Woodward Falls 10% on Revenue, Outlook Miss

FORT COLLINS – Woodward Inc. (NASDAQ:) reported third-quarter earnings that surpassed analyst expectations but saw its stock tumble 10% as both revenue and future guidance fell short of market estimates.

The aerospace and industrial company announced earnings per share (EPS) of $1.63, which was $0.11 higher than the analyst estimate of $1.52. However, revenue for the quarter was $848 million, missing the consensus estimate of $853.29 million.

The company’s third-quarter results showed a 6% increase in net sales compared to the same period last year, rising from $801 million to $848 million. Net earnings also improved from $85 million ($1.37 per share) to $102 million ($1.63 per share).

This performance was primarily driven by strong aftermarket demand in the Aerospace segment, which saw an 8% increase in net sales. Industrial growth moderated, with a 3% increase in net sales, benefiting from power generation and transportation sales despite flat shipments in China.

Woodward’s Chairman and CEO, Chip Blankenship, attributed the solid quarter to robust end-market demand and the company’s focus on growth, operational excellence, and innovation. Despite the positive earnings outcome, the market’s reaction was decidedly negative due to the revenue shortfall and future earnings guidance.

For the full fiscal year 2024, Woodward provided an EPS guidance range of $5.80 to $6.00, which is below the analyst consensus of $5.99. The company’s revenue guidance for FY2024 is projected to be between $3.25 billion and $3.3 billion, also falling short of the consensus estimate of $3.308 billion. The midpoint of the EPS guidance range is $5.90, slightly below the consensus, while the midpoint of the revenue guidance range is $3.275 billion, below the consensus estimate.

The company’s financial position remains strong, with net cash provided by operating activities reaching $297 million for the first nine months of 2024, and adjusted free cash flow rising to $230 million. Despite these positive cash flow metrics, the market’s focus on the missed revenue and guidance has overshadowed the company’s profitability and cash generation capabilities.

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