UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the |
Date of Report: January 23, 2012
(Date of earliest event reported)
Woodward, Inc.
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction
of incorporation)
000-8408
(Commission File Number)
36-1984010
(IRS Employer
Identification Number)
1000 East Drake Road, Fort Collins, Colorado
(Address of principal executive offices)
80525
(Zip Code)
970-482-5811
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
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Item 2.02. Results of Operations and Financial Condition On January 23, 2012, Woodward, Inc. reported its results of operations for its first fiscal quarter ended December 31, 2011. A copy of the news release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated by reference.
Item 9.01. Financial Statements and Exhibits
(a) Financial statements:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: January 23, 2012 |
WOODWARD, INC.
By: /s/ A. Christopher Fawzy |
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| Exhibit No. | Description |
| 99.1 | Press Release of Woodward, Inc. dated January 23, 2012 |
FORT COLLINS, CO -- (Marketwire - January 23, 2012) - Woodward, Inc. (NASDAQ: WWD) today reported financial results for its first quarter of fiscal 2012. (All per share amounts are presented on a fully diluted basis.)
First Quarter Fiscal 2012 Highlights
"Our sales and earnings growth this quarter, coupled with our order volume for the remainder of the year, supports our full year expectations," said Thomas A. Gendron, Chairman and Chief Executive Officer. "Sales and earnings growth this quarter benefitted from progress on key strategic initiatives."
Net sales for the fiscal 2012 first quarter were $407.9 million, an increase of 12 percent from $365.1 million for the 2011 first quarter. Foreign currency exchange rates had an insignificant impact on net sales for the first quarter of 2012.
Net earnings for the 2012 first quarter increased to $28.4 million, from $22.4 million in the 2011 first quarter. Earnings per share increased 25 percent to $0.40 per share from $0.32 in the prior year's first quarter. Earnings per share in the prior year first quarter included a charge of $0.03 per share related to workman's compensation.
EBIT(1) was $46.4 million for the first quarter of 2012 compared to $37.9 million for the first quarter of 2011. Foreign currency exchange rates had an insignificant impact on EBIT for the first quarter of 2012. The prior year first quarter's EBIT included the workman's compensation charge mentioned above. The current quarter EBIT was positively impacted by increased volumes, partially offset by increased research and development costs. Research and development costs incurred in the first quarter of 2012 increased by $7.1 million, or 30 percent, compared to the same quarter of the prior year, reflecting increased investment in awarded programs.
Quarterly Segment Results
Aerospace
Aerospace net sales for the first quarter of fiscal 2012 were $193.2 million, an increase of 7 percent from $181.1 million for the first quarter a year ago. Segment earnings for the first quarter of 2012 increased to $27.1 million from $19.9 million for the same quarter a year ago, an increase of 36 percent. Segment earnings as a percent of segment net sales were 14.0 percent this quarter compared to 11.0 percent in the same quarter of the prior year.
Strength across all major markets, both commercial and military, as well as price increases, contributed to sales growth in the quarter. Segment earnings benefitted from the increased sales volumes and price increases, partially offset by increased research and development costs. The prior year also reflected a workman's compensation charge.
Energy
Energy net sales for the first quarter of fiscal 2012 were $214.7 million, an increase of 17 percent from $183.9 million for last year's first quarter. Segment earnings for the first quarter of 2012 increased to $26.7 million, up 9 percent from $24.5 million for last year's first quarter. Segment earnings as a percent of segment net sales were 12.4 percent for the first quarter of 2012 compared to 13.3 percent in the same quarter of the prior year.
The sales increase was attributable to broad strength in control systems and components for industrial turbines, wind turbines and reciprocating engines. Segment earnings were positively impacted by sales volume and slightly offset by OEM and aftermarket mix.
Nonsegment
Nonsegment expenses totaled $7.4 million for the first quarter of fiscal 2012, compared to $6.6 million for the same quarter last year. Nonsegment expenses were 1.8 percent of consolidated sales for the first quarter of 2012, consistent with the same quarter of the prior year.
Cash Flow, Financial Position and Other Matters
Net cash generated from operating activities was $2.3 million for the first quarter of fiscal 2012, compared to $7.2 million for the same quarter of the prior year. Free cash flow was a net outflow of $14.9 million for the first quarter of fiscal 2012, compared to a net outflow of $3.0 million for the same quarter of the prior year. Cash flow for the first quarter of 2012 reflected increased variable compensation payments and capital expenditures. Capital expenditures for the first quarter of 2012 were $17.3 million compared with $10.2 million for the same quarter of the prior year.
