Woodward, Inc. · NASDAQ:WWD
Woodward — Q4 2019 Earnings Presentation
22 slides from Woodward's earnings presentation, Nov 18, 2019
Slide 1: Fiscal Year 2019 and Fourth Quarter Results
Fiscal Year 2019 and Fourth Quarter Results November 18, 2019
Slide 2: Today's Agenda
Today’s Agenda Highlights Don Guzzardo Market Review Tom Gendron Financial Results & Outlook Jack Thayer Q&A 2 | © WOODWARD, INC. PROPRIETARY
Slide 3: Cautionary Statement
Cautionary Statement Information in this presentation 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 our positon within our markets and ability to
Slide 4: New Revenue Recognition Standard (ASC 606)
New Revenue Recognition Standard (ASC 606) Adopted October 1, 2018 Fiscal 2019 results presented under ASC 606 Prior year results presented under previous standard, ASC 605 No impact to cash flow Refer to slide 11, press release tables and 10-K for 2019 4 | © WOODWARD, INC. PROPRIETARY
Slide 5: Adjusted and Organic Financial Results
Adjusted and Organic Financial Results Reporting on U.S. GAAP, adjusted and organic basis Organic net sales exclude L’Orange Adjusted amounts exclude: Transition impacts of change in U.S. tax legislation Special charges Restructuring charges, Duarte move related costs, M&A transaction and inte
Slide 6: Q4 FY 2019 Consolidated Results
Q4 FY 2019 Consolidated Results Woodward Sales (mil $) Net Earnings (mil $) 737 733 719 89 659 641 Reported 79 85 Reported 73 75 Organic 67 Adjusted ASC 605 Q4 2019 Q4 2018 ASC 605 Q4 2019 ASC 606 Q4 2019 ASC 605 Q4 2018 ASC 605 EBIT1 (mil $) Earnings Per Share $1.32 122 $1.22 $1.13 $1.16 $1.39 113
Slide 7: Fiscal Year 2019 Consolidated Results
Fiscal Year 2019 Consolidated Results Woodward Sales (bil $) Net Earnings (mil $) 2.90 2.79 314 310 2.60 Reported 2.33 260 254 246 Reported 2.20 Organic Adjusted ASC 605 180 FY 2019 FY 2018 ASC 605 FY 2019 ASC 606 FY 2019 ASC 605 FY 2018 ASC 605 Free Cash Flow1 (mil $) Earnings Per Share $4.88 $4.82
Slide 8: Aerospace
Aerospace Aerospace segment performing well Desire for air travel driving demand for fuel efficient narrowbody aircraft Boeing 737 MAX grounding Estimating return to service in Q2 FY20 Build rates in line with Boeing expectations Expect initial provisioning to ramp up in second half of fisca
Slide 9: Industrial
Industrial Power generation Gas turbine market continues to stabilize due to content wins on new turbines Mitsubishi content represents new program and share gains Renewables remains uncertain due to Senvion bankruptcy Siemens announced agreement to acquire part of Senvion Considerable val
Slide 10: Q4 FY 2019 Results Under ASC 606 and ASC 605
Q4 FY 2019 Results Under ASC 606 and ASC 605 Woodward, Inc. and Subsidiaries Comparison of financial results under ASC 606 and ASC 605 As reported As adjusted (Non U.S. GAAP) Three-Months Ended September 30, Three-Months Ended September 30, 2019 2018 2019 2018 (Unaudited - in thousands, except per s
Slide 11: FY 2019 Results Under ASC 606 and ASC 605
FY 2019 Results Under ASC 606 and ASC 605 Woodward, Inc. and Subsidiaries Comparison of financial results under ASC 606 and ASC 605 As reported As adjusted (Non U.S. GAAP) Year Ended September 30, Year Ended September 30, 2019 2018 2019 2018 (Unaudited - in thousands, except per share amounts) ASC 6
Slide 12: Aerospace Q4 Fiscal Year 2019 Results
