Woodward Pulls Off Q4 Earnings Beat, Misses on Revenues - Analyst Blog

Woodward, Inc. (WWD) reported fiscal fourth-quarter 2014 (ending Sep 30, 2014) earnings of 77 cents per share, surpassing the Zacks Consensus Estimate and the year-ago figure of 76 cents.

For fiscal 2014, the company reported earnings of $2.45 per share, up 16.7% from the previous fiscal-year figure of $2.10.

Total Revenue

The company's total revenue was $565.4 million, lagging the Zacks Consensus Estimate of $595 million by 5%. Revenues were up from the year-ago number of $558.4 million by 1.3%. The year-over-year increase was on the back of a strong aerospace market.

Revenues for fiscal 2014 amounted to $2.0 billion, up 3.1% from fiscal 2013 revenues of $1.94 billion.

Operational Update

Woodward's total cost and expenses increased 1.5% year over year to $490.4 million in the quarter. Total cost and expenses were up primarily due to higher cost of goods sold and an increase of 23% in research and development costs.

Interest expenses decreased 29.5% to $4.6 million compared with $6.5 million in the fourth quarter of fiscal 2013.

Segmental Performance

Aerospace: Segment revenues increased 3.5% year over year to $318.2 million, driven by higher commercial and defense sales.

Earnings came in at $57 million, up 4.8% year over year due to higher sales volume, partially offset by higher research and development expenses.

Energy: Segment revenues were $247.2 million, down 1.5% year over year as most of the company's energy markets experienced a downfall, which was partially offset by higher wind-turbine converter sales.

Earnings were $35.1 million, a decrease of 8.6% year over year attributable to lower sales volume and higher costs and expenses in the quarter.

Financial Condition

Woodward's cash and cash equivalents as of Sep 30, 2014 were $115.3 million versus $48.6million as of Sep 30, 2013.

Long-term debt (excluding current portion) was $710 million as of Sep 30, 2014 versus $450 million as of Sep 30, 2013.    

For fiscal 2014, net cash generated from operating activities was $268.1 million compared with $222.6 million for fiscal 2013, as a result of improved earnings and working capital. Free cash flow stood at $61 million at the end of fiscal 2014 as compared with $81 million at fiscal 2013 end.

Guidance

The company expects revenues to be in the range of $2.05 billion – $2.15 billion for fiscal 2015. Earnings per share for fiscal 2015 are expected in the range of $2.65 – $2.90. The outlook for fiscal 2015 takes into consideration the improvement in the company's markets along with the prevailing uncertainty around the globe. The company expects to be benefitted by its focus on cost containment.

Other Peer Releases

Roper Industries Inc. (ROP) reported third-quarter 2014 non-GAAP earnings of $1.54 per share, beating the Zacks Consensus Estimate by a penny. Earnings per share increased 13.3% on a year-over-year basis, driven by robust revenue growth.

Badger Meter Inc. (BMI) reported record third-quarter 2014 earnings per share of 71 cents, up 12.7% year over year and also outperformed the Zacks Consensus Estimate of 68 cents, driven by higher sales of municipal water products and flow instrumentation products.

Watts Water Technologies, Inc. (WTS) reported third-quarter 2014 adjusted earnings of 70 cents, a 21% year-over-year improvement, driven by increased volumes in America, cost savings realized in the EMEA as part of its restructuring and transformation efforts and more stable manufacturing in its lead-free foundry. Earnings beat the Zacks Consensus Estimate by a penny.

Zacks Rank

Woodward Inc. currently carries a Zacks Rank #3 (Hold).
 

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