Total debt declined to $422.7 million at December 31, 2011 from $425.2 million at September 30, 2011. The ratio of debt-to-debt-plus-equity was 31.1 percent at December 31, 2011 compared to 31.6 percent at September 30, 2011.
Outlook
"Our fiscal 2012 outlook remains unchanged from our November outlook and reflects growth in excess of our underlying markets primarily as a result of market share gains and the launch of key platforms," said Mr. Gendron. "We still anticipate modest growth in our markets in 2012, despite continued uncertainty in the overall economy. We continue to expect our sales to be between $1.85 billion and $1.95 billion and earnings per share to be between $2.20 and $2.35 per share for fiscal 2012."
Non- 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 defined as net cash provided by operating activities less capital expenditures, 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 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.
(1) EBIT is defined as net earnings before interest and taxes.
(2) Free cash flow is defined as net cash provided by operating activities less capital expenditures.
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. EST on January 23, 2012 to provide an overview of the financial performance for the first quarter of fiscal 2012, business highlights, and outlook for the remainder of the year. 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 1-866-835-8903 (domestic) or 1-703-639-1410 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 1563970. An audio replay will be available by telephone from 7:30 p.m. EST on January 23, 2012 until 11:59 p.m. on January 28, 2012. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 1563970.
About Woodward, Inc.
Woodward is an independent designer, manufacturer, and service provider of control solutions for the aerospace and energy markets. Our aerospace systems and components optimize the performance of fixed wing and rotorcraft platforms in the commercial, business and military aircraft, ground vehicles and other equipment. Our energy-related systems and components enhance the performance of industrial gas and steam turbines, reciprocating engines, compressors, wind turbines, electrical grids and other energy-related industrial equipment. The company's innovative fluid energy, combustion control, electrical energy, 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 headquartered in Fort Collins, Colorado, USA. Visit our website at www.woodward.com.
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, growth, order volume, market share gains, key product launches, 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, the instability in the financial markets, sovereign credit rating downgrades and uncertainty surrounding European sovereign and other debt defaults, and prolonged unfavorable economic and other industry conditions; Woodward's ability to implement and realize the intended effects of its restructuring efforts; Woodward's ability to manage its expenses relative to sales; the ability of Woodward's suppliers to meet their obligations; Woodward's ability to integrate acquisitions and manage the costs related thereto; the success of, or expenses associated with, our product development activities; Woodward's debt obligations, debt service requirements, and any limitations regarding its ability to operate its business and pursue business strategies and incur additional debt in light of certain restrictive covenants in its outstanding debt documents; risks relating to U.S. government contracting activities, including any decline in the level of U.S. defense spending; future impairment charges resulting from changes in the estimated fair value of reporting units or of long-lived assets; unforeseen events that significantly reduce commercial airline travel; risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and other risk factors described in Woodward's Annual Report on Form 10-K for the year ended September 30, 2011 and any subsequently filed Quarterly Report on Form 10-Q.
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three-Months Ending
December 31,
------------------------------
(Unaudited - in thousands except per share
amounts) 2011 2010
-------------- --------------
Net sales $ 407,896 $ 365,075
-------------- --------------
Costs and expenses:
Cost of goods sold 284,410 261,177
Selling, general, and administrative
expenses 38,570 32,666
Research and development costs 30,794 23,738
Amortization of intangible assets 8,258 8,543
Interest expense 6,308 6,501
Interest income (126) (123)
Other (income) expense, net (494) 1,098
-------------- --------------
Total costs and expenses 367,720 333,600
-------------- --------------
Earnings before income taxes 40,176 31,475
Income taxes 11,760 9,076
-------------- --------------
Net earnings $ 28,416 $ 22,399
============== ==============
Earnings per share amounts:
Basic earnings per share $ 0.41 $ 0.33
Diluted earnings per share $ 0.40 $ 0.32
============== ==============
Weighted average common shares outstanding:
Basic 68,919 68,811
Diluted 70,393 70,181
============== ==============
Cash dividends per share paid to Woodward
common stockholders $ 0.07 $ 0.06
============== ==============
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
(Unaudited - in thousands) 2011 2011
-------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 50,380 $ 74,539
Accounts receivable 251,995 297,614
Inventories 408,479 381,555
Income taxes receivable 4,276 2,456
Deferred income tax assets 39,400 38,270
Other current assets 28,430 23,359
-------------- --------------
Total current assets 782,960 817,793
