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: November 13, 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 November 13, 2012, Woodward, Inc. (the "Registrant") reported its results of operations for its for its fourth quarter and fiscal year 2012. 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: November 13, 2012 |
WOODWARD, INC.
By: /s/ A. Christopher Fawzy |
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| Exhibit No. | Description |
| 99.1 | Press Release of Woodward, Inc. dated November 13, 2012 |
FORT COLLINS, CO -- (Marketwire - November 13, 2012) - Woodward, Inc. (NASDAQ: WWD) today reported record financial results for its fourth quarter and fiscal year 2012. (All per share amounts are presented on a fully diluted basis.)
Fourth Quarter Fiscal 2012 Highlights
Woodward experienced a record quarter on higher sales and earnings over the fourth quarter of the previous year and sharply higher over the third quarter of fiscal 2012.
"Woodward finished the year with strong sales and earnings, while continuing our strategic investments in future growth," said Thomas A. Gendron, Chairman and Chief Executive Officer. "Fourth quarter profitability improved as we recovered from the impacts of the unusual operational issues experienced in the third quarter."
Net sales for the fiscal 2012 fourth quarter were $528.7 million, an increase of 8 percent from $489.3 million for the 2011 fourth quarter. Foreign currency exchange rates had an unfavorable impact of approximately $10 million on net sales for the fourth quarter of 2012.
EBIT was $72.4 million for the fourth quarter of 2012 compared to $64.8 million for the fourth quarter of 2011, an increase of 12 percent. The current quarter EBIT was primarily impacted by the increased sales volume and favorable price changes. Foreign currency exchange rates had an insignificant impact on EBIT for the quarter.
Net earnings for the 2012 fourth quarter were $46.1 million or $0.66 per share, an increase of 11 percent from $41.7 million, or $0.60 per share in the 2011 fourth quarter.
Quarterly Segment Results
Aerospace
Aerospace net sales for the fourth quarter of fiscal 2012 were $264.0 million, an increase of 9 percent from $241.7 million for the fourth quarter a year ago. Segment earnings for the fourth quarter of 2012 increased to $47.9 million from $40.9 million for the same quarter a year ago, an increase of 17 percent. Segment earnings as a percent of segment net sales were 18.1 percent this quarter compared to 16.9 percent in the same quarter of the prior year.
The sales increase was attributable to strength across all end markets. Segment earnings were positively impacted by the higher sales volumes and price increases, partially offset by investments in research and development and manufacturing technology and capacity.
Energy
Energy net sales for the fourth quarter of fiscal 2012 were $264.7 million, an increase of 7 percent from $247.6 million for last year's fourth quarter. Segment earnings for the fourth quarter increased to $34.2 million, up 3 percent from $33.2 million for last year's fourth quarter. Segment earnings as a percent of segment net sales were 12.9 percent this quarter compared to 13.4 percent in the same quarter of the prior year.
The sales increase was mainly related to growth in compressed natural gas engines and strength in the wind turbine market primarily associated with the impending expiration of government incentives. Segment earnings benefitted from the increased sales volume and lower research and development costs, largely offset by expenses primarily associated with product warranty, increased accounts receivable reserves, and overhead cost reduction initiatives.
Nonsegment
Nonsegment expenses totaled $9.7 million for the fourth quarter of fiscal 2012, compared to $9.3 million for the same quarter last year. Nonsegment expenses were 1.8 percent of consolidated net sales for the fourth quarter of 2012, down from 1.9 percent of consolidated net sales for the same quarter of the prior year.
Full Year 2012 Results
Net sales for fiscal 2012 were $1.87 billion, an increase of 9 percent from $1.71 billion last year. Net earnings for fiscal 2012 increased 7 percent to $141.6 million, or $2.01 per share, compared with $132.2 million, or $1.89 per share, last year. Earnings per share for fiscal year 2012 reflected both volume and price increases, partially offset by $27.6 million of increased research and development expense, as well as manufacturing costs, primarily associated with recent aerospace awards.
Full year segment results can be found in the tables included herein.
Cash Flow and Financial Position
Net cash generated from operating activities was $144.1 million for fiscal 2012, compared to $114.6 million for the prior year primarily as a result of improved working capital utilization. Free cash flow was $79.2 million for 2012, compared to $66.4 million in 2011. Capital expenditures for 2012 were $64.9 million compared with $48.3 million in 2011.
Total debt declined to $392.2 million at September 30, 2012 from $425.2 million at September 30, 2011. The ratio of debt-to-debt-plus-equity was 28.0 percent at September 30, 2012, down from 31.6 percent at September 30, 2011.
Outlook
"Overall economic uncertainty continues to impact the markets we serve. We continue to anticipate market share growth in our Aerospace segment, while in our Energy segment growth in natural gas offerings is being offset by the significant decline in the wind turbine market," said Mr. Gendron. "Therefore, we expect our sales to be between $1.85 billion and $2.00 billion and earnings per share to be between $2.15 and $2.35 per share for fiscal 2013."
