EXHIBIT 99.1
FORT COLLINS, Colo., Jan. 20, 2015 (GLOBE NEWSWIRE) -- Woodward, Inc. (Nasdaq:WWD) today reported financial results for its first quarter of fiscal year 2015 ending December 31, 2014. (All per share amounts are presented on a fully diluted basis.)
First Quarter Fiscal 2015 Highlights
"Our operating results for the first quarter were strong, particularly in comparison to the prior year," said Thomas A. Gendron, Chairman and Chief Executive Officer. "Our focus on leveraging sales growth and continued cost control led to improved operating margins."
Company Results
Net sales for the first quarter of fiscal 2015 were $487.6 million, compared to $429.0 million for the fiscal 2014 first quarter, the result of increases in most of our markets. Foreign currency exchange rates had an unfavorable impact of approximately $12 million on net sales for the first quarter of 2015, as compared to the first quarter of the prior year.
EBIT was $62.9 million for the first quarter of 2015, compared to $38.9 million for the first quarter of 2014. The increase in EBIT primarily reflected the impact of increased sales volume, partially offset by higher company-wide variable compensation expense. Foreign currency exchange rates had a minor impact on EBIT for the quarter.
Net earnings for the first quarter of 2015 were $43.8 million, or $0.66 per share, compared to $23.4 million, or $0.34 per share, in the first quarter of 2014. Net earnings in the current quarter included an after-tax benefit of $5.1 million, or $0.08 per share, related to the retroactive reinstatement of the research and experimentation tax credit.
Segment Results
Aerospace
Aerospace net sales for the first quarter of fiscal 2015 were $255.8 million, an increase of 11 percent from $229.9 million for the first quarter a year ago. Segment earnings for the first quarter of 2015 were $35.8 million, compared to $22.5 million for the same quarter a year ago. Segment earnings as a percent of segment net sales were 14.0 percent this quarter, compared to 9.8 percent in the same quarter of the prior year.
The sales increase for the quarter was due to higher sales in commercial OEM and aftermarket, and defense aftermarket. Segment earnings were favorably impacted by higher sales volume and improved manufacturing margins.
Energy
Energy net sales for the first quarter of 2015 were $231.9 million, an increase of 16.4 percent from $199.2 million for last year's first quarter. Segment earnings for the first quarter of 2015 were $39.3 million, compared to $27.1 million for last year's first quarter. Segment earnings as a percent of segment net sales were 16.9 percent this quarter, compared to 13.6 percent in the same quarter of the prior year.
Segment sales and earnings for the quarter were favorably impacted by higher sales of industrial gas turbine systems, natural gas bus and truck systems, and wind turbine power converters, partially offset by the unfavorable impact of foreign currency exchange rates.
Nonsegment
Nonsegment expenses totaled $12.2 million for the first quarter of 2015, compared to $10.7 million for the same quarter last year. Nonsegment expenses were 2.5 percent of consolidated net sales for the first quarter of 2015, consistent with the same quarter of the prior year.
Cash Flow and Financial Position
Net cash generated from operating activities was $37.9 million for the first quarter of fiscal 2015, compared to $44.4 million for the first quarter of fiscal 2014. Free cash flow was an outflow of $8.8 million for the first quarter of fiscal 2015, compared to an inflow of $7.3 million for the first quarter of fiscal 2014. Payments for property, plant, and equipment for the first quarter of fiscal 2015 were $46.6 million, compared with $37.1 million for the first quarter of fiscal 2014. Approximately $32 million of Woodward stock were repurchased in the quarter.
Total debt was $700 million at December 31, 2014, compared to $710 million at September 30, 2014. The ratio of debt to debt-plus-equity was 37.6 percent at December 31, 2014, compared to 37.9 percent at September 30, 2014.
The effective tax rate for the first quarter of fiscal 2015 was 23.3 percent, compared to 29.0 percent for the first quarter of fiscal 2014. The decrease in the income tax rate was primarily due to the retroactive impact of the research and experimentation tax credit extension.
