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Woodward, Inc (WWD - Free Report) reported net earnings of $1.01 per share for second-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 31.2%. In the year-ago quarter, WWD reported adjusted net earnings of 72 cents.
Net sales in the fiscal second quarter moved up 22% year over year to $718 million due to higher sales in the Aerospace and Industrial segments. The top line beat the consensus estimate by 11.1%.
However, ongoing supply-chain and labor disruptions and unfavorable foreign currency exchange rates continued to be headwinds.
Aerospace: Net sales were $437 million, up 17% year over year. The upside can be attributed to higher commercial OEM (up 30% year over year) and commercial aftermarket sales (up 28% year over year), resulting from improving passenger traffic and fleet utilization. Yet, continued softness in defense OEM sales due to lower guided weapons sales and supply-chain disruptions were headwinds.
The segment’s earnings were $73 million, up from $60 million in the year-ago quarter. Price realization, higher commercial OEM and aftermarket sales resulted in the uptick. However, it was partly offset by inflation, and the annual incentive compensation.
Industrial: Net sales totaled $281 million, up 31% from the prior-year quarter due to higher demand across all markets. Nonetheless, forex volatility impacted sales by $11 million.
The segment’s earnings were $38 million, up from $17 million in the year-ago quarter, mainly due to higher volume and favorable product mix partly offset by inflation and annual incentive compensation.
Other Details
Total costs and expenses increased to $678 million, up 27.3% year over year. Adjusted EBITDA was $117.4 million compared with $90.7 million in the year-ago quarter.
Cash Flow & Liquidity
As of Mar 31, Woodward had $129.4 million in cash and cash equivalents with $652.1 million of long-term debt (less the current portion).
For the first half of fiscal 2023, Woodward generated $40 million of net cash from operating activities compared with $50 million in the comparable period in fiscal 2022. For the fiscal first half of 2023, adjusted free cash flow was ($1) million compared with $27 million in the comparable period in fiscal 2022. The downtick was mainly caused by increased capital expenditures.
Woodward repurchased shares worth $26 million in the six months ended Mar 31. In January 2022, the company authorized a new $800 million two-year stock repurchase program, reinforcing its financial position and positive outlook. The company has $328 million remaining under its share repurchase authorization.
Fiscal 2023 Outlook
For fiscal 2023, net sales are now expected in the range of $2.7-$2.8 billion compared with the earlier guided range of $2.6-$2.75 billion.
Aerospace revenues are anticipated to increase between 14% and 19%, while Industrial revenues are expected to remain flat to increase 5%.
Adjusted free cash flow is projected to be between $200 million and $250 million. Earnings are likely to be in the range of $3.15-$3.60 per share.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.78 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.7%. Shares of ANET have increased 40.4% in the past year.
The Zacks Consensus Estimate for SAP’s 2023 earnings has increased 0.4% in the past 60 days to $5.65 per share. The long-term earnings growth rate is projected to be 13.9%. Shares of SAP have surged 34.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has been unchanged in the past 60 days at $3.43 per share. The long-term earnings growth rate is expected to be 10.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 6.2%. Shares of BLKB have gained 20% in the past year
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Woodward (WWD) Q2 Earnings & Revenues Beat, Increase Y/Y
Woodward, Inc (WWD - Free Report) reported net earnings of $1.01 per share for second-quarter fiscal 2023, which beat the Zacks Consensus Estimate by 31.2%. In the year-ago quarter, WWD reported adjusted net earnings of 72 cents.
Net sales in the fiscal second quarter moved up 22% year over year to $718 million due to higher sales in the Aerospace and Industrial segments. The top line beat the consensus estimate by 11.1%.
However, ongoing supply-chain and labor disruptions and unfavorable foreign currency exchange rates continued to be headwinds.
Woodward, Inc. Price, Consensus and EPS Surprise
Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote
Segment Results
Aerospace: Net sales were $437 million, up 17% year over year. The upside can be attributed to higher commercial OEM (up 30% year over year) and commercial aftermarket sales (up 28% year over year), resulting from improving passenger traffic and fleet utilization. Yet, continued softness in defense OEM sales due to lower guided weapons sales and supply-chain disruptions were headwinds.
The segment’s earnings were $73 million, up from $60 million in the year-ago quarter. Price realization, higher commercial OEM and aftermarket sales resulted in the uptick. However, it was partly offset by inflation, and the annual incentive compensation.
Industrial: Net sales totaled $281 million, up 31% from the prior-year quarter due to higher demand across all markets. Nonetheless, forex volatility impacted sales by $11 million.
The segment’s earnings were $38 million, up from $17 million in the year-ago quarter, mainly due to higher volume and favorable product mix partly offset by inflation and annual incentive compensation.
Other Details
Total costs and expenses increased to $678 million, up 27.3% year over year. Adjusted EBITDA was $117.4 million compared with $90.7 million in the year-ago quarter.
Cash Flow & Liquidity
As of Mar 31, Woodward had $129.4 million in cash and cash equivalents with $652.1 million of long-term debt (less the current portion).
For the first half of fiscal 2023, Woodward generated $40 million of net cash from operating activities compared with $50 million in the comparable period in fiscal 2022. For the fiscal first half of 2023, adjusted free cash flow was ($1) million compared with $27 million in the comparable period in fiscal 2022. The downtick was mainly caused by increased capital expenditures.
Woodward repurchased shares worth $26 million in the six months ended Mar 31. In January 2022, the company authorized a new $800 million two-year stock repurchase program, reinforcing its financial position and positive outlook. The company has $328 million remaining under its share repurchase authorization.
Fiscal 2023 Outlook
For fiscal 2023, net sales are now expected in the range of $2.7-$2.8 billion compared with the earlier guided range of $2.6-$2.75 billion.
Aerospace revenues are anticipated to increase between 14% and 19%, while Industrial revenues are expected to remain flat to increase 5%.
Adjusted free cash flow is projected to be between $200 million and $250 million. Earnings are likely to be in the range of $3.15-$3.60 per share.
Zacks Rank & Stocks to Consider
Woodward currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology space are SAP SE (SAP - Free Report) , Blackbaud (BLKB - Free Report) and Arista Networks (ANET - Free Report) . SAP currently sports a Zacks Rank #1 (Strong Buy) whereas Arista Networks and Blackbaud carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.78 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.7%. Shares of ANET have increased 40.4% in the past year.
The Zacks Consensus Estimate for SAP’s 2023 earnings has increased 0.4% in the past 60 days to $5.65 per share. The long-term earnings growth rate is projected to be 13.9%. Shares of SAP have surged 34.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has been unchanged in the past 60 days at $3.43 per share. The long-term earnings growth rate is expected to be 10.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 6.2%. Shares of BLKB have gained 20% in the past year