ROCKFORD, 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 --------- --------- Net sales $ 189,325 $ 158,973 --------- --------- 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 --------- --------- Total costs and expenses 170,285 146,952 --------- --------- Earnings before income taxes 19,040 12,021 Income taxes 7,045 4,628 --------- --------- Net earnings $ 11,995 $ 7,393 ========= ========= 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 --------- --------- 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 --------- --------- 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 --------- --------- 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 --------- --------- Total liabilities 269,366 268,433 Shareholders' equity 400,638 385,861 --------- --------- Total liabilities and shareholders' equity $ 670,004 $ 654,294 ========= ========= Woodward Governor Company and Subsidiaries SELECTED SEGMENT INFORMATION Three months ended December 31, (Unaudited - in thousands) 2004 2003 --------- --------- 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