Outlook
"We are maintaining our full year outlook for fiscal 2015, with sales anticipated to be between $2.05 and $2.15 billion, and earnings per share expected to be between $2.65 and $2.90 per share. We believe our cost control initiatives and operating leverage will offset the persistent global economic uncertainty," said Mr. Gendron.
1Non-U.S. GAAP Financial Measures: EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization) and free cash flow are financial measures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Management uses EBIT to evaluate Woodward's operating performance without the impacts of financing and tax related considerations. Management uses EBITDA in evaluating Woodward's operating performance, making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Management uses free cash flow, which is derived from net cash provided by operating activities less payments for property, plant, and equipment, in reviewing the financial performance of Woodward's various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use EBIT, EBITDA and free cash flow in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of any of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Because EBIT and EBITDA exclude certain financial information compared with net earnings, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Management's calculations of EBIT, EBITDA, and free cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. EST, January 20, 2015 to provide an overview of the financial performance for the first quarter, business highlights, and outlook for fiscal 2015. 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.com.
You may also listen to the call by dialing 1-866-814-1912 (domestic) or 1-703-639-1356 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 1649901. An audio replay will be available by telephone from 7:30 p.m. EST on January 20, 2015 until 11:59 p.m. EST on February 3, 2015. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 1649901.
A webcast presentation will be available on the website by clicking the Investors tab, then the Calendar of Events menu selection and associated webcast link. The call and presentation will remain accessible at the website for 14 days.
About Woodward, Inc.
Woodward is an independent designer, manufacturer, and service provider of control solutions for the aerospace and energy markets. The company's innovative fluid, combustion, electrical, and motion control systems help customers offer cleaner, more reliable, and more efficient equipment. Our customers include leading original equipment manufacturers and end users of their products. Woodward is a global company headquartered in Fort Collins, Colorado, USA. Visit our website at www.woodward.com, and connect with us at www.facebook.com/woodwardinc.
Cautionary Statement
Information in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, statements regarding future sales, earnings, liquidity, relative profitability, and the impact of economic conditions and downturns on Woodward. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. 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, a decline in business with, or financial distress of, Woodward's significant customers; global economic uncertainty and instability in the financial markets; Woodward's ability to manage product liability claims, product recalls or other liabilities associated with the products and services that Woodward provides; Woodward's ability to obtain financing, on acceptable terms or at all, to implement its business plans, complete acquisitions, or otherwise take advantage of business opportunities or respond to business pressures; Woodward's long sales cycle, customer evaluation process, and implementation period of some of its products and services; Woodward's ability to implement and realize the intended effects of any restructuring and alignment efforts; Woodward's ability to successfully manage competitive factors, including prices, promotional incentives, competitor product development, industry consolidation, and commodity and other input cost increases; Woodward's ability to manage expenses and product mix while responding to sales increases or decreases; the ability of Woodward's subcontractors to perform contractual obligations and its suppliers to provide Woodward with materials of sufficient quality or quantity required to meet Woodward's production needs at favorable prices or at all; Woodward's ability to monitor its technological expertise and the success of, and/or costs associated with, its product development activities; Woodward's ability to integrate acquisitions and manage costs related thereto; Woodward's debt obligations, debt service requirements, and ability to operate its business, pursue its business strategies and incur additional debt in light of covenants contained in its outstanding debt agreements; Woodward's ability to manage additional tax expense and exposures; risks related to Woodward's U.S. Government contracting activities, including liabilities resulting from legal and regulatory proceedings, inquiries, or investigations related to such activities; the potential of a significant reduction in defense sales due to decreases in the amount of U.S. Federal defense spending or other specific budget cuts impacting defense programs in which Woodward participates; changes in government spending patterns, priorities, subsidy programs and/or regulatory requirements; future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets; future results of Woodward's subsidiaries; environmental liabilities related to manufacturing activities and/or real estate acquisitions; Woodward's continued access to a stable workforce and favorable labor relations with its employees; physical and other risks related to Woodward's operations and suppliers, including natural disasters, which could disrupt production; Woodward's ability to successfully manage regulatory, tax, and legal matters; risks related to Woodward's common stock, including changes in prices and trading volumes; risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and compliance with and changes in the legal and regulatory environments of the United States and the countries in which Woodward operates; fair value of defined benefit plan assets and assumptions used in determining Woodward's retirement pension and other postretirement benefit obligations and related expenses; industry risks, including increases in natural gas prices, unforeseen events that may reduce commercial aviation and increasing emissions standards; Woodward's operations may be adversely affected by information systems interruptions or intrusions; certain provisions of Woodward's charter documents and Delaware law that could discourage or prevent others from acquiring the company; and other risk factors described in Woodward's Annual Report on Form 10-K for the year ended September 30, 2014 and any subsequently filed Quarterly Report on Form 10-Q.
