Woodward (WWD 88.04, +10.79, +13.97%) is up about 8% this this morning after reporting
strong 1Q19 (Dec) earnings last night. Woodward is a provider of control
systems for the aerospace and industrial markets. Products include fuel pumps,
metering units, actuators, air valves and thrust reverser actuation systems for
turbine engines etc.
Non-GAAP EPS jumped 85% yr/yr to $0.96 while revenue rose 38.9% yr/yr to $652.8 mln. Both results were well ahead of market expectations. WWD also reaffirmed guidance for FY19 with EPS of $4.40-4.70 and revenue of $2.65-2.80 bln. This was a strong start to FY19 with aerospace performing very well, with robust OEM and aftermarket sales. In Industrial, WWD also saw a strong performance as its end markets improved.
Aerospace segment sales jumped 28% yr/yr to $393 mln with strong results across commercial and military OEM and aftermarket programs. It's also benefitting from continued momentum in next generation aircraft production, increased aircraft utilization, and higher defense spending. Industrial segment sales jumped 59% yr/yr to $260 mln, but a lot of that growth was from its L'Orange acquisition. Industrial segment sales improved in both industrial turbomachinery and reciprocating engines.
On the call, management talked about how uncertainty in the broader economic landscape exists due to the current tariffs, ongoing international trade negotiations, as well as government shutdowns. However, WWD remains optimistic about its markets. Specifically, its Aerospace segment continues to deliver strong results, driven by healthy global passenger and cargo growth, load factors are at an all-time high, and a growing number of operators are bringing on new-generation aircraft driving initial provisioning. Also, defense budgets continue to support increased military spending.
On the Industrial side, within power generation, the industrial turbine market remains uncertain. However, it appears to have bottomed with inventory stabilizing and WWD's content on newer turbines is increasing. In addition, WWD is seeing robust growth in distributed power for data center applications. In Transportation, natural gas, truck orders, and deliveries were strong over the prior-year quarter. Also, the Chinese government's Blue Sky initiatives on air quality are providing support for higher natural gas truck sales which are increasing in total and as a percent of total trucks sold. Finally, oil & gas markets are showing sustained growth.
In sum, this was a very strong quarter for Woodward. Its aerospace business is going very well right now. Fuller planes and a number of airlines bringing on new generation planes is acting as a nice tailwind for WWD. Also, President Trump has made military spending a priority which is great for WWD's defense applications. The industrial side seems decent but not as strong as aerospace, but WWD is doing well overall.
Also, after a miss in last year's DecQ, WWD has now posted four consecutive upside quarters. And this was its largest EPS beat in that span. WWD does not guide on a quarterly basis so analysts are always a bit in the dark on a quarter-to-quarter basis. So, it's good to see them string together several beats in a row.
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