Woodward, Inc. Q4 FY2025 earnings call

Growth: Aerospace team delivered strong growth in defense OEM and commercial services; industrial segment had double-digit growth in oil and gas, power generation, and high single-digit growth in marine transportation. Achieved milestones like strategic acquisition for electromechanical actuation and win for A350 wing spoiler actuators. ### Operational Excellence: Progress in human and organizational performance program, supply chain stabilization, and automation investments. ### Innovation: Prudent investments in technology development for new military programs, next single-aisle, alternative fuels, automation, and services delivery.

Aerospace segment: 2025 sales totaled $2.3 billion, up 14% with margin expansion of 290 basis points. Fourth quarter aerospace segment sales were $661 million, up 20%, with margins expanding 520 basis points to 24.4% of segment sales. Industrial segment: 2025 industrial segment sales were $1.25 billion, a decrease of 3% excluding China on highway impact; core industrial sales increased 10%. Fourth quarter industrial segment sales were $334 million, up 11%, with margins 14.6% of segment sales.

Consolidated: Net sales growth expected 7-12% in 2026. ### Aerospace: Sales growth expected 9-15%. ### Industrial: Sales growth expected 5-9%. ### Adjusted EPS: Between $7.50 and $8.00. ### Dividends and share repurchases: $650 million to $700 million. ### Capital expenditures: Approximately $290 million.

Market Dynamics: Uncertainties in global economy and business performance. ### Supply Chain: Supplier performance shortfalls. ### Automation: Challenges in realizing full benefits of automation projects. ### Aftermarket Demand: Lumpy order behavior and uncertainties in spare end item demand.

Q: How are you sure about the status of parts ordered for aftermarket vs OE channel?

A: We have clear line of sight on the PO status that comes to us, whether it's an install or a spare end item in terms of what customer is ordering it.

Q: What growth are you assuming for legacy narrow-body engine aftermarket in 2026?

A: Expect single-digit growth rates, with flat to a little bit of repair growth on V2500 CFM-five but noting lumpy order behavior on spare end items impacts top line.

Q: Can you quantify the lumpy order behavior impact on aerospace aftermarket revenue?

A: It has an outsized effect on top line as spare end items are high-priced, and we don't forecast that happening again without line of sight.

Q: What are you assuming for OE destocking?

A: Broadly, we feel somewhere in the second quarter of fiscal year, if airframe and engine customers hit rates, we could be destocked by then.

Q: How should we think about the return of capital to shareholders?

A: Plan is to spread it out evenly through the year, staying in the market throughout the year