Woodward Inc.

11/25/2024 | Press release | Distributed by Public on 11/25/2024 15:18

Woodward Reports Record Sales & Earnings for Fiscal Year 2024 Form 8 K

Woodward Reports Record Sales & Earnings for Fiscal Year 2024

2025 guidance reflects growth in key Aerospace and Industrial markets

FORT COLLINS, Colo., Nov. 25, 2024 (GLOBE NEWSWIRE) -- Woodward, Inc. (NASDAQ: WWD) today reported financial results for its fiscal year 2024 and fourth quarter ending September 30, 2024.

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. All references to years are references to the Company's fiscal year unless otherwise stated.

Fourth Quarter and Fiscal Year 2024 Overview
Fourth Quarter 2024 Fiscal Year 2024
Net sales $855M, +10% $3.3B, +14%
Earnings per share (EPS) $1.36, +2% $6.01, +59%
Adjusted EPS1 $1.41, +6% $6.11, +45%
Cash from operations $142M, -7% $439M, +42%
Free cash flow1 $118M, -12% $343M, +48%

"We delivered record sales in fiscal 2024 with Woodward revenue exceeding $3 billion for the first time. Robust end market demand along with contributions from operational excellence fueled significant sales growth and earnings expansion," said Chip Blankenship, Chairman and Chief Executive Officer. "In Aerospace, both commercial and defense OEM sales increased due to capacity improvements to meet customer demand, and commercial and defense aftermarket sales increased due to continued high aircraft utilization. Our Industrial business benefitted from increased sales in power generation and transportation. Our performance over the last year reflects the hard work and dedication of Woodward members to deliver on our value proposition and fulfill our purpose.

We enter fiscal 2025 with strong momentum. In Aerospace, we anticipate increasing revenue and margin expansion driven by continued strength in commercial markets and increased defense activity. In Industrial, we expect broad-based market strength in power generation and marine transportation, offset by a significant decline in sales related to China on-highway natural gas trucks. We remain focused on growth, operational excellence and innovation to drive shareholder value."

Fiscal 2024 Key Highlights

  • Completed $55 million, multi-year transformation of Aerospace Maintenance, Repair and Overhaul (MRO) facility in Loves Park, Illinois, to prepare for aftermarket growth
  • Signed three MRO agreements:
    • To continue servicing Woodward-manufactured components for Lufthansa Technik
    • To be exclusive Thrust Reverser Actuation System (TRAS) MRO contractor for CF34-10E powered fleet for Australia-based Alliance Airlines
    • For Turkish Technic to join Woodward's global licensed asset management provider network, in support of the growing LEAP fleet
  • Expanded participation in next generation aircraft development and demonstrator projects:
    • Selected as rotary actuation technology provider for the NASA and Boeing Transonic Truss-braced Wing X-66A aircraft demonstrator
    • Selected to provide Trim Control Module for JetZero Blended Wing Body Demonstrator
  • Broke ground on Glatten, Germany, expansion to add capacity to support power generation and transportation growth
  • Continued progress in automation and operational excellence through the installation of additional industrial robots and cobots
Fourth Quarter and Fiscal Year 2024 Company Results
Total Company Results
Three Months Ended September 30, Year Ended September 30,
Dollars in millions, except per share amounts 2024 2023 Year over
Year 		2024 2023 Year over
Year
Income Statement
Total Sales $ 855 $ 777 10 % $ 3,324 $ 2,915 14 %
Net Earnings 83 83 1 % 373 232 61 %
Adjusted Net Earnings1 86 83 5 % 379 259 47 %
EPS $ 1.36 $ 1.33 2 % $ 6.01 $ 3.78 59 %
Adjusted EPS1 $ 1.41 $ 1.33 6 % $ 6.11 $ 4.21 45 %
EBIT1 113 108 4 % 495 321 54 %
Adjusted EBIT1 117 108 8 % 504 356 42 %
Effective Tax Rate 18.0 % 15.7 % 230 bps 17.8 % 15.7 % 210 bps
Adjusted Effective Tax Rate1 18.4 % 15.7 % 270 bps 18.0 % 16.8 % 120 bps
Cash Flow and Financial Position
Cash from operating activities $ 142 $ 153 -7 % $ 439 $ 309 42 %
Free cash flow 118 134 -12 % 343 232 48 %
Adjusted free cash flow1 118 135 -13 % 348 238 46 %
Dividends Paid 15 13 12 % 58 51 14 %
Share Repurchases 86 100 -14 391 126 209 %
Total Debt 872 722 21 %
Debt to EBITDA1 Leverage 1.4x 1.5x
Segment Results
Aerospace
Three Months Ended September 30, Year Ended September 30,
Dollars in millions 2024 2023 Year over
Year 		2024 2023 Year over
Year
Commercial OEM $ 194 $ 167 16 % $ 738 $ 651 13 %
Commercial Aftermarket 174 142 22 % 641 548 17 %
Defense OEM 126 90 40 % 407 369 10 %
Defense Aftermarket 59 56 7 % 243 201 21 %
Revenue 553 455 22 % 2,029 1,768 15 %
Segment Earnings 106 78 35 % 385 290 33 %
Segment Margin % 19.2 % 17.2 % 200 bps 19.0 % 16.4 % 260 bps

