FORT COLLINS, Colo., April 29, 2024 (GLOBE NEWSWIRE) -- Woodward, Inc. (NASDAQ:WWD) today reported financial results for its second quarter of fiscal year 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. Second Quarter Overview Net sales were $835 million, compared to $718 million, an increase of 16 percent. Net earnings were $98 million, or $1.56 per share, compared to net earnings of $36 million, or $0.58 per share. Adjusted net earnings1 were $101 million, or $1.62 per share, compared to adjusted net earnings of $62 million, or $1.01 per share. Net cash provided by operating activities was $144 million for the first half of fiscal 2024, compared to $40 million. Free cash flow1 for the first half of fiscal 2024 was $88 million, compared to negative $4 million. Adjusted free cash flow1 was $90 million for the first half of fiscal 2024, compared to negative $1 million. "Our focus on operational excellence continues to enable significant sales growth and margin expansion, thanks to the efforts of all our members," stated Chip Blankenship, Chairman and Chief Executive Officer. "In Aerospace, both original equipment and aftermarket demonstrated strong growth, and our Industrial segment benefited from growth of our China on-highway business and strong demand in power generation. "Our improving operational performance allows us to capitalize on robust demand for Woodward products and services across both aerospace and industrial markets. Based on these improvements and better visibility, we are raising certain aspects of our full-year guidance. As we drive profitable growth, operational excellence, and innovation, we remain well positioned to deliver long term shareholder value." Second Quarter Company Results Net sales for the second quarter of fiscal 2024 were $835 million, compared to $718 million, an increase of 16 percent. Net earnings were $98 million, or $1.56 per share, for the second quarter of 2024, compared to $36 million, or $0.58 per share. Adjusted net earnings for the second quarter of 2024 were $101 million, or $1.62 per share, compared to $62 million, or $1.01 per share. EBIT1 was $131 million for the second quarter of 2024, compared to $53 million. Adjusted EBIT1 was $135 million for the second quarter of 2024, compared to $87 million. The effective tax rate was 19.1 percent for the second quarter of 2024, compared to 11.8 percent. The adjusted effective tax rate1 for the second quarter of 2024 was 19.3 percent, compared to 17.8 percent. Segment Results Aerospace Aerospace segment net sales for the second quarter of fiscal 2024 were $498 million, compared to $437 million, an increase of 14 percent. Commercial aerospace sales increased significantly, driven by increased aircraft utilization as a result of continued growth in passenger traffic, and price realization. Overall defense sales grew modestly. Segment earnings for the second quarter of 2024 were $98 million, compared to $73 million. Segment earnings as a percent of segment net sales were 19.8 percent for the second quarter of 2024, compared to 16.8 percent. The increase in segment earnings was primarily a result of higher volume and net price realization. Industrial Industrial segment net sales for the second quarter of fiscal 2024 were $338 million, compared to $281 million, an increase of 20 percent. The increase in Industrial segment net sales was driven primarily by growth in transportation, particularly in the on-highway natural gas truck business in China, as well as strong sales in power generation and price realization, partially offset by decreased oil and gas sales. Industrial segment earnings for the second quarter of 2024 were $65 million, or 19.3 percent of segment net sales, compared to $38 million, or 13.4 percent of segment net sales. The increase in Industrial earnings was a result of higher volume, largely due to the heightened demand for our China on-highway business, net price realization, and operational improvements including increased output and efficiency gains. Nonsegment Nonsegment expenses were $33 million for the second quarter of fiscal 2024, compared to $58 million. Adjusted nonsegment expenses1 were $29 million for the second quarter of 2024, compared to $23 million.          Year-to-Date Results Net sales for the first half of 2024 were $1.62 billion, compared to $1.34 billion. Net earnings for the first half of 2024 were $188 million, or $3.02 per share, compared to $65 million, or $1.07 per share. Adjusted net earnings for the first half of 2024 were $191 million, or $3.07 per share, compared to $91 million, or $1.50 per share. The effective tax rate was 18.6 percent for the first half of 2024, compared to 9.5 percent. The adjusted effective tax rate for the first half of 2024 was 18.6 percent, compared to 14.5 percent. Aerospace segment net sales for the first half of 2024 were $958 million, compared to $833 million. Aerospace segment earnings for the first half of 2024 were $177 million, or 18.5 percent of segment net sales, compared to $129 million, or 15.5 percent of segment net sales. Industrial segment net sales for the first half of 2024 were $664 million, compared to $504 million. Industrial segment earnings for the first half of 2024 were $132 million, or 19.9 percent of segment net sales, compared to $49 million, or 9.7 percent of segment net sales. Nonsegment expenses were $59 million for the first half of 2024, compared to $83 million. Adjusted nonsegment expenses for the first half of 2024 were $55 million, compared to $48 million. Cash Flow and Financial Position Net cash provided by operating activities was $144 million for the first half of 2024, compared to $40 million. Payments for property, plant, and equipment were $56 million for the first half of 2024, compared to $44 million. Free cash flow was $88 million for the first half of fiscal 2024, compared to negative $4 million. Adjusted free cash flow was $90 million for the first half of fiscal 2024, compared to negative $1 million. The increase in free cash flow and adjusted free cash flow was primarily due to increased earnings, partially offset by higher capital expenditures. During the first half of fiscal 2024, $28 million was returned to stockholders in the form of dividends. Total debt was $791 million at March 31, 2024, compared to $859 million at March 31, 2023. Debt-to-EBITDA1 leverage at March 31, 2024, was 1.2 times EBITDA, compared to 2.2 times EBITDA at March 31, 2023. Fiscal Year 2024 Guidance Based on visibility into the third quarter