Woodward Reports First Quarter Results
18 January 2001
Woodward Reports First Quarter Results
ROCKFORD, Ill.--Jan. 18, 2001--Woodward Governor Company today reported financial results for the first fiscal quarter ended December 31, 2000.Net sales for the quarter were $150,730,000, up 13 percent from $133,592,000 in the first quarter a year ago. Included in the first quarter last year were sales from a portion of Industrial Controls that was divested on May 31, 2000. The divested business had net sales of approximately $50 million annually.
Net earnings for the quarter were $10,908,000, or $0.95 per share, compared with $6,007,000, or $0.53 per share for the same quarter a year earlier, an increase of 82 percent (all per share amounts are diluted). Earnings benefited from significantly improved sales and margins in Aircraft Engine Systems, while Industrial Controls continued to provide strong results.
First quarter sales for Industrial Controls rose seven percent despite the divestiture referred to previously. The growth reflected significantly increased demand for systems and components used in power generation, as well as continuing strong demand for other industrial products. Costs related to new programs and product development, and a less favorable product mix, limited Industrial Controls segment earnings during the quarter to a two percent increase over the first quarter a year ago.
Chairman and Chief Executive Officer John A. Halbrook commented, "The first quarter provided further evidence that Industrial Controls' strategic OEM focus is producing impressive results. Sales for the quarter were paced by strong demand for marine, oil and gas exploration and processing, and, most significantly, power generation equipment."
To capture an increasing share of these growing markets, Industrial Controls is developing and introducing digital controls and complementary mechanical products designed to increase fuel efficiency, lower emissions, and enable remote operation and networking, as well as adding resources to accommodate higher rates of product development and production. During the quarter, the company formed an alliance with Edward King AG of Switzerland, a specialist in fuel skid design. In addition, the company added ignition systems technology for gas engines with both the acquisition of Hoeflich Controls, Inc. and a licensing agreement with Adrenaline Research. These actions broadened the functionality and scope of our integrated control systems.
For the quarter, Aircraft Engine Systems sales rose 20 percent, representing ongoing strength in OEM products and aftermarket business, compared with a weak first quarter last year. Segment earnings in the quarter increased 181 percent over the first quarter last year, reflecting the impact of higher sales and cost reduction actions initiated in the second quarter of fiscal 2000.
Mr. Halbrook continued, "Our Aircraft Engine Systems business has made significant strides over the past year. During the quarter, we benefited from higher OEM sales. This sales growth reflects our strong position in control systems, particularly for business and regional jets, which are currently two of the strongest segments in aviation. Our growth strategy involves continuing to expand the scope of our integrated fuel delivery components for OEM customers, and improving products and services for the aftermarket."
Mr. Halbrook concluded, "Despite some evidence of a slowing economy, we are on track to meet our stated expectations of 10-15 percent earnings growth for the year, excluding one-time items. Significant new product development activity and costs associated with ramping to higher levels of production will tend to pressure third and fourth quarter results compared with those relatively strong quarters in 2000. However, we believe that the breadth of our energy control technologies, our intense customer focus and commitment to operational excellence, and the strength of many of our targeted markets position us for long-term success."
Woodward will hold an investor conference call at 8:30 a.m. EST on Friday, January 19, 2001, to provide an overview of the first-quarter's financial performance, business highlights, and outlook for the remainder of the year. You are invited to listen to the live webcast of our conference call or a recording at our web site, www.woodward.com.
Headquartered in Rockford, Illinois and serving global markets from locations worldwide, Woodward designs, manufactures and services energy control systems and components for aircraft and industrial engines and turbines. The company's products and services are used in the aerospace, power generation, oil and gas processing, and transportation markets, which include rail, marine and many light and heavy industrial applications. Woodward has approximately 3,300 employees.
The statements in this release concerning the company's future sales, earnings, business performance, and prospects reflect current expectations and are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from projections or any other forward-looking statement. Factors that could affect performance and could cause actual results to differ materially from projections and forward-looking statements are described in Woodward's Annual Report and Form 10-K for the year ended September 30, 2000, and Form 10-Q for the quarterly period ended December 31, 2000 (expected to be available by mid-February, 2001).
Three months ended
December 31,
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(In thousands) 2000 1999
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External net sales:
Industrial Controls $83,045 $77,298
Aircraft Engine Systems 67,685 56,294
Segment earnings:
Industrial Controls $12,457 $12,182
Aircraft Engine Systems 12,492 4,443
Segment earnings reflected in the table above do not reflect
interest, corporate expenses, and income taxes. Portions of Industrial
Controls were previously reported as Aircraft Engine Systems or other
operations. Amounts for 1999 in the information above have been
restated to be consistent with the current composition of our
segments.
Woodward Governor Company and Subsidiaries
STATEMENTS OF CONSOLIDATED EARNINGS
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Three months ended
December 31,
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(In thousands except per share amounts) 2000 1999
Net sales $150,730 $133,592
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Costs and expenses:
Cost of goods sold 113,401 99,653
Sales, general, and
administrative expenses 15,286 18,521
Amortization of
intangible assets 1,645 1,667
Interest expense 2,179 2,809
Interest income (279) (174)
Other expense--net 556 1,104
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Total costs and expenses 132,788 123,580
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Earnings before income taxes 17,942 10,012
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Income taxes 7,034 4,005
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Net earnings $10,908 $6,007
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Basic earnings per share $ .96 $ .53
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Diluted earnings per share $ .95 $ .53
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Weighted-average number of basic
shares outstanding 11,315 11,274
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Weighted-average number of
diluted shares outstanding 11,471 11,321
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CONDENSED CONSOLIDATED BALANCE SHEETS
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At December 31, At September 30,
(In thousands) 2000 2000
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Assets
Total current assets $229,539 $234,293
Property, plant, and
equipment-net 121,096 122,458
Intangibles and other assets 162,476 158,568
Deferred income taxes 18,276 18,404
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Total assets $531,387 $533,723
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Liabilities and shareholders' equity
Total current liabilities $118,730 $133,457
Long-term debt, less
current portion 79,500 74,500
Other liabilities 50,507 50,142
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Total liabilities 248,737 258,099
Shareholders' equity 282,650 275,624
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Total liabilities and
shareholders' equity $531,387 $533,723
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