GlobeNewswire Inc | Nov 19, 2020 04:05PM EST

November 19, 2020

FORT COLLINS, Colo., Nov. 19, 2020 (GLOBE NEWSWIRE) -- Woodward, Inc. (NASDAQ:WWD) today reported financial results for its fiscal year 2020 and fourth quarter ending September30, 2020. (All amounts are presented on an as reported (U.S. GAAP) basis unless otherwise indicated. All per share amounts are presented on a fully diluted basis. All comparisons are made to the same period of the prior year unless otherwise stated.)

Fourth Quarter Fiscal 2020 Overview

-- Net sales were $531 million, compared to $737 million, a decrease of 28 percent. -- Earnings per share were $0.89, down from $1.03. -- Adjusted earnings per share1 were $0.75, down from $1.22.

Fiscal Year 2020 Overview

-- Net sales were $2.50 billion for fiscal year 2020, a decrease of 14 percent. -- Net earnings were $240 million, or $3.74 per share, compared to $260 million, or $4.02 per share. -- Adjusted net earnings1 were $254 million, or $3.96 per share, compared to $314 million, or $4.88 per share. -- Net cash provided by operating activities for 2020 was $349 million, compared to $391 million. Free cash flow1 was $302 million for 2020, compared to $292 million. Adjusted free cash flow1 was $315 million for 2020.

Fiscal year 2020 marked one of the most volatile periods in the global macro-economic landscape. Our team acted swiftly to focus on diligent cash management and liquidity as well as aligning our cost structure to the current COVID-19 environment, which significantly impacted both of our segments. Our Aerospace segment was impacted by the decline in global passenger traffic, partially offset by a strong defense market. Our Industrial segment was impacted by a sharp decline in oil prices as well as the pandemic, said Thomas A. Gendron, Chairman and Chief Executive Officer of Woodward. The COVID-19 headwinds are enduring, and our team has driven and will continue to focus on operational excellence, prudently manage cash and liquidity as well as execute on our strategy, to emerge as a leaner and stronger Woodward.

Company Results

Net sales for the fourth quarter of fiscal 2020 were $531 million, compared to $737 million for the fourth quarter of last year, a decrease of 28 percent. Net earnings for the fourth quarter of 2020 were $57 million, or $0.89 per share, compared to $67 million, or $1.03 per share, for the fourth quarter of last year.

Adjusted net earnings for the fourth quarter of 2020 were $48 million, or $0.75 per share, compared to $79 million, or $1.22 per share for the fourth quarter of the prior year.

Net sales for fiscal 2020 were $2.50 billion, compared to $2.90 billion last year, a decrease of 14 percent. Net earnings for 2020 were $240 million, or $3.74 per share, compared to $260 million, or $4.02 per share, for the prior year.

Adjusted net earnings for 2020 were $254 million, or $3.96 per share, compared to $314 million, or $4.88 per share, for the prior year.

EBIT1 was $77 million for the fourth quarter of 2020, compared to $86 million for the fourth quarter of 2019. Adjusted EBIT1 for the fourth quarter of 2020 was $65 million, compared to $103 million for the fourth quarter of 2019.

EBIT was $316 million for fiscal 2020, compared to $363 million for 2019. Adjusted EBIT for 2020 was $343 million, compared to $424 million for 2019.

The effective tax rate for the fourth quarter of 2020 was 16.0 percent, compared to 12.8 percent in the prior year. The adjusted effective tax rate1 was 13.8 percent for the quarter, compared to 15.5 percent for the fourth quarter of 2019.

The full year effective tax rate for 2020 was 14.7 percent, compared to 19.0 percent for the prior year. The adjusted effective tax rate for the full year 2020 was 17.8 percent, compared to 17.5 percent for the prior year.

Segment Results

Aerospace

Aerospace segment net sales for the fourth quarter of fiscal 2020 were $336 million, compared to $506 million for the fourth quarter a year ago, a decrease of 34 percent.

Aerospace sales for the quarter were unfavorably impacted by COVID-19 related declines in commercial OEM, commercial aftermarket and defense OEM, partially offset by strong defense aftermarket.

Segment earnings for the fourth quarter of 2020 were $58 million, compared to $111 million for the fourth quarter of last year. Segment earnings as a percent of segment net sales were 17.4 percent for the fourth quarter of 2020, compared to 22.0 percent in the same quarter of the prior year. The decline in segment earnings was a result of lower volume, partially offset by cost reduction initiatives.

For fiscal 2020, Aerospace segment net sales were $1.59 billion, a decrease of 15 percent compared to $1.88 billion for the prior year. Segment earnings for 2020 were $310 million, or 19.5 percent of segment net sales, compared to $389 million, or 20.7 percent of segment net sales, in the prior year.

Industrial

Industrial segment net sales for the fourth quarter of fiscal 2020 were $195 million, compared to $231 million for the fourth quarter a year ago, a decrease of 15 percent. Industrial segment net sales of $195 million for the fourth quarter of fiscal 2020 were down 5 percent compared to $206 million of Industrial segment net sales excluding renewable power systems and related businesses1 (RPS) for the fourth quarter of 2019.

Industrial sales for the fourth quarter of 2020 declined primarily as a result of COVID-19 related weakness in many of our markets, partially offset by increases in industrial gas turbines and China natural gas engines.

Industrial segment earnings for the fourth quarter of 2020 were $19 million, or 9.6 percent of segment net sales, compared to $11 million, or 4.8 percent of segment net sales for prior year quarter. Industrial segment earnings increased primarily as a result of cost reduction initiatives, partially offset by the impact of lower sales volume.

Industrial segment earnings of $19 million for the fourth quarter of 2020 were up compared to $10 million of Industrial segment earnings excluding RPS1, or 4.9 percent of segment sales, for the same period last year.

For fiscal year 2020, Industrial segment net sales were $905 million, compared to $1.02 billion for the prior year, an 11 percent decrease. Excluding RPS, Industrial segment sales for 2020 were $837 million, compared to $932 million for the prior year, a decrease of 10 percent.

Both Industrial segment earnings and adjusted Industrial segment earnings1 for 2020 were $100 million, or 11.1 percent of segment net sales. For 2019, Industrial segment earnings were $94 million, or 9.2 percent of segment net sales, and adjusted Industrial segment earnings were $115 million, or 11.2 percent of segment net sales.

Excluding RPS, Industrial segment earnings and adjusted Industrial segment earnings for 2020 were $97 million, or 11.6 percent of segment net sales. For 2019, excluding RPS, Industrial segment earnings were $97 million, or 10.4 percent of segment net sales, and adjusted Industrial segment earnings were $118 million, or 12.7 percent of segment net sales.

Nonsegment

Nonsegment expenses as reported were $0.2 million for the fourth quarter of fiscal 2020, compared to $36 million for the same period of the prior year. Adjusted nonsegment expