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Woodward (WWD) Surpasses Q4 Earnings and Revenue Estimates

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Woodward, Inc. (WWD - Free Report) reported healthy fourth-quarter fiscal 2018 results, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate.

Net Earnings

On a GAAP basis, net earnings for the fiscal fourth quarter were $74.5 million or $1.16 per share compared with $62.2 million or 98 cents per share in the year-ago quarter, primarily driven by top-line growth. For fiscal 2018, net earnings declined to $180.4 million or $2.82 per share from $200.5 million or $3.16 per share a year ago despite improved revenues due to higher total costs and expenses.

Adjusted net earnings came in at $89 million or $1.39 per share compared with $62 million or 98 cents per share in the year-ago quarter, beating the Zacks Consensus Estimate by 8 cents.

Woodward, Inc. Price, Consensus and EPS Surprise


Quarterly net sales increased 18.6% year over year to $719.4 million, largely attributable to sales growth in the Aerospace segment. The top line surpassed the Zacks Consensus Estimate of $688 million. For fiscal 2018, net sales increased 10.8% to $2,325.9 million.

Other Quarter Detail

Total costs and expenses increased 23.1% year over year to $640.3 million. This was primarily due to higher cost of goods sold.

Segmental Performance

Aerospace: Net sales were up 15.5% year over year to $461.1 million, which was strong for both commercial and military programs. Commercial OEM sales accelerated due to the rise in next generation aircraft deliveries and solid aftermarket sales. Defense OEM sales were positively impacted by strength in smart weapons. The segment’s earnings were $103.1 million, up 20.5% year over year, primarily due to strong sales volume for both OEM and aftermarket.

Industrial: Net sales totaled $258.2 million, up 24.4% year over year primarily due to the addition of L’Orange and improvement in renewables sales. The segment’s earnings declined 65.7% to $7.9 million.

Cash Flow and Liquidity

In fiscal 2018, Woodward generated $299.3 million of cash from operating activities compared with $307.5 million in fiscal 2017.

Free cash flow was $172 million for fiscal 2018 compared with $215 million a year ago. The decrease was primarily related to increase in capital expenditures.

As of Sep 30, 2018, the company had $83.6 million of cash and cash equivalents with long-term debt (less current portion) of $1,092.4 million compared with respective figures of $87.6 million and $580.3 million a year ago.

Fiscal 2019 Outlook

Woodward currently expects total net sales of $2.65-$2.8 billion for fiscal 2019 with 10% and 30% rise in Aerospace and Industrial sales, respectively, year over year. Adjusted earnings per share are now projected to be between $4.40 and $4.70, based on approximately 65 million outstanding shares. While free cash flow is expected to be around $300 million, effective tax rate is expected to be approximately 2%.

Zacks Rank and Stocks to Consider

Woodward currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the broader industry include Allied Motion Technologies Inc. (AMOT - Free Report) , Badger Meter, Inc. (BMI - Free Report) and Comtech Telecommunications Corp. (CMTL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allied Motion Technologies has a long-term earnings growth expectation of 10%.

Badger Meter has a long-term earnings growth expectation of 9%.

Comtech has a long-term earnings growth expectation of 5%. It beat earnings estimates in each of the trailing four quarters, the average positive surprise being 136%.

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