Woodward, Inc.

What they do

Woodward designs, manufactures, and services control systems for fuel, air, combustion, fluid, motion, and electrical energy. It operates through two reportable segments: Aerospace and Industrial. Aerospace products include fuel pumps, metering units, actuators, valves, and thrust reverser systems for commercial and defense platforms. Industrial products include actuators, valves, pumps, fuel injection systems, and ignition systems for power generation, oil and gas, and transportation applications.

Revenue drivers

• Aerospace - Commercial OEM — Sales of original equipment to commercial aircraft manufacturers; $640 million in the first nine months of fiscal 2026, up 29% year-over-year.
• Aerospace - Commercial services — Aftermarket maintenance, repair, and overhaul services for commercial airlines and operators; $788 million in the first nine months of fiscal 2026, up 36% year-over-year.
• Aerospace - Defense OEM and services — Sales to defense prime contractors and military depots; combined $619 million in the first nine months of fiscal 2026, up 8% from the prior year.
• Industrial segment — Controls and systems for power generation, oil and gas, and transportation; first nine months of fiscal 2026 sales increased $149 million on volume, with segment earnings up 86% in the third quarter.

Recent performance

Fiscal 2025 net sales were $3.57 billion, up 7.3% from $3.32 billion in 2024, with net earnings of $442 million and diluted EPS of $7.19. In the third quarter of fiscal 2026, net sales rose 21.2% year-over-year to $1.11 billion, and net earnings increased to $147 million (EPS $2.40). For the first nine months of fiscal 2026, net sales were $3.20 billion, up 24.3%, and net earnings were $414 million (EPS $6.76). Operating cash flow for the first nine months was $352 million, up 48%.

Strategy

Management focuses on providing energy control and optimization solutions for aerospace and industrial markets. They are expanding capacity, improving flow, and supporting customers to meet durable demand. The company is investing in R&D (4.1% of sales in fiscal 2025) and has raised full-year earnings guidance. They also returned $553 million to shareholders through share repurchases in the first nine months of fiscal 2026. Woodward plans to continue pursuing profitable growth and operational excellence.

Risks

• China on-highway demand volatility — Fiscal 2025 sales and earnings decreased significantly in the China on-highway natural gas truck business, and demand remains uncertain.
• Trade policy changes — Evolving U.S.-China trade policy could impact the company's industrial segment and overall operations.
• Inflationary cost pressures — Higher material and labor costs increased cost of goods sold in fiscal 2025, although price realization partially offset the impact.
• Supply chain and production rates — The company's aerospace commercial OEM sales depend on increasing aircraft production rates; any disruption could affect future revenue.

Outlook

Management raised full-year fiscal 2026 earnings guidance based on strong third-quarter results and confidence in the fourth quarter. Demand across the portfolio is described as durable. The company expects continued growth in both segments, with Aerospace services resilient and Industrial growth across all primary markets.