The increase in segment earnings in the fourth quarter was primarily a result of price realization and higher volume, partially offset by inflation. The increase in segment earnings for the year was a result of price realization and higher volume, partially offset by inflation.

Industrial
Three Months Ended September 30, Year Ended September 30,
Dollars in millions 2024 2023 Year over Year 2024 2023 Year over Year
Transportation $ 131 $ 162 -19 % $ 642 $ 527 22 %
Power generation 109 106 4 % 424 383 11 %
Oil and gas 62 55 12 % 230 236 -3 %
Revenue 302 322 -6 % 1,296 1,146 13 %
Segment Earnings 38 54 -30 % 230 162 42 %
Segment Margin % 12.6 % 16.9 % -430 bps 17.7 % 14.1 % 360 bps

The decrease in segment earnings in the fourth quarter was primarily a result of lower volume and unfavorable mix, partially offset by price realization. The increase in segment earnings for the year was a result of price realization and higher volume, partially offset by unfavorable mix.

Nonsegment
Three Months Ended September 30, Year Ended September 30,
Dollars in millions 2024 2023 Year over
Year 		2024 2023 Year over
Year
Nonsegment Expenses $ (31 ) $ (24 ) 28 % $ (120 ) $ (131 ) -8 %
Adjusted Nonsegment Expenses (27 ) (24 ) 10 % (112 ) (96 ) 16 %
Fiscal Year 2025 Guidance

Woodward's fiscal 2025 guidance includes a continued strong demand environment and improving operational performance throughout the year. The Aerospace segment guidance includes increasing revenue and margin expansion driven by continued strength in commercial markets and increased defense activity. The Industrial segment guidance includes broad-based market strength in power generation and marine transportation, offset by a significant decline in sales related to China on-highway natural gas trucks. Our fiscal year 2025 guidance includes $40 million in sales related to China on-highway natural gas trucks, which would be a year-over-year decline of approximately $175 million.

Woodward, Inc. and Subsidiaries
Total Company
Sales $3.30 billion - $3.50 billion
Effective Tax Rate ~20%
Capital Expenditures ~$115 million
EPS $5.75 - $6.25
Free Cash Flow $350 million - $400 million
Diluted shares outstanding ~61.5 million
Segment Data
Aerospace
Sales up 6% - 13%
Segment Earnings (% of Sales) 20% - 21%
Industrial
Sales down 7% - 11%
Segment Earnings (% of Sales) 13% - 14%
Conference Call

Woodward will hold an investor conference call at 5:00 p.m. EST, November 25, 2024, to provide an overview of the financial performance for its fiscal year 2024 and fourth quarter ending September 30, 2024, business highlights, and outlook for fiscal 2025. 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 1-800-715-9871 (domestic) or 1-646-307-1963 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 4675940. The call and presentation will be available on the website by selecting "Investors/Events & Presentations" from the menu and will remain accessible on the company's website for one year.

