Woodward, Inc. · NASDAQ:WWD
Woodward — Q1 FY2020 Earnings Presentation
20 slides from Woodward's earnings presentation, Feb 3, 2020
Slide 1: Fiscal Year 2020 First Quarter Results
Fiscal Year 2020 First Quarter Results February 3, 2020
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 position within our markets and ability t
Slide 4: Cautionary Statement
Cautionary Statement Additional Information and Where to Find It In connection with the proposed merger, Woodward will file with the SEC a registration statement on Form S-4 to register the shares of Woodward’s common stock to be issued in connection with the merger. The registration statement will
Slide 5: Q1 Fiscal Year 2020 Consolidated Results
Q1 Fiscal Year 2020 Consolidated Results Woodward Sales (mil $) Net Earnings (mil $) 720 653 Q1 FY20 71 Reported 53 62 Q1 FY19 49 Adjusted Q1 FY20 Q1 FY19 Free Cash Flow1 (mil $) Earnings Per Share 53 53 $1.10 $0.96 Reported Reported $0.83 $0.77 Adjusted 29 Adjusted 10 Q1 FY20 Q1 FY19 Q1 FY20 Q1 FY1
Slide 6: Transformative Merger of Equals
Transformative Merger of Equals Unites global industry leaders in advanced materials and control systems to create a premier integrated systems provider focusing on technology-rich innovations that deliver smarter, cleaner and safer customer solutions. Premier integrated systems provider acceleratin
Slide 7: Transaction Overview
Transaction Overview ● All-stock merger of equals Transaction ● Hexcel shareholders will receive 0.625 shares in Woodward Hexcel for each share of Hexcel Structure ● Woodward shareholders will own ~55% and Hexcel shareholders will own ~45% of combined company ● ~$1.5 billion share repurchase program
Slide 8: Aerospace
Aerospace Commercial aerospace Strong aircraft utilization and passenger traffic growth Boeing 737 MAX grounding Estimating return to service in Q2 FY20 Build rates in line with Boeing expectations Commercial Aftermarket 14% increase for quarter versus prior year period Strong initial pr
Slide 9: Industrial
Industrial Power generation Gas turbine market continues to stabilize Continue to expand content wins on new turbines Transportation Strong China natural gas truck production China is enforcing new regulations and natural gas is securing larger share of truck market Oil and gas Pressured m
Slide 10: Renewable Power Systems Portfolio
Renewable Power Systems Portfolio* No longer a key focus area for Woodward Entered into agreement with Aurelius Group to divest renewable power systems and protective relays businesses Price: $23.4 million, subject to customary purchase price adjustments Expect transaction to close in third quar
Slide 11: Aerospace Q1 Fiscal Year 2020 Results
Aerospace Q1 Fiscal Year 2020 Results Aerospace Sales (mil $) 474 Segment Net Sales 393 Q1 FY20 Strong OEM and aftermarket in both commercial and Q1 FY19 defense Segment Earnings Leverage on higher sales volume Segment Earnings (mil $) Segment Margin % 93 19.6% 18.5% 73 Q1 FY20 Q1 FY20 Q1 FY19 Q
Slide 12: Industrial Q1 Fiscal Year 2020 Results
Industrial Q1 Fiscal Year 2020 Results Industrial Sales (mil $) Segment Net Sales 260 Softness in oil and gas partially offset by higher 246 Q1 FY20 renewables Q1 FY19 Industrial Segment Earnings Lower sales volume and aftermarket Segment Margin % Segment Earnings (mil $) 14.9% 39 11.5% 11.2% Re
Slide 13: Selected Financial Items
Selected Financial Items Quarter and Year-to-Date Comparatives Q1 FY 20 Q1 FY 19 Gross Margin * 25.7% 24.6% SG&A Expenses - % of Sales 8.6% 8.0% R&D Expenses - % of Sales 5.1% 6.0% Effective Tax Rate 13.3% 20.1% Adjusted effective Tax Rate1 17.1% 21.0% EBITDA1 (mils) $ 103 $ 112 Adjusted EBITDA1 (mi
Slide 14: Fiscal Year 2020 Outlook
Fiscal Year 2020 Outlook Woodward Aerospace Revenue between $2.9 and $3.0 billion Revenue up low single digits Adjusted effective tax rate ~20% Margin ~21% Adjusted free cash flow ~$420 million Industrial Adjusted earnings per share1 between Revenue approximately flat $5.22 and $5.52
Slide 15: Adjusted Earnings Per Share Bridge – FY20 Outlook
Adjusted Earnings Per Share Bridge – FY20 Outlook Lower Tax Rate Cost Containment Higher Share Count 737 MAX $5.30 Oil and Gas $5.22 to Renewables to Softness Portfolio Sale $5.60 $5.52 Original Updated FY20 FY20 Outlook Note: For illustrative purposes only. Outlook 15 | © WOODWARD, INC. PROPRIETARY
Slide 16: Appendix
W woopwarD Appendix
Slide 17: Non-U.S. GAAP Measures
Non-U.S. GAAP Measures Q1 FY 20 Q1 FY 19 Q1 FY 20 Q1 FY 19 Earnings Per Earnings Per Net Earnings Share Net Earnings Share (mils) (mils) (mils) (mils) (mils) (mils) Industrial Segment Earnings $ 28.2 $ 29.2 Net Earnings $ 53.4 $ 0.83 $ 49.1 $ 0.77 Purchase accounting impacts - 9.5 Non-U.S. GAAP Adju
Slide 18: Non-U.S. GAAP Measures (cont.)
Non-U.S. GAAP Measures (cont.) Q1 FY 20 Q1 FY 19 (mils) (mils) Q1 FY 20 Q1 FY 19 (mils) (mils) Cash From Operations $ 27.4 $ 84.7 Payments for PP&E (17.2) (31.3) Net Earnings $ 53.4 $ 49.1 Free Cash Flow1 $ 10.2 $ 53.4 Income Taxes 8.2 12.4 Cash proceeds from the sale of the Duarte facility 18.8 - I
Slide 19: Non-U.S. GAAP Measures (cont.)
Non-U.S. GAAP Measures (cont.) Q1 FY 20 Q1 FY 19 (mils) (mils) Net Earnings $ 53.4 $ 49.1 Income Taxes 8.2 12.4 Interest Expense 9.0 11.9 Interest Income (0.5) (0.4) EBIT1 70.1 73.0 Amortization of Intangibles 9.9 17.5 Depreciation Expense 22.5 21.2 EBITDA1 102.5 111.7 Non U.S. GAAP adjustments* 24.
Slide 20: 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) the gain