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 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 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 derived from net cash provided by operating activities less payments for property, plant, and equipment.
Conference Call
Woodward will hold an investor conference call at 4:30 p.m. EST, November 13, 2012 to provide an overview of the financial performance for the fourth quarter and fiscal 2012, business highlights, and outlook for fiscal 2013. 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 1-866-814-8482 (domestic) or 1-703-639-1372 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 1592537. An audio replay will be available by telephone from 7:30 p.m. EST on November 13, 2012 until 11:59 p.m. EST on November 18, 2012. The telephone number to access the replay is 1-888-266-2081 (domestic) or 1-703-925-2533 (international), reference access code 1592537.
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. 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, 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, our significant customers; instability in the financial markets, sovereign credit rating downgrades and uncertainty surrounding European sovereign and other debt defaults, or other prolonged unfavorable economic and other industry conditions; Woodward's ability to obtain financing, on acceptable terms or at all; Woodward's long sales cycle and implementation period of some of our products and services; Woodward's ability to implement and realize the intended effects of restructuring efforts; Woodward's ability to successfully manage competitive factors; Woodward's ability to manage expenses while responding to sales increases or decreases; the ability of Woodward's subcontractors and suppliers to meet their obligations; the success of, or expenses associated with, Woodward's product development activities; Woodward's ability to integrate acquisitions and manage costs thereto; Woodward's debt obligations, debt service requirements and ability to operate its business and pursue its business strategies in light of restrictive covenants in its outstanding debt agreements; risks related to U.S. Government contracting activities; reductions in defense sales due to a decrease in the amount of U.S. Federal defense spending; future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets; future subsidiary results or changes in domestic and international tax statutes; environmental liabilities; Woodward's continued access to a stable workforce and favorable labor relations; the geographical location of a significant portion of our Aerospace business in California, which historically has been susceptible to natural disasters; Woodward's ability to successfully manage regulatory, tax and legal matters; liabilities that may result from legal and regulatory proceedings, inquiries, or investigations by private or U.S. Government persons or entities; risks from operating internationally including the impact on reported earnings from fluctuations in foreign currency exchange rates; fair value of defined benefit plan assets and assumptions used in determining Woodward's retirement pension and other postretirement benefit obligations and related expenses, and other risk factors described in Woodward's Annual Report on Form 10-K for the year ended September 30, 2012 which we expect to file shortly.
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
-------------------- ----------------------
Three-Months Ended Year Ended
September 30, September 30,
-------------------- ----------------------
(Unaudited - in thousands
except per share amounts) 2012 2011 2012 2011
--------- --------- ---------- ----------
Net sales $ 528,697 $ 489,294 $1,865,627 $1,711,702
--------- --------- ---------- ----------
Costs and expenses:
Cost of goods sold 366,990 340,015 1,303,344 1,198,153
Selling, general, and
administrative expenses 45,528 39,322 164,512 148,903
Research and development
costs 36,077 35,572 143,274 115,633
Amortization of intangible
assets 8,118 8,973 32,809 34,993
Interest expense 6,532 6,238 26,003 25,399
Interest income (67) (209) (542) (534)
Other (income) expense, net (366) 633 (1,580) 1,588
--------- --------- ---------- ----------
Total costs and expenses 462,812 430,544 1,667,820 1,524,135
--------- --------- ---------- ----------
Earnings before income taxes 65,885 58,750 197,807 187,567
Income taxes 19,766 17,060 56,218 55,332
--------- --------- ---------- ----------
Net earnings $ 46,119 $ 41,690 $ 141,589 $ 132,235
========= ========= ========== ==========
Earnings per share amounts:
Basic earnings per share $ 0.67 $ 0.61 $ 2.06 $ 1.92
Diluted earnings per share $ 0.66 $ 0.60 $ 2.01 $ 1.89
========= ========= ========== ==========
Weighted average common shares
outstanding:
Basic 68,604 68,830 68,880 68,797
Diluted 69,878 70,062 70,307 70,140
========= ========= ========== ==========
Cash dividends per share paid
to Woodward common
stockholders $ 0.08 $ 0.07 $ 0.31 $ 0.27
========= ========= ========== ==========
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
------------------------------
September 30,
(Unaudited - in thousands) 2012 2011
-------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 61,829 $ 74,539
Accounts receivable 354,386 297,614
Inventories 398,229 381,555
Income taxes receivable 7,485 2,456
Deferred income tax assets 40,277 38,270