About Woodward, Inc.

Woodward is the global leader in the design, manufacture, and service of energy conversion and control solutions for the aerospace and industrial equipment markets. Our purpose is to design and deliver energy control solutions our partners count on to power a clean future. Our innovative fluid, combustion, electrical, propulsion and motion control systems perform in some of the world's harshest environments. 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, anticipated continued strong demand, continued improvements in our operational performance, the results of our ongoing focus on growth, operational excellence and innovation, including whether such focus ultimately leads to long-term term success and enhanced shareholder value, and statements regarding our business and guidance for fiscal year 2025, including our guidance for sales, segment sales as compared to the prior fiscal year, earnings per share, segment earnings margin, effective tax rate, free cash flow, capital expenditures, and diluted weighted average shares outstanding, as well as our assumptions regarding our guidance, anticipated trends in our business and markets, including increased revenue and margin expansion in our Aerospace segment, strength in commercial aerospace markets, defense activity in our Aerospace segment, broad-based market strength in power generation and marine transportation in our Industrial segment, anticipated weakness in the China on-highway natural gas truck market, including our assumptions regarding sales and demand in fiscal 2025. 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: (1) global economic uncertainty and instability, including in the financial markets that affect Woodward, its customers, and its supply chain; (2) risks related to constraints and disruptions in the global supply chain and labor markets; (3) Woodward's long sales cycle; (4) risks related to Woodward's concentration of revenue among a relatively small number of customers; (5) Woodward's ability to implement and realize the intended effects of any restructuring efforts; (6) Woodward's ability to successfully manage competitive factors including expenses and fluctuations in sales; (7) changes and consolidations in the aerospace market; (8) Woodward's financial obligations including debt obligations and tax expenses and exposures; (9) risks related to Woodward's U.S. government contracting activities including potential changes in government spending patterns; (10) Woodward's ability to protect its intellectual property rights and avoid infringing the intellectual property rights of others; (11) changes in the estimates of fair value of reporting units or of long-lived assets; (12) environmental risks; (13) Woodward's continued access to a stable workforce and favorable labor relations with its employees; (14) Woodward's ability to manage various regulatory and legal matters; (15) risks from operating internationally; (16) cybersecurity and other technological risks; and other risk factors and risks described in Woodward's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2023, 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, 2024, which we expect to file shortly, and other risks described in Woodward's filings with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and Woodward assumes no obligation to update such statements, except as required by applicable law.

