Woodward Inc

Global Business Conditions

During the first nine months of fiscal year 2024, we achieved significant sales growth and margin expansion as compared to the same period of the prior year. The compounding impacts of our focused efforts on operational excellence enabled us to increase output and capitalize on continued strong end market demand for our products and services across the aerospace and industrial markets. We continue to better align price to the value of our products which helps to mitigate the ongoing impacts of inflation. We expect declines in demand in our on-highway natural gas trucks business in China for the remainder of the fiscal year, and future demand beyond the fiscal year remains uncertain. Additionally, ongoing supply chain challenges in the broader aerospace industry may impact the timing of certain shipments in our Aerospace segment. We continue to monitor the macroeconomic environment as inflation and economic uncertainty continue to impact certain aspects of our business. We remain committed to growth, operational excellence, and innovation to deliver long-term success and enhanced shareholder value.

Operational Highlights

Quarter and Year to Date Highlights

Adjusted net earnings, adjusted earnings per share, adjusted effective tax rate, EBIT, adjusted EBIT, EBITDA, and adjusted EBITDA are non-U.S. GAAP financial measures. A description of these measures as well as a reconciliation of these non-U.S. GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found under the caption “Non-U.S. GAAP Financial Measures” in this Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity Highlights

Net cash provided by operating activities for the first nine months of fiscal year 2024 was $297,329, compared to $155,630 for the first nine months of fiscal year 2023. The increase in net cash provided by operating activities in the first nine months of fiscal year 2024 compared to the first nine months of the prior fiscal year is primarily attributable to increased earnings.

For the first nine months of fiscal year 2024, free cash flow was $225,136, compared to $98,488 for the first nine months of fiscal year 2023. We define free cash flow as net cash flow from operating activities less payments for property, plant, and equipment. The increase in free cash flow for the first nine months of fiscal year 2024 as compared to the same period of the prior fiscal year was primarily due to increased earnings and improved working capital, partially offset by higher capital expenditures. Free cash flow is a non-U.S. GAAP financial measure. A description of this measure as well as a reconciliation of this non-U.S. GAAP financial measure to the most directly comparable U.S. GAAP financial measure can be found under the caption “Non-U.S. GAAP Financial Measures” in this Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

At June 30, 2024, we held $308,332 in cash and cash equivalents and had total outstanding debt of $923,126. We have additional borrowing availability of $717,338, net of outstanding letters of credit, under our revolving credit agreement. At June 30, 2024, we also had additional borrowing capacity of $25,176 under various foreign lines of credit and foreign overdraft facilities.