses, free cash flow, and adjusted free cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.
2Website, Facebook, Twitter: Woodward has used, and intends to continue to use, its Investor Relations website, its Facebook page and its Twitter handle as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
| Contact: | Don Guzzardo Vice President, Investor Relations & Treasurer 970-498-3580 Don.Guzzardo@woodward.com |
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