Woodward Delivers Strong First Quarter Results Despite Industrial Segment Challenges

Woodward, Inc. (NASDAQ: WWD) reported its first quarter fiscal year 2025 results on February 3, 2025, with net sales of $773 million, a 2% decrease from the prior year. Net earnings and adjusted net earnings also decreased by 3% and 8%, respectively, while earnings per share (EPS) and adjusted EPS fell by 3% and 7%. Cash from operations and free cash flow declined by 26% and 81%, respectively. Despite these declines, Woodward's Aerospace segment performed well, with sales and earnings increasing by 7% and 20%, respectively, driven by price realization and strong defense aftermarket demand. However, the Industrial segment faced challenges, with sales and earnings decreasing by 15% and 40%, respectively, primarily due to lower volume and unfavorable mix. Woodward reaffirmed its 2025 guidance, with the exception of the adjusted effective tax rate and adjusted EPS, which were narrowed to $5.85-6.25 due to a favorable tax rate in the first quarter.



Woodward's Aerospace segment was a standout performer in the first quarter of fiscal year 2025, with sales and earnings increasing by 7% and 20%, respectively. This growth was driven by price realization, which offset the impact of inflation, unfavorable mix, and lower volumes. The segment's strong performance was supported by high aircraft utilization, which drove both commercial and defense aftermarket demand. Additionally, increased smart defense demand contributed to strong sales in the quarter. Despite a pause in deliveries for some Boeing product lines and a reduced delivery rate in others, the Aerospace segment managed to maintain growth, demonstrating the company's ability to execute its strategy effectively.

However, Woodward's Industrial segment faced challenges in the first quarter, with sales and earnings decreasing by 15% and 40%, respectively. The decline in the Industrial segment was primarily a result of lower volume and unfavorable mix, partially offset by price realization and favorable foreign currency exchange rates. The Transportation segment, in particular, saw a significant decline of 33% in sales due to soft demand for heavy-duty trucks in China and a work stoppage at Boeing. Despite these challenges, Woodward remains committed to operational excellence, innovation, and delivering profitable growth to build a stronger, more focused company.



Woodward's effective tax rate decreased significantly in the first quarter of fiscal year 2025, from 17.9% in the prior year to 14.5% in the current quarter, a decrease of 340 basis points. This decrease can be attributed to a favorable tax rate in the first quarter. As a result of this favorable tax rate, Woodward narrowed its adjusted earnings per share range to $5.85-6.25 for the full year. The decrease in the effective tax rate has positive implications for Woodward's full-year guidance and shareholder value, as it leads to improved EPS, revised guidance, and potential for higher cash flow, dividends, or share repurchases.

In conclusion, Woodward's first quarter fiscal year 2025 results demonstrated the company's ability to execute its strategy effectively, with the Aerospace segment delivering strong performance despite challenges in the commercial OEM market. However, the Industrial segment faced challenges, particularly in the Transportation segment, which will require the company to address these issues to return to growth. Woodward's effective tax rate decrease in the first quarter has positive implications for the company's full-year guidance and shareholder value. As the company looks ahead to the remainder of fiscal year 2025, it remains committed to operational excellence, innovation, and delivering profitable growth to build a stronger, more focused Woodward.