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Woodward, Inc. (WWD - Free Report) reported third-quarter fiscal 2024 adjusted net earnings per share (EPS) of $1.63, which beat the Zacks Consensus Estimate by 10.9%. In the year-ago quarter, WWD reported adjusted net EPS of $1.37.
Quarterly net sales increased 6% year over year to $848 million. Continued momentum in end-market demand and strong aerospace aftermarket sales resulted in this uptick. The top line missed the consensus estimate by 0.4%.
Post this announcement, the stock lost 13.18% in the pre-market trading hours on Jul 30. In the past year, shares of WWD have gained 52.1% compared with the sub-industry’s growth of 21.8%.
Image Source: Zacks Investment Research
Segment Results
Aerospace: Net sales were $518 million, up 8% year over year. Defense OEM sales were down 4% and defense aftermarket was up 22%. Commercial OEM sales were up 2% and commercial aftermarket sales increased 19%. Overall, aftermarket sales were supported by higher aircraft utilization. We predicted the metric to be $515.7 million.
Segmental earnings were $102 million, up from $83 million a year ago. The increase in segment earnings was a result of price utilization in higher aftermarket volumes.
Industrial: Net sales totaled $330 million, up 3% year over year. The rise in industrial sales was primarily driven by an 8% increase in power generation and a 3% jump in transportation.
Industrial segment sales growth moderated year over year as expected due to relatively flat China on-highway sales. We expected the metric to be $320.2 million.
Sales for on-highway natural gas trucks in China were $55 million in the quarter under review. However, management expects further decline in the fiscal fourth quarter, with sales in the range of $10 million to $15 million.
Segmental earnings were $60 million, up from $58 million in the year-ago quarter. Industrial earnings remained relatively flat as price realization was largely offset by inflation and an unfavorable mix.
Other Details
Gross margin was up 160 basis points year over year to 27.1%.
Total costs and expenses were $725.6 million, up 4.4% year over year. Adjusted EBITDA was $161 million compared with $147 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2024, Woodward had $308.3 million in cash and cash equivalents with $562.6 million of long-term debt (less the current portion).
For the nine months ended Jun 30, 2024, WWD generated $297 million of net cash from operating activities, increasing from $156 million in the prior-year period.
Adjusted free cash flow was $230 million compared with $103 million in the prior-year period. The increase in adjusted free cash flow was primarily due to increased earnings and improved working capital, partially offset by higher capital expenditures.
During the first nine months of fiscal 2024, WWD returned $348 million to shareholders in the form of $43 million of dividends and $305 million of share repurchases.
Guidance
The company has revised its fiscal 2024 guidance due to lower China on-highway deliveries and supply chain disruptions, including delayed supplier deliveries and customer pushouts. These issues are expected to delay cash collection on planned deliveries beyond the fiscal 2024 end.
Net sales are expected to be in the $3.25-$3.3 billion band compared with the previous guidance of $3.25-$3.35 billion. The Zacks Consensus Estimate is pegged at $3.29 billion. Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: $325-$375 million).
EPS is expected to be between $5.80 and $6.00. Earlier, EPS was forecasted in the range of $5.70-$6.00. The Zacks Consensus Estimate is pegged at $5.88.
Aerospace segment revenues are anticipated to increase in the range of 12-14%, unchanged from the previous guidance. Industrial segment revenues are expected to increase in the band of 11-13% compared with the prior guided range of 13-15%.
Zacks Rank and Stocks to Consider
Woodward currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS has increased 4.37% in the past 60 days to $4.06. BMI’s long-term earnings growth rate is 17.9%. The company recently reported results for second-quarter 2024, wherein EPS of $1.12 topped the Zacks Consensus Estimate by 14.3%. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%.
Badger Meter’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 12.89%. BMI shares have risen 24.8% in the past year.
The Zacks Consensus Estimate for NVDA’s 2024 EPS has increased 1.5% in the past 60 days to $2.69. NVDA’s long-term earnings growth rate is 37.6%.
NVIDIA’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average earnings surprise of 18.43%. The stock has gained 138.8% in the past year.
The Zacks Consensus Estimate for ANET’s 2024 EPS has increased 0.3% in the past 60 days to $7.94. ANET’s long-term earnings growth rate is 16.1%. Arista is slated to announce second-quarter 2024 results on Jul 30, after market close.
Arista Networks’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 15.39%. Shares of ANET have gained 106.7% in the past year.
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Woodward (WWD) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Woodward, Inc. (WWD - Free Report) reported third-quarter fiscal 2024 adjusted net earnings per share (EPS) of $1.63, which beat the Zacks Consensus Estimate by 10.9%. In the year-ago quarter, WWD reported adjusted net EPS of $1.37.