| Woodward, Inc. and Subsidiaries | ||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||
| Three-Months Ended | ||
| December 31, | ||
| (Unaudited - in thousands except per share amounts) | 2014 | 2013 |
| Net sales | $ 487,646 | $ 429,042 |
| Costs and expenses: | ||
| Cost of goods sold | 343,760 | 315,466 |
| Selling, general, and administrative expenses | 39,843 | 37,328 |
| Research and development costs | 34,029 | 29,424 |
| Amortization of intangible assets | 7,575 | 8,484 |
| Interest expense | 5,949 | 6,062 |
| Interest income | (127) | (59) |
| Other (income) expense, net | (455) | (607) |
| Total costs and expenses | 430,574 | 396,098 |
| Earnings before income taxes | 57,072 | 32,944 |
| Income taxes | 13,288 | 9,561 |
| Net earnings | $ 43,784 | $ 23,383 |
| Earnings per share amounts: | ||
| Basic earnings per share | $ 0.67 | $ 0.35 |
| Diluted earnings per share | $ 0.66 | $ 0.34 |
| Weighted average common shares outstanding: | ||
| Basic | 65,322 | 67,724 |
| Diluted | 66,739 | 69,021 |
| Cash dividends per share paid to Woodward common stockholders | $ 0.08 | $ 0.08 |
| Woodward, Inc. and Subsidiaries | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| December 31, | September 30, | |
| (Unaudited - in thousands) | 2014 | 2014 |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 58,462 | $ 115,287 |
| Accounts receivable | 300,161 | 346,858 |
| Inventories | 467,700 | 451,944 |
| Income taxes receivable | 9,860 | 6,574 |
| Deferred income tax assets | 40,709 | 40,774 |
| Other current assets | 43,538 | 47,207 |
| Total current assets | 920,430 | 1,008,644 |
| Property, plant, and equipment – net | 566,273 | 513,279 |
| Goodwill | 557,959 | 559,724 |
| Intangible assets – net | 246,859 | 254,772 |
| Deferred income tax assets | 6,567 | 6,292 |
| Other assets | 56,571 | 54,491 |
| Total assets | $ 2,354,659 | $ 2,397,202 |
| Liabilities and stockholders' equity | ||
| Current liabilities: | ||
| Current portion of long-term debt | $ -- | $ -- |
| Accounts payable | 176,580 | 160,683 |
| Income taxes payable | 10,225 | 6,130 |
| Deferred income tax liabilities | 314 | 472 |
| Accrued liabilities | 116,570 | 172,731 |
| Total current liabilities | 303,689 | 340,016 |
| Long-term debt, less current portion | 700,000 | 710,000 |
| Deferred income tax liabilities | 88,754 | 85,031 |
| Other liabilities | 99,764 | 101,211 |
| Total liabilities | 1,192,207 | 1,236,258 |
| Stockholders' equity | 1,162,452 | 1,160,944 |
| Total liabilities and stockholders' equity | $ 2,354,659 | $ 2,397,202 |
| Woodward, Inc. and Subsidiaries | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Three-Months Ended | ||
| December 31, | ||
| (Unaudited - in thousands) | 2014 | 2013 |
| Net cash provided by operating activities | $ 37,856 | $ 44,433 |
| Cash flows from investing activities: | ||
| Payments for property, plant, and equipment | (46,621) | (37,149) |
| Proceeds from sale of other assets | 90 | 40 |
| Net cash used in investing activities | (46,531) | (37,109) |
| Cash flows from financing activities: | ||
| Cash dividends paid | (5,250) | (5,448) |
| Proceeds from sales of treasury stock | 1,391 | 4,122 |
| Payments for repurchases of common stock | (32,118) | (43,616) |
| Excess tax benefits from stock compensation | 522 | 280 |
| Proceeds from the issuance of long-term debt | -- | 250,000 |
| Payments of long-term debt | -- | (300,000) |
| Borrowings on revolving lines of credit and short-term borrowings | 105,000 | 165,094 |
| Payments on revolving lines of credit and short-term borrowings | (115,000) | (71,094) |
| Payment of debt financing costs | -- | (1,297) |
| Net cash used in financing activities | (45,455) | (1,959) |
| Effect of exchange rate changes on cash and cash equivalents | (2,695) | 669 |
| Net change in cash and cash equivalents | (56,825) | 6,034 |
| Cash and cash equivalents at beginning of period | 115,287 | 48,556 |
| Cash and cash equivalents at end of period | $ 58,462 | $ 54,590 |
| Woodward, Inc. and Subsidiaries | ||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS | ||
| Three-Months Ended | ||
| December 31, | ||
| (Unaudited - in thousands) | 2014 | 2013 |
| Net sales: | ||
| Aerospace | $ 255,770 | $ 229,872 |
| Energy | 231,876 | 199,170 |
| Total consolidated net sales | $ 487,646 | $ 429,042 |
| Segment earnings**: | ||
| Aerospace | $ 35,793 | $ 22,549 |
| As a percent of segment sales | 14.0% | 9.8% |
| Energy | 39,268 | 27,071 |
| As a percent of segment sales | 16.9% | 13.6% |
| Total segment earnings | 75,061 | 49,620 |
| Nonsegment expenses | (12,167) | (10,673) |
| EBIT | 62,894 | 38,947 |
| Interest expense, net | (5,822) | (6,003) |
| Consolidated earnings before income taxes | $ 57,072 | $ 32,944 |
| Payments for property, plant and equipment | $ 46,621 | $ 37,149 |
| Depreciation expense | 10,998 | 10,632 |
| **This schedule reconciles segment earnings, which exclude certain costs, to consolidated earnings before taxes. | ||
| Woodward, Inc. and Subsidiaries | ||
| RECONCILIATION OF NET EARNINGS TO EBIT AND EBITDA | ||
| Three-Months Ended | ||
| December 31, | ||
| (Unaudited - in thousands) | 2014 | 2013 |
| Net earnings | $ 43,784 | $ 23,383 |
| Income taxes | 13,288 | 9,561 |
| Interest expense | 5,949 | 6,062 |
| Interest income | (127) | (59) |
| EBIT | 62,894 | 38,947 |
| Amortization of intangible assets | 7,575 | 8,484 |
| Depreciation expense | 10,998 | 10,632 |
| EBITDA | $ 81,467 | $ 58,063 |
| Woodward, Inc. and Subsidiaries | ||
| RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW | ||
| Three-Months Ended | ||
| December 31, | ||
| (Unaudited - in thousands) | 2014 | 2013 |
| Net cash provided by operating activities | $ 37,856 | $ 44,433 |
| Payments for property, plant, and equipment | (46,621) | (37,149) |
| Free cash flow | $ (8,765) | $ 7,284 |
CONTACT: Don Guzzardo
Director, Investor Relations & Treasury
970-498-3580
Don.Guzzardo@Woodward.com