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,
2024 2023 2024 2023
Net sales $ 854,488 $ 777,070 $ 3,324,249 $ 2,914,566
Costs and expenses:
Cost of goods sold 646,733 587,510 2,447,770 2,236,983
Selling, general and administrative expenses 77,729 65,944 307,499 269,692
Research and development costs 34,689 32,061 140,676 132,095
Restructuring charges - - - 5,172
Interest expense 13,477 11,736 47,959 47,898
Interest income (1,964 ) (1,361 ) (6,458 ) (2,751 )
Other (income) expense, net (17,707 ) (16,860 ) (67,168 ) (50,291 )
Total costs and expenses 752,957 679,030 2,870,278 2,638,798
Earnings before income taxes 101,531 98,040 453,971 275,768
Income taxes 18,235 15,388 81,000 43,400
Net earnings $ 83,296 $ 82,652 $ 372,971 $ 232,368
Earnings per share amounts:
Basic earnings per share $ 1.40 $ 1.38 $ 6.21 $ 3.88
Diluted earnings per share $ 1.36 $ 1.33 $ 6.01 $ 3.78
Weighted average common shares outstanding:
Basic 59,437 60,103 60,076 59,908
Diluted 61,385 62,039 62,084 61,482
Cash dividends paid per share $ 0.2500 $ 0.2200 $ 0.9700 $ 0.8500
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
September 30, September 30,
2024 2023
Assets
Current assets:
Cash and cash equivalents $ 282,270 $ 137,447
Accounts receivable 770,066 749,859
Inventories 609,092 517,843
Income taxes receivable 22,016 14,120
Other current assets 60,167 50,183
Total current assets 1,743,611 1,469,452
Property, plant, and equipment, net 940,715 913,094
Goodwill 806,643 791,468
Intangible assets, net 440,419 452,363
Deferred income tax assets 84,392 58,550
Other assets 353,135 325,276
Total assets $ 4,368,915 $ 4,010,203
Liabilities and stockholders' equity
Current liabilities:
Short term borrowings 217,000 -
Current portion of long term debt 85,719 75,817
Accounts payable 287,457 234,328
Income taxes payable 40,692 44,435
Accrued liabilities 292,642 262,616
Total current liabilities 923,510 617,196
Long-term debt, less current portion 569,751 645,709
Deferred income tax liabilities 121,858 132,819
Other liabilities 577,380 543,490
Total liabilities 2,192,499 1,939,214
Stockholders' equity 2,176,416 2,070,989
Total liabilities and stockholders' equity $ 4,368,915 $ 4,010,203
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
For the Year
Ended September 30,
2024 2023
Net cash provided by operating activities $ 439,089 $ 308,543
Cash flows from investing activities:
Payments for purchase of property, plant, and equipment (96,280 ) (76,500 )
Proceeds from sale of assets 2,292 488
Proceeds from business divestiture 1,800 -
Payments for business acquisition, net of cash acquired - 878
Proceeds from sales of short-term investments 9,738 7,692
Payments for purchases of short-term investments (6,767 ) (6,109 )
Net cash used in investing activities (89,217 ) (73,551 )
Cash flows from financing activities:
Cash dividends paid (58,286 ) (51,027 )
Proceeds from sales of treasury stock 89,875 50,749
Payments for repurchases of common stock (390,819 ) (126,380 )
Borrowings on revolving lines of credit and short-term borrowings 2,962,800 2,323,500
Payments on revolving lines of credit and short-term borrowings (2,745,800 ) (2,390,300 )
Payments of debt financing costs - (2,236 )
Payments of long-term debt and finance lease obligations (75,817 ) (779 )
Net cash used in financing activities (218,047 ) (196,473 )
Effect of exchange rate changes on cash and cash equivalents 12,998 (8,916 )
Net change in cash and cash equivalents 144,823 29,603
Cash and cash equivalents at beginning of year 137,447 107,844
Cash and cash equivalents at end of year $ 282,270 $ 137,447
Woodward, Inc. and Subsidiaries
SEGMENT NET SALES AND EARNINGS
(Unaudited - in thousands)
Three Months Ended September 30, Year Ended September 30,
2024 2023 2024 2023
Net sales:
Aerospace $ 552,790 $ 454,870 $ 2,028,618 $ 1,768,103
Industrial 301,698 322,200 1,295,631 1,146,463
Total consolidated net sales $ 854,488 $ 777,070 $ 3,324,249 $ 2,914,566
Segment earnings*:
Aerospace $ 106,065 $ 78,281 $ 385,360 $ 290,104
As a percent of segment net sales 19.2 % 17.2 % 19.0 % 16.4 %
Industrial 38,015 54,451 229,857 161,622
As a percent of segment net sales 12.6 % 16.9 % 17.7 % 14.1 %
Total segment earnings 144,080 132,732 615,217 451,726
Nonsegment expenses (31,036 ) (24,317 ) (119,745 ) (130,811 )
EBIT 113,044 108,415 495,472 320,915
Interest expense, net (11,513 ) (10,375 ) (41,501 ) (45,147 )
Consolidated earnings before income taxes $ 101,531 $ 98,040 $ 453,971 $ 275,768
*This schedule reconciles segment earnings, which exclude certain costs, to consolidated earnings before taxes.
Payments for property, plant and equipment $ 24,087 $ 19,358 $ 96,280 $ 76,500
Depreciation expense $ 21,084 $ 20,942 $ 82,578 $ 82,154
Woodward, Inc. and Subsidiaries
RECONCILIATION OF EARNINGS TO ADJUSTED NET EARNINGS1
(Unaudited - in thousands, except per share amounts)
Three Months Ended September 30, 2024 Three Months Ended September 30, 2023
