Woodward Reports First Quarter ResultsROCKFORD, IL -- 01/23/2006 -- Woodward Governor Company (NASDAQ: WGOV) today reported financial results for its first fiscal quarter ended December 31, 2005.
Net sales for the quarter were $195,634,000, up 3 percent from $189,325,000 for the first quarter last year. Net earnings for the quarter were $12,427,000, or $1.06 per share compared with $11,995,000, or $1.03 per share, a year ago (all per share amounts are diluted). Woodward adopted the new accounting standard for stock compensation in this year's first quarter. Had the same standard been applied a year ago, employee compensation expense, net of income tax benefits, would have increased by $344,000, and net earnings would have been $11,651,000 or $1.00 per share in last year's first quarter.
Earnings before income taxes in the first quarter were $19,119,000, compared with $19,040,000 in the first quarter a year ago. Last year's first quarter included a $3,834,000 pretax gain from the sale of product rights. In addition, pretax employee compensation expense associated with stock compensation that would have been recognized in last year's first quarter if the current standard had been adopted was $555,000.
"Our first quarter results show strong improvement over the prior year, largely driven by our Industrial Controls segment. We believe this quarter's performance places us firmly on track to achieve our financial plan for the year," said President and Chief Executive Officer Tom Gendron.
Industrial Controls' first quarter net sales were $124,459,000, up 2 percent from $122,355,000 in the first quarter a year ago. Segment earnings for the quarter were $11,545,000, compared with $5,055,000 for the same quarter a year ago.
"Industrial Controls segment results reflect a favorable sales mix, focus on productivity improvements, and initial benefits of last year's restructuring activities," commented Mr. Gendron.
Aircraft Engine Systems' first quarter net sales were $71,175,000, compared with $66,970,000 last year, an increase of 6 percent. Segment earnings for the quarter were $14,812,000. Segment earnings for the same period a year ago were $18,312,000, which included a $3,834,000 gain on the sale of product rights.
"Demand for narrow- and wide-body aircraft OEM and aftermarket products was the primary source of growth for our first quarter over the prior year, while regional jet products reflected industry-wide softening from last year's high growth. Aircraft Engine Systems continued to perform within our targeted range for segment earnings. We continue to invest in research and development tied to the program wins secured over the last 18 months," said Mr. Gendron.
Mr. Gendron concluded, "Our outlook for the remainder of the year is in line with what we previously reported, with sales growth in the range of 3 to 6 percent and earnings per share of $5.00 to $5.25. The improved performance of our Industrial Controls segment has been a key focus of the organization for some time, and we are encouraged that our execution is showing tangible results."
Woodward will hold an investor conference call at 7:30 a.m. CT on Tuesday, January 24, 2006, to provide an overview of the first quarter of fiscal 2006 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. You may also listen to the call by dialing 1-866-837-9779 (domestic) or 1-703-639-1417 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 838634. An audio replay will be available by telephone from 10:30 a.m. CT on January 24 until 10:59 p.m. CT on January 26, 2006. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 838634.
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, and power generation and mobile industrial equipment. The company's innovative control, fuel delivery, and combustion systems help customers worldwide operate cleaner, more reliable, and cost effective equipment. Woodward is headquartered in Rockford, Illinois, and serves global power generation, transportation, process industries, and aerospace 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, 2005 and Form 10-Q for the quarter ended December 31, 2005, expected to be available by mid-February, 2006.
Woodward Governor Company and Subsidiaries
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended
December 31,
----------------------
(Unaudited - in thousands except
per share amounts) 2005 2004
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Net sales $ 195,634 $ 189,325
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Costs and expenses:
Cost of goods sold 141,939 143,273
Sales, general, and
administrative expenses 21,057 18,697
Research and development costs 11,910 10,605
Amortization of intangible assets 1,755 1,776
Interest expense 1,297 1,369
Interest income (643) (635)
Other income (1,028) (4,901)
Other expense 228 101
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Total costs and expenses 176,515 170,285
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Earnings before income taxes 19,119 19,040
Income taxes 6,692 7,045
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Net earnings $ 12,427 $ 11,995
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Per share amounts:
Basic $ 1.09 $ 1.06
Diluted 1.06 1.03
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Weighted-average number of shares outstanding:
Basic 11,449 11,329
Diluted 11,724 11,638
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Woodward Governor Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
At December At September
(Unaudited - in thousands) 31, 30,
2005 2005
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Assets
Current assets:
Cash and cash equivalents $ 71,551 $ 84,597
Accounts receivable 99,293 107,403
Inventories 151,296 149,336
Income taxes receivable 468 5,330
Deferred income taxes 18,752 18,700
Other current assets 4,631 4,207
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Total current assets 345,991 369,573
Property, plant, and equipment-net 113,452 114,787
Goodwill 130,722 131,035
Other intangibles-net 76,763 78,564
Deferred income taxes 2,465 2,310
Other assets 9,486 9,197
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Total assets $678,879 $705,466
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Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $ 15,361 $ 8,419
Current portion of long-term debt 14,369 14,426
Accounts payable 31,025 37,015
Accrued liabilities 44,327 68,647
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Total current liabilities 105,082 128,507
Long-term debt, less current portion 61,117 72,942
Other liabilities 71,681 71,548
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Total liabilities 237,880 272,997
Shareholders' equity 440,999 432,469
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Total liabilities and shareholders' equity $678,879 $705,466
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Woodward Governor Company and Subsidiaries
SELECTED SEGMENT INFORMATION
Three months ended
December 31,
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(Unaudited - in thousands) 2005 2004
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External net sales:
Industrial Controls $ 124,459 $ 122,355
Aircraft Engine Systems 71,175 66,970
Segment earnings:
Industrial Controls 11,545 5,055
Aircraft Engine Systems 14,812 18,312
Earnings reconciliation:
Total segment earnings 26,357 23,367
Nonsegment expenses (6,584) (3,593)
Interest expense and income, net (654) (734)
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Consolidated earnings before income taxes $ 19,119 $ 19,040
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Workforce management costs:
Member termination benefits $ 70 $ 488
Related cost of facility consolidation 183 --
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Total workforce management costs $ 253 $ 488
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Capital expenditures $ 5,082 $ 4,360
Depreciation expense 5,475 6,515
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CONTACT:
Robert F. Weber, Jr.
Chief Financial Officer and Treasurer
970-498-3112