Other current assets 41,271 23,359
-------------- --------------
Total current assets 903,477 817,793
Property, plant, and equipment - net 234,505 206,725
Goodwill 461,374 462,282
Intangible assets - net 235,563 268,897
Deferred income tax assets 9,129 10,466
Other assets 15,916 15,271
-------------- --------------
Total assets $ 1,859,964 $ 1,781,434
============== ==============
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $ 329 $ -
Current portion of long-term debt 7,500 18,374
Accounts payable 124,914 123,453
Income taxes payable 14,141 5,440
Deferred income tax liabilities 800 74
Accrued liabilities 132,184 133,516
-------------- --------------
Total current liabilities 279,868 280,857
Long-term debt, less current portion 384,375 406,875
Deferred income tax liabilities 78,163 85,911
Other liabilities 109,443 88,694
-------------- --------------
Total liabilities 851,849 862,337
Stockholders' equity 1,008,115 919,097
-------------- --------------
Total liabilities and stockholders' equity $ 1,859,964 $ 1,781,434
============== ==============
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------
Year Ended
September 30,
----------------------------
(Unaudited - in thousands) 2012 2011
------------- -------------
Net cash provided by operating activities $ 144,113 $ 114,623
------------- -------------
Cash flows from investing activities:
Payments for property, plant, and equipment (64,900) (48,255)
Business acquisitions, net of cash and
marketable securities acquired - (38,698)
Business acquisitions, marketable securities
acquired - (8,463)
Proceeds from the sale of marketable
securities - 8,217
Proceeds from sale of other assets 283 59
------------- -------------
Net cash used in investing activities (64,617) (87,140)
------------- -------------
Cash flows from financing activities:
Cash dividends paid (21,351) (18,581)
Proceeds from sales of treasury stock 6,286 2,482
Payments for repurchases of common stock (44,110) (6,837)
Excess tax benefits from stock compensation 3,990 3,558
Payments of long-term debt (33,365) (18,430)
Borrowings on revolving lines of credit and
short-term borrowings 187,865 164,557
Payments on revolving lines of credit and
short-term borrowings (187,591) (182,728)
Payment of debt financing costs (2,185) -
------------- -------------
Net cash used in financing activities (90,461) (55,979)
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents (1,745) (2,544)
------------- -------------
Net change in cash and cash equivalents (12,710) (31,040)
Cash and cash equivalents at beginning of
period 74,539 105,579
------------- -------------
Cash and cash equivalents at end of period $ 61,829 $ 74,539
============= =============
Woodward, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
-------------------- ----------------------
Three-Months Ended Year Ended
September 30, September 30,
-------------------- ----------------------
(Unaudited - in thousands) 2012 2011 2012 2011
--------- --------- ---------- ----------
Net sales:
Aerospace $ 264,046 $ 241,701 $ 896,083 $ 843,032
Energy 264,651 247,593 969,544 868,670
--------- --------- ---------- ----------
Total consolidated net sales $ 528,697 $ 489,294 $1,865,627 $1,711,702
========= ========= ========== ==========
Segment earnings*:
Aerospace $ 47,915 $ 40,945 $ 130,192 $ 129,502
As a percent of segment sales 18.1% 16.9% 14.5% 15.4%
Energy 34,177 33,177 126,441 113,872
As a percent of segment sales 12.9% 13.4% 13.0% 13.1%
--------- --------- ---------- ----------
Total segment earnings 82,092 74,122 256,633 243,374
Nonsegment expenses (9,742) (9,343) (33,365) (30,942)
--------- --------- ---------- ----------
EBIT 72,350 64,779 223,268 212,432
Interest expense, net (6,465) (6,029) (25,461) (24,865)
--------- --------- ---------- ----------
Consolidated earnings before
income taxes $ 65,885 $ 58,750 $ 197,807 $ 187,567
========= ========= ========== ==========
Payments for property, plant
and equipment $ 20,676 $ 15,615 $ 64,900 $ 48,255
Depreciation expense 6,629 9,121 35,808 40,400
========= ========= ========== ==========
*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 Year Ended
September 30, September 30,
-------------------- --------------------
(Unaudited - in thousands) 2012 2011 2012 2011
--------- --------- --------- ---------
Net earnings $ 46,119 $ 41,690 $ 141,589 $ 132,235
Income taxes 19,766 17,060 56,218 55,332
Interest expense 6,532 6,238 26,003 25,399
Interest income (67) (209) (542) (534)
--------- --------- --------- ---------
EBIT 72,350 64,779 223,268 212,432
Amortization of intangible
assets 8,118 8,973 32,809 34,993
Depreciation expense 6,629 9,121 35,808 40,400
--------- --------- --------- ---------
EBITDA $ 87,097 $ 82,873 $ 291,885 $ 287,825
========= ========= ========= =========
Woodward, Inc. and Subsidiaries
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
-------------------- --------------------
Three-Months Ended Year Ended
September 30, September 30,
-------------------- --------------------
(Unaudited - in thousands) 2012 2011 2012 2011
--------- --------- --------- ---------
Net cash provided by operating
activities $ 80,460 $ 67,823 $ 144,113 $ 114,623
Payments for property, plant,
and equipment (20,676) (15,615) (64,900) (48,255)
--------- --------- --------- ---------
Free cash flow $ 59,784 $ 52,208 $ 79,213 $ 66,368
========= ========= ========= =========
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