Property, plant, and equipment - net 207,306 206,725
Goodwill 460,945 462,282
Intangible assets - net 260,097 268,897
Deferred income tax assets 10,489 10,466
Other assets 14,566 15,271
-------------- --------------
Total assets $ 1,736,363 $ 1,781,434
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ 10,000 $ -
Current portion of long-term debt 7,651 18,374
Accounts payable 106,418 123,453
Income taxes payable 7,828 5,440
Deferred income tax liabilities 800 74
Accrued liabilities 86,753 133,516
-------------- --------------
Total current liabilities 219,450 280,857
Long-term debt, less current portion 405,000 406,875
Deferred income tax liabilities 86,323 85,911
Other liabilities 87,390 88,694
-------------- --------------
Total liabilities 798,163 862,337
Stockholders' equity 938,200 919,097
-------------- --------------
Total liabilities and stockholders' equity $ 1,736,363 $ 1,781,434
============== ==============
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-Months Ending
December 31,
------------------------------
(Unaudited - in thousands) 2011 2010
-------------- --------------
Net cash provided by operating activities $ 2,328 $ 7,177
-------------- --------------
Cash flows from investing activities:
Payments for property, plant, and equipment (17,254) (10,213)
Proceeds from sale of other assets 60 2
-------------- --------------
Net cash used in investing activities (17,194) (10,211)
-------------- --------------
Cash flows from financing activities:
Cash dividends paid (4,823) (4,136)
Proceeds from sales of treasury stock 2,211 1,095
Payments for repurchases of common stock (4,663) (6,837)
Excess tax benefits from stock compensation 1,691 2,230
Payments of long-term debt (12,589) (12,589)
Borrowings on revolving lines of credit and
short-term borrowings 74,821 26,693
Payments on revolving lines of credit and
short-term borrowings (64,858) (46,275)
-------------- --------------
Net cash used in financing activities (8,210) (39,819)
-------------- --------------
Effect of exchange rate changes on cash and
cash equivalents (1,083) (1,418)
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Net change in cash and cash equivalents (24,159) (44,271)
Cash and cash equivalents at beginning of
period 74,539 105,579
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Cash and cash equivalents at end of period $ 50,380 $ 61,308
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Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three-Months Ending
December 31,
------------------------------
(Unaudited - in thousands) 2011 2010
-------------- --------------
Net sales:
Aerospace $ 193,226 $ 181,144
Energy 214,670 183,931
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Total consolidated net sales $ 407,896 $ 365,075
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Segment earnings*:
Aerospace $ 27,060 $ 19,914
As a percent of segment sales 14.0% 11.0%
Energy 26,725 24,503
As a percent of segment sales 12.4% 13.3%
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Total segment earnings 53,785 44,417
Nonsegment expenses (7,427) (6,564)
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EBIT 46,358 37,853
Interest expense, net (6,182) (6,378)
-------------- --------------
Consolidated earnings before income taxes $ 40,176 $ 31,475
============== ==============
Capital expenditures $ 17,254 $ 10,213
Depreciation expense 10,169 10,354
============== ==============
*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 Ending
December 31,
------------------------------
(Unaudited - in thousands) 2011 2010
-------------- --------------
Net earnings $ 28,416 $ 22,399
Income taxes 11,760 9,076
Interest expense 6,308 6,501
Interest income (126) (123)
-------------- --------------
EBIT 46,358 37,853
Amortization of intangible assets 8,258 8,543
Depreciation expense 10,169 10,354
-------------- --------------
EBITDA $ 64,785 $ 56,750
============== ==============
EBIT (earnings before interest and taxes) and EBITDA (earnings before interest, taxes, depreciation, and amortization) are non-U.S. GAAP financial measures. 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. Securities analysts, investors, and others frequently use EBIT and EBITDA in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use 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. Management's calculations of EBIT and EBITDA may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.
Woodward, Inc. and Subsidiaries
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
Three-Months Ending
December 31,
------------------------------
(Unaudited - in thousands) 2011 2010
-------------- --------------
Net cash provided by operating activities $ 2,328 $ 7,177
Capital expenditures (17,254) (10,213)
-------------- --------------
Free cash flow $ (14,926) $ (3,036)
============== ==============
Free cash flow is a non-U.S. GAAP financial measure. Management uses free cash flow, which is derived from cash flows provided by operating activities, in reviewing the financial performance of Woodward's various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use 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 this non-U.S. GAAP financial measure 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. 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 calculation of free cash flow may differ from similarly titled measures used by other companies, limiting its usefulness as a comparative measure.
CONTACT: Robert F. Weber, Jr. Vice Chairman, Chief Financial Officer and Treasurer 970-498-3112 Woodward, Inc. 1000 East Drake Road Fort Collins, Colorado 80525, USA Tel: 970-482-5811 Fax: 970-498-3058