Aerospace Q4 Fiscal Year 2019 Results Aerospace Sales (mil $) Segment Net Sales Strong defense OEM and aftermarket, and commercial OEM 506 491 461 Segment Earnings ASC 606 ASC 605 Leverage on higher sales volume Partially offset by higher capacity expansion costs Q4 2019 Q4 2018 ASC 605 Segmen
Slide 13: Aerospace Fiscal Year 2019 Results
Aerospace Fiscal Year 2019 Results Segment Earnings (mil $) Aerospace Sales (bil $) 389 381 309 ASC 606 ASC 605 1.88 1.76 1.56 FY 2019 FY 2018 ASC 605 ASC 606 ASC 605 Segment Margin % 21.6% 20.7% 19.8% ASC 606 FY 2019 FY 2018 ASC 605 ASC 605 FY 2019 FY 2018 ASC 605 13 | © WOODWARD, INC. PROPRIETARY
Slide 14: Industrial Q4 Fiscal Year 2019 Results
Industrial Q4 Fiscal Year 2019 Results Industrial Sales (mil $) Segment Net Sales Decreased primarily due to reduced demand for natural gas trucks in Asia, as well as lower renewables sales 258 Reported 231 Organic 180 Adjusted Industrial Segment Earnings 153 Declined mainly as a result of lower
Slide 15: Industrial Fiscal Year 2019 Results
Industrial Fiscal Year 2019 Results Segment Earnings (mil $) Industrial Sales (mil $) 115 119 94 96 84 Reported Adjusted Reported 50 Organic 1,020 FY19 2019 ASC 606 FY19 2019 ASC 605 FY19 2018 ASC 605 767 688 664 Segment Margin % 11.2% 11.6% 11.0% 9.2% 9.3% Reported 6.5% Adjusted FY19 2019 FY19 2018
Slide 16: Selected Financial Items
Selected Financial Items Quarter and Year-to-Date Comparatives Q4 FY 19 Q4 FY 18 YTD FY 19 YTD FY 18 Gross Margin * 22.5% 24.3% 24.4% 25.9% SG&A Expenses - % of Sales 7.0% 7.3% 7.3% 8.3% R&D Expenses - % of Sales 4.9% 5.1% 5.5% 6.4% Effective Tax Rate 12.8% 5.7% 19.0% 17.9% EBITDA1 (mils) $ 120 $ 13
Slide 17: Fiscal Year 2020 Outlook
Fiscal Year 2020 Outlook Woodward Aerospace Revenue between $3.0 and $3.1 billion Revenue up ~6% Effective tax rate ~22% Margin ~21% Free cash flow ~$400 million Industrial Earnings per share between $5.30 and $5.60 Revenue flat to up low single digits ~64 million shares Margin ~14
Slide 18: Appendix
W woopwarD Appendix
Slide 19: Non-U.S. GAAP Measures
Non-U.S. GAAP Measures Q4 FY 19 Q4 FY 18 Earnings Per Net Earnings Per Net Earnings Share Earnings Share Q4 FY 19 Q4 FY 18 YTD FY 19 YTD FY 18 (mils) (mils) (mils) (mils) (mils) (mils) (mils) (mils) Net Earnings $ 66.8 $ 1.03 $ 74.5 $ 1.16 Industrial Segment Earnings $ 11.0 $ 8.5 $ 93.5 $ 49.9 Non-U
Slide 20: Non-U.S. GAAP Measures (cont.)
Non-U.S. GAAP Measures (cont.) Q4 FY 19 Q4 FY 18 YTD FY 19 YTD FY 18 (mils) (mils) (mils) (mils) Q4 FY 19 Q4 FY 18 Net Earnings $ 66.8 $ 74.5 $ 259.6 $ 180.4 (mils) (mils) Income Taxes 9.8 4.5 61.0 39.2 Cash From Operations $ 390.6 $ 299.3 Interest Expense 9.8 12.7 44.0 40.5 Payments for PP&E (99.1)
Slide 21: Non-U.S. GAAP Measures (cont.)
Non-U.S. GAAP Measures (cont.) Q4 FY 19 Q4 FY 18 YTD FY 19 YTD FY 18 (mils) (mils) (mils) (mils) Net Earnings $ 66.8 $ 74.5 $ 259.6 $ 180.4 Income Taxes 9.8 4.5 61.0 39.2 Interest Expense 9.8 12.7 44.0 40.5 Interest Income (0.4) (0.5) (1.4) (1.7) EBIT1 86.1 91.2 363.2 258.4 Amortization of Intangibl
Slide 22: Explanation of Non-U.S. GAAP Measures
Explanation of Non-U.S. GAAP Measures 1Adjusted and Non-U.S. GAAP Financial Measures: Adjusted net earnings, adjusted earnings per share, adjusted Industrial segment earnings, adjusted EBIT and EBITDA, adjusted effective tax rate, and adjusted nonsegment expenses exclude, as applicable, (i) restruct