Woodward Reports First Quarter ResultsROCKFORD, IL -- 01/24/2005 -- Woodward Governor Company (NASDAQ: WGOV) today reported financial results for its first fiscal quarter ended December 31, 2004.
Net sales for the quarter were $189,325,000, up 19 percent from $158,973,000 for the first quarter last year. Net earnings for the quarter were $11,995,000, or $1.03 per share (all per share amounts are diluted) compared with $7,393,000, or $0.65 per share, a year ago. Earnings before income taxes in the first quarter were $19,040,000, which included a $3,834,000 gain from the sale of certain product line rights and costs associated with workforce management actions totaling $488,000.
"We began the fiscal year with strong results that reflected increased demand for products in our key markets and operating leverage inherent in our business," said Chairman and Chief Executive Officer John Halbrook.
Industrial Controls first quarter net sales were $122,355,000, compared with $96,819,000 a year ago, an increase of 26 percent due primarily to higher volume. Segment earnings for the quarter were $5,055,000, compared with $4,591,000 for the same quarter a year ago. This year's first quarter results included $488,000 in workforce management costs.
"During the first quarter, Industrial Controls benefited from a continuing industrial recovery, mainly in power generation and transportation markets," commented Mr. Halbrook. "In particular, turbine combustion products were strong, driven by an international demand for new builds and an increase in domestic aftermarket sales and services that reflects the large installed base established several years ago."
Our first quarter workforce management costs are related to actions previously announced and represent accruals of termination benefits earned by members in the first quarter. We currently expect to incur additional costs totaling approximately $2,700,000 over the next five quarters. Savings from these actions, which we expect to realize beginning in this year's third quarter, will partially offset some of these costs. Once fully implemented, annual savings are expected to range from $9,000,000 to $11,000,000.
Aircraft Engine Systems first quarter net sales were $66,970,000, compared with $62,154,000, an increase of 8 percent. Segment earnings for the quarter were $18,312,000, which included a $3,834,000 gain on the sale of rights to our aircraft propeller synchronizer product line. Segment earnings for the same period a year ago were $11,421,000.
"Aircraft Engine Systems experienced continuing strength in both the commercial and military aftermarkets and the ongoing recovery in commercial OEM markets," said Mr. Halbrook. "In October 2004, we sold rights to our synchronizer product line, which represented about $2,000,000 of annual sales. To meet our objectives for the future, we continue to work closely with our customers on numerous programs to develop energy control systems and components used on next-generation aircraft engines."
Mr. Halbrook concluded, "We believe we are on track to meet our full year total company goals. In last quarter's outlook, we targeted 4 to 7 percent revenue growth and $3.50 to $3.70 in earnings per diluted share for fiscal 2005. With the gain on the product line sale, we now believe earnings per diluted share for the year will be $3.70 to $3.90."
Woodward will hold an investor conference call at 7:30 a.m. CT on Tuesday, January 25, 2005, to provide an overview of the first quarter of fiscal 2005 financial performance, business highlights, and outlook for the year. You are invited to listen to the live webcast of our conference call or a recording at our website, www.woodward.com.
About Woodward
Woodward is the world's largest independent designer, manufacturer, and service provider of energy control solutions for aircraft engines, industrial engines and turbines, power generation, and process automation equipment. The company's innovative control, fuel delivery, combustion, and automation systems help customers worldwide operate cleaner, more cost effective, and more reliable equipment. Woodward is headquartered in Rockford, Illinois, and serves global markets from locations worldwide. Visit our website at www.woodward.com.
The statements in this release concerning the company's future sales, earnings, business performance, prospects, and the economy in general reflect current expectations and are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from projections or any other forward-looking statement and we have no obligation to update our forward-looking statements. Factors that could affect performance and could cause actual results to differ materially from projections and forward-looking statements are described in Woodward's Annual Report and Form 10-K for the year ended September 30, 2004, and Form 10-Q for the quarter ended December 31, 2004, expected to be available by February 4, 2005.
Woodward Governor Company and Subsidiaries
STATEMENTS OF CONSOLIDATED EARNINGS
Three months ended
December 31,
(Unaudited - in thousands except per share amounts) 2004 2003
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Net sales $ 189,325 $ 158,973
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Costs and expenses:
Cost of goods sold 143,273 117,689
Sales, general, and administrative expenses 18,697 18,011
Research and development costs 10,605 9,626
Amortization of intangible assets 1,776 1,610
Interest expense 1,369 1,244
Interest income (635) (573)
Other income (4,901) (961)
Other expense 101 306
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Total costs and expenses 170,285 146,952
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Earnings before income taxes 19,040 12,021
Income taxes 7,045 4,628
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Net earnings $ 11,995 $ 7,393
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Per share amounts:
Basic $ 1.06 $ 0.66
Diluted 1.03 0.65
========= =========
Weighted-average number of shares outstanding:
Basic 11,329 11,264
Diluted 11,638 11,456
========= =========
Certain reclassifications have been made to the
financial statement line items for the three months
ended December 31, 2003, to conform to the 2004
presentation.
Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
At Dec 31, At Sept 30,
(Unaudited - in thousands) 2004 2004
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Assets
Current assets:
Cash and cash equivalents $ 54,959 $ 48,895
Accounts receivable 97,238 99,277
Inventories 148,776 138,708
Deferred income taxes 17,157 16,852
Other current assets 5,554 5,064
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Total current assets 323,684 308,796
Property, plant, and equipment-net 117,066 117,310
Goodwill 132,907 131,542
Other intangibles-net 84,223 85,711
Deferred income taxes 541 4,318
Other assets 11,583 6,617
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Total assets $ 670,004 $ 654,294
========= =========
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 6,146 $ 5,833
Current portion of long-term debt 12,771 956
Accounts payable 32,024 35,207
Accrued liabilities 62,705 65,573
Income taxes payable 6,849 3,703
--------- ---------
Total current liabilities 120,495 111,272
Long-term debt, less current portion 77,268 88,452
Other liabilities 71,603 68,709
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Total liabilities 269,366 268,433
Shareholders' equity 400,638 385,861
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Total liabilities and shareholders' equity $ 670,004 $ 654,294
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Woodward Governor Company and Subsidiaries
SELECTED SEGMENT INFORMATION
Three months ended
December 31,
(Unaudited - in thousands) 2004 2003
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External net sales:
Industrial Controls $ 122,355 $ 96,819
Aircraft Engine Systems 66,970 62,154
Segment earnings:
Industrial Controls 5,055 4,591
Aircraft Engine Systems 18,312 11,421
Capital expenditures 4,360 4,118
Depreciation expense 6,717 6,702
========= =========
Segment earnings in the table above do not reflect
nonsegment expenses, interest, and income taxes.
Woodward Governor Company
5001 North Second Street
P.O. Box 7001
Rockford, IL 61125-7001
Tel: 815-877-7441
Fax: 815-639-6050
CONTACT:
Stephen P. Carter
Executive Vice President,
Chief Financial Officer and Treasurer
815-639-6800