demand for the China on-highway natural gas truck business and anticipated improved operational performance in the second half of fiscal 2024, we are raising certain aspects of our full-year guidance. Woodward, Inc. and Subsidiaries Revised Guidance (In millions, except per share amount and percentages)     Prior   Revised     FY24 Guidance issued on   FY24 Guidance issued on     January 29, 2024   April 29, 2024 Total Company         Sales   $3,150 - $3,300   $3,250 - $3,350 Adjusted Effective Tax Rate   ~21%   ~20% Adjusted Free Cash Flow   $300 - $350   $325 - $375 Capital Expenditures   ~100   No change Shares   ~62   No change Adjusted EPS   $5.00 - $5.40   $5.70 - $6.00           Segment Data         Aerospace         Sales Growth   Up 10% to 14%   Up 12% to 14% Segment Earnings (% of Sales)   18% to 19%   No change Industrial         Sales Growth   Up 8% to 10%   Up 13% to 15% Segment Earnings (% of Sales)   14% - 15%   17% - 18% Conference Call Woodward will hold an investor conference call at 4:30 p.m. ET, April 29, 2024, to provide an overview of the financial performance for the second quarter of fiscal year 2024, business highlights, and outlook for the remainder of fiscal 2024. 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 (U.S. domestic) or 1-646-307-1963 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 2819144. An audio replay will be available by telephone from 7:30 p.m. ET on April 29, 2024 until 11:59 p.m. ET on May 13, 2024. The telephone number to access the replay is 1-800-770-2030 (U.S. domestic) or 1-609-800-9909 (international), reference access code 2819144. A webcast presentation will be available on the website by selecting "Investors/Events & Presentations." The call and presentation will remain accessible on the website for 14 days. 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. Together with our customers, we are enabling the path to a cleaner, decarbonized world. 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 This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These forward-looking statements include, but are not limited to, our prioritization of growth, operational excellence and innovation, including to the outcome of such efforts on our long-term success and shareholder value; demand for our products and services and our ability to capitalize on such demand, trends in our markets and statements regarding our business and financial guidance for the remainder of fiscal year 2024, including our guidance for sales, adjusted earnings, adjusted earnings per share, segment sales growth, segment earnings as a percent of sales, adjusted effective tax rate, adjusted free cash flow, capital expenditures, and diluted weighted shares outstanding, as well as our assumptions and expectations regarding our guidance. 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) volatility with respect to the China on-highway natural gas truck market; (11) Woodward's ability to protect its intellectual property rights and avoid infringing the intellectual property rights of others; (12) changes in the estimates of fair value of reporting units or of long-lived assets; (13) environmental risks; (14) Woodward's continued access to a stable workforce and favorable labor relations with its employees; (15) Woodward's ability to manage various regulatory and legal matters; (16) risks from operating internationally; (17) 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 Quarterly Report on Form 10-Q for the second quarter ended March 31, 2024, which we expect to file shortly, and other risks described in Woodward's filings with the Securities and Exchange Commission. Woodward, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited - in thousands, except per share amounts)                           Three Months Ended March 31,   Six Months Ended March 31,     2024     2023   2024     2023                       Net sales   $ 835,343     $ 718,214   $ 1,622,073     $ 1,336,833   Costs and expenses:                     Cost of goods sold     600,954       559,149     1,183,335       1,051,812   Selling, general, and administrative expenses     81,447       75,578     155,958       138,765   Research and development costs     36,465       37,777     67,259       66,411   Restructuring charges     -       5,172     -       5,172   Interest expense     11,530       12,845     22,966       23,987   Interest income     (1,293 )     (508 )   (2,766 )     (874 ) Other (income) expense, net     (14,384 )     (12,040 )   (35,023 )     (20,430 ) Total costs and expenses     714,719       677,973     1,391,729       1,264,843   Earnings before income taxes     120,624       40,241     230,344       71,990   Income taxes     23,068       4,730     42,744       6,873   Net earnings   $ 97,556     $ 35,511   $ 187,600     $ 65,117                         Earnings per share amounts:                     Basic earnings per share   $ 1.61     $ 0.59   $ 3.12     $ 1.09   Diluted earnings per share   $ 1.56     $ 0.58   $ 3.02     $ 1.07   Weighted average common shares outstanding:                     Basic     60,427       59,807     60,223       59,736   Diluted     62,365       61,227     62,106       61,083                         Cash dividends paid per share   $ 0.25     $ 0.22   $ 0.47     $ 0.41   Woodward, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands)                   March 31,       September 30,     2024       2023 Assets             Current assets:             Cash and cash equivalents   $ 316,932       $ 137,447   Accounts receivable     831,777         749,859   Inventories     580,377         517,843   Income taxes receivable     32,816         14,120   Other current assets     50,072         50,183   Total current assets     1,811,974         1,469,452   Property, plant, and equipment, net     921,355         913,094   Goodwill     796,706         791,468   Intangible assets, net     443,414         452,363   Deferred income tax assets     58,911         58,550   Other assets     333,899         325,276   Total assets   $ 4,366,259       $ 4,010,203                 Liabilities and stockholders' equity             Current liabilities:             Short-term debt   $ 141,300       $ -   Current portion of long-term debt     699         75,817   Accounts payable     258,670         234,328   Income taxes payable     54,242         44,435   Accrued liabilities     236,944         262,616   Total current liabilities     691,855         617,196   Long-term debt, less current portion     649,039