Quarterly net sales increased 6% year over year to $848 million. Continued momentum in end-market demand and strong aerospace aftermarket sales resulted in this uptick. The top line missed the consensus estimate by 0.4%.
Woodward, Inc. Price, Consensus and EPS Surprise
Woodward, Inc. price-consensus-eps-surprise-chart | Woodward, Inc. Quote
Post this announcement, the stock lost 13.18% in the pre-market trading hours on Jul 30. In the past year, shares of WWD have gained 52.1% compared with the sub-industry’s growth of 21.8%.
Image Source: Zacks Investment Research
Segment Results
Aerospace: Net sales were $518 million, up 8% year over year. Defense OEM sales were down 4% and defense aftermarket was up 22%. Commercial OEM sales were up 2% and commercial aftermarket sales increased 19%. Overall, aftermarket sales were supported by higher aircraft utilization. We predicted the metric to be $515.7 million.
Segmental earnings were $102 million, up from $83 million a year ago. The increase in segment earnings was a result of price utilization in higher aftermarket volumes.
Industrial: Net sales totaled $330 million, up 3% year over year. The rise in industrial sales was primarily driven by an 8% increase in power generation and a 3% jump in transportation.
Industrial segment sales growth moderated year over year as expected due to relatively flat China on-highway sales. We expected the metric to be $320.2 million.
Sales for on-highway natural gas trucks in China were $55 million in the quarter under review. However, management expects further decline in the fiscal fourth quarter, with sales in the range of $10 million to $15 million.
Segmental earnings were $60 million, up from $58 million in the year-ago quarter. Industrial earnings remained relatively flat as price realization was largely offset by inflation and an unfavorable mix.
Other Details
Gross margin was up 160 basis points year over year to 27.1%.
Total costs and expenses were $725.6 million, up 4.4% year over year. Adjusted EBITDA was $161 million compared with $147 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2024, Woodward had $308.3 million in cash and cash equivalents with $562.6 million of long-term debt (less the current portion).
For the nine months ended Jun 30, 2024, WWD generated $297 million of net cash from operating activities, increasing from $156 million in the prior-year period.
Adjusted free cash flow was $230 million compared with $103 million in the prior-year period. The increase in adjusted free cash flow was primarily due to increased earnings and improved working capital, partially offset by higher capital expenditures.
During the first nine months of fiscal 2024, WWD returned $348 million to shareholders in the form of $43 million of dividends and $305 million of share repurchases.
Guidance
The company has revised its fiscal 2024 guidance due to lower China on-highway deliveries and supply chain disruptions, including delayed supplier deliveries and customer pushouts. These issues are expected to delay cash collection on planned deliveries beyond the fiscal 2024 end.
Net sales are expected to be in the $3.25-$3.3 billion band compared with the previous guidance of $3.25-$3.35 billion. The Zacks Consensus Estimate is pegged at $3.29 billion.
Adjusted free cash flow is projected to be between $300 million and $350 million (previous projection: $325-$375 million).
EPS is expected to be between $5.80 and $6.00. Earlier, EPS was forecasted in the range of $5.70-$6.00. The Zacks Consensus Estimate is pegged at $5.88.
Aerospace segment revenues are anticipated to increase in the range of 12-14%, unchanged from the previous guidance. Industrial segment revenues are expected to increase in the band of 11-13% compared with the prior guided range of 13-15%.
Zacks Rank and Stocks to Consider
Woodward currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology space are Badger Meter,Inc. (BMI - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Arista Networks,Inc. (ANET - Free Report) . BMI presently sports a Zacks Rank #1 (Strong Buy), whereas NVDA & ANET 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 Badger Meter’s 2024 EPS has increased 4.37% in the past 60 days to $4.06. BMI’s long-term earnings growth rate is 17.9%. The company recently reported results for second-quarter 2024, wherein EPS of $1.12 topped the Zacks Consensus Estimate by 14.3%. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%.
Badger Meter’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 12.89%. BMI shares have risen 24.8% in the past year.
The Zacks Consensus Estimate for NVDA’s 2024 EPS has increased 1.5% in the past 60 days to $2.69. NVDA’s long-term earnings growth rate is 37.6%.
NVIDIA’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average earnings surprise of 18.43%. The stock has gained 138.8% in the past year.
The Zacks Consensus Estimate for ANET’s 2024 EPS has increased 0.3% in the past 60 days to $7.94. ANET’s long-term earnings growth rate is 16.1%. Arista is slated to announce second-quarter 2024 results on Jul 30, after market close.
Arista Networks’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average earnings surprise of 15.39%. Shares of ANET have gained 106.7% in the past year.