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
Net Earnings (U.S. GAAP) $ 101,531 $ 83,296 $ 1.36 $ 98,040 $ 82,652 $ 1.33
Non-U.S. GAAP adjustments:
Non-recurring gain related to a previous acquisition - - - - - -
Business development activities - - - - - -
Non-recurring charge related to a previous acquisition 4,378 3,129 0.05 - - -
Certain non-restructuring separation costs - - - - - -
Specific charge for excess and obsolete inventory - - - - - -
Product rationalization - - - - - -
Non-recurring charge related to customer collections - - - - - -
Restructuring charges - - - - - -
Total non-U.S. GAAP adjustments 4,378 3,129 0.05 - - -
Adjusted net earnings (Non-U.S. GAAP) $ 105,909 $ 86,425 $ 1.41 $ 98,040 $ 82,652 $ 1.33
Woodward, Inc. and Subsidiaries
RECONCILIATION OF EARNINGS TO ADJUSTED NET EARNINGS1
(Unaudited - in thousands, except per share amounts)
Year Ended September 30, 2024 Year Ended September 30, 2023
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
Net Earnings (U.S. GAAP) $ 453,971 $ 372,971 $ 6.01 $ 275,768 $ 232,368 $ 3.78
Non-U.S. GAAP adjustments:
Non-recurring gain related to a previous acquisition (4,803 ) (3,433 ) (0.06 ) - - -
Business development activities 5,902 4,456 0.07 - - -
Non-recurring charge related to a previous acquisition 4,378 3,129 0.05 - - -
Certain non-restructuring separation costs 2,666 2,013 0.04 2,208 1,661 0.03
Specific charge for excess and obsolete inventory - - - 11,995 9,016 0.15
Product rationalization - - - 10,504 7,896 0.13
Non-recurring charge related to customer collections - - - 4,997 3,761 0.06
Restructuring charges - - - 5,172 3,874 0.06
Total non-U.S. GAAP adjustments 8,143 6,165 0.10 34,876 26,208 0.43
Adjusted net earnings (Non-U.S. GAAP) $ 462,114 $ 379,136 $ 6.11 $ 310,644 $ 258,576 $ 4.21
Woodward, Inc. and Subsidiaries
RECONCILIATION OF NET EARNINGS TO EBIT1 AND ADJUSTED EBIT1
(Unaudited - in thousands)
Three Months Ended September 30, Year Ended September 30,
2024 2023 2024 2023
Net earnings (U.S. GAAP) $ 83,296 $ 82,652 $ 372,971 $ 232,368
Income taxes 18,235 15,388 81,000 43,400
Interest expense 13,477 11,736 47,959 47,898
Interest income (1,964 ) (1,361 ) (6,458 ) (2,751 )
EBIT (Non-U.S. GAAP) 113,044 108,415 495,472 320,915
Non-U.S. GAAP adjustments* 4,378 - 8,143 34,876
Adjusted EBIT (Non-U.S. GAAP) $ 117,422 $ 108,415 $ 503,615 $ 355,791
*See Reconciliation of Net Earnings to Adjusted Net 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 September 30, Year Ended September 30,
2024 2023 2024 2023
Net earnings (U.S. GAAP) $ 83,296 $ 82,652 $ 372,971 $ 232,368
Income taxes 18,235 15,388 81,000 43,400
Interest expense 13,477 11,736 47,959 47,898
Interest income (1,964 ) (1,361 ) (6,458 ) (2,751 )
Amortization of intangible assets 8,244 9,500 33,592 37,589
Depreciation expense 21,084 20,942 82,578 82,154
EBITDA (Non-U.S. GAAP) 142,372 138,857 611,642 440,658
Non-U.S. GAAP adjustments* 4,378 - 8,143 34,876
Adjusted EBITDA (Non-U.S. GAAP) $ 146,750 $ 138,857 $ 619,785 $ 475,534
*See Reconciliation of Net Earnings to Adjusted Net Earnings1 tables above for the list of Non-U.S. GAAP adjustments made in the applicable periods.
Woodward, Inc. and Subsidiaries
RECONCILIATION OF NONSEGMENT EXPENSES TO ADJUSTED NONSEGMENT EXPENSES1
(Unaudited - in thousands)
Three Months Ended
September 30, 		Year Ended September 30,
2024 2023 2024 2023
Nonsegment expenses (U.S. GAAP) $ 31,036 $ 24,317 $ 119,745 $ 130,811
Non-recurring gain related to a previous acquisition - - 4,803 -
Business development activities - - (5,902 ) -
Non-recurring charge related to a previous acquisition (4,378 ) - (4,378 ) -
Certain non-restructuring separation costs - - (2,666 ) (2,208 )
Specific charge for excess and obsolete inventory - - - (11,995 )
Product rationalization - - - (10,504 )
Restructuring charges - - - (5,172 )
Non-recurring charge related to customer collections - - - (4,997 )
Adjusted nonsegment expenses (Non-U.S. GAAP) $ 26,658 $ 24,317 $ 111,602 $ 95,935
Woodward, Inc. and Subsidiaries
RECONCILATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW1 AND ADJUSTED FREE CASH FLOW1
(Unaudited - in thousands)
Three Months Ended September 30, Year Ended September 30,
2024 2023 2024 2023
Net cash provided by operating activities (U.S. GAAP) $ 141,760 $ 152,913 $ 439,089 $ 308,543
Payments for property, plant and equipment (24,087 ) (19,358 ) (96,280 ) (76,500 )
Free cash flow (Non-U.S. GAAP) 117,673 133,555 342,809 232,043
Cash received for a non-recurring matter related to a previous acquisition - - (4,803 ) -
Cash paid for business development activities - - 5,902 -
Cash paid for non-recurring matter unrelated to the ongoing operations of the businesses - - 2,725 -
Cash paid for certain non-restructuring separation costs - - 985 977
Cash paid for restructuring charges - 1,613 - 5,207
Adjusted free cash flow (Non-U.S. GAAP) 117,673 135,168 347,618 238,227

1Adjusted and Non-U.S. GAAP Financial Measures: Adjusted net earnings, adjusted earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, and adjusted nonsegment expenses exclude, as applicable, (i) a non-recurring gain related to a previous acquisition, (ii) costs related to business development activities, (iii) non-recurring charge related to a previous acquisition, (iv) certain non-restructuring separation costs, (v) a specific charge for excess and obsolete inventory, (vi) product rationalization, (vii) a non-recurring charge related to customer collections, and (viii) restructuring charges. The product rationalization adjustment pertains to a non-recurring write-off of inventory and assets related to the elimination of certain product lines. The specific charge for excess and obsolete inventory pertains to a non-recurring process change that resulted in the identification and write down of certain excess inventory unrelated to product rationalization. The non-recurring charge related to customer collections pertains to a discrete process issue that was identified and corrected. The Company believes that these excluded items are short‐term in nature, not directly related to the ongoing operations of the business, and therefore, the exclusion of them illustrates more clearly how the underlying business of Woodward is performing. Adjusted free cash flow is free cash flow (defined below) minus cash received for a non-recurring matter related to a previous acquisition, plus cash paid for (i) business development activities, (ii) a non-recurring matter unrelated to the ongoing operations of the business, (iii) certain non-restructuring separation costs and (iv) restructuring charges. Management believes these adjustments to free cash flow better portray 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 earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, 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 adjusted net earnings, adjusted earnings per share, EBIT, EBITDA, adjusted EBIT, and adjusted 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 and adjusted free cash flow do not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Woodward's calculations of EBIT, EBITDA, adjusted net earnings, adjusted earnings per share, adjusted EBIT, adjusted 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, X: Woodward has used, and intends to continue to use, its Investor Relations website, LinkedIn page, Facebook page, and X handle as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Contact: Dan Provaznik
Director, Investor Relations
970-498-3849
[email protected]