Woodward, Inc. (WWD) reported fiscal first-quarter 2015 (ending Dec 31, 2014) adjusted earnings of 58 cents per share, surpassing the Zacks Consensus Estimate of 47 cents by 23.4%. Earnings also increased 70.6% from the year-ago figure of 34 cents.
Total Revenue
The company’s net sales were $487.6 million, surpassing the Zacks Consensus Estimate of $451 million by 8.1%. Revenues were up from the year-ago number of $429 million by 13.7%. The year-over-year increase was on the back solid results in most of its markets.
Operational Update
Woodward’s total cost and expenses increased 8.7% year over year to $430.6 million in the quarter. These were up primarily due to higher cost of goods sold and an increase of 15.6% in research and development costs.
Interest expenses inched down 1.9% to $5.9 million from $6.1 million in the first quarter of fiscal 2014.
Operating income stood at $57.1 million or 11.7% of net sales in the quarter compared with $32.9 million or 7.7% of net sales in the year-ago quarter. The company’s focus on continued cost control initiatives led to improved operating margins.
Segmental Performance
Aerospace: Segment revenues increased 11% year over year to $255.8 million, driven by higher commercial OEM and aftermarket as well as higher defense sales.
Earnings came in at $35.8 million, up 59.1% year over year due to higher sales volume, accompanied with improved manufacturing margins.
Energy: Segment revenues were $231.9 million, up 16.4% year over year buoyed by higher sales of industrial gas turbine systems, natural gas bus and truck systems, and wind turbine power converters.
Earnings shot up 45% year over year to $39.3 million attributable to higher sales volume in the quarter.
Financial Condition
Woodward’s cash and cash equivalents as of Dec 31, 2014, were $58.5 million compared with $54.5 million as of Dec 31, 2013.
Long-term debt (excluding current portion) was $700 million as of Dec 31, 2014, up from $584 million as of Dec 31, 2013.
In the reported quarter, net cash generated from operating activities was $37.9 million compared with $44.4 million a year ago. Cash outflow from operating activities was $8.8 million at the end of the fiscal first quarter 2015 as compared to an inflow of $7.3 million at fiscal first quarter 2014 end.
Guidance
The company reaffirmed its fiscal 2015 guidance with revenues in the range of $2.05 billion to $2.15 billion. Earnings per share for fiscal 2015 are expected in the band of $2.65–$2.90. The outlook for fiscal 2015 takes into consideration improvements in the company’s markets but at the same time recognizes the prevailing uncertainties worldwide. The company expects to benefit from its focus on cost containment.
Other Peer Releases
Thermon Group Holdings, Inc. (THR) is expected to report its third quarter fiscal 2015 (ended Dec 31, 2014) results on Feb 3, 2015. The Zacks Consensus Estimate is at 35 cents per share.
Badger Meter Inc. (BMI) is expected to report its fourth quarter 2014 results on Feb 5. The Zacks Consensus Estimate is at 38 cents per share.
Watts Water Technologies, Inc. (WTS) is expected to report its fourth quarter 2014 results on Feb 17. The Zacks Consensus Estimate is at 65 cents per share
Zacks Rank
Woodward Inc. currently carries a Zacks Rank #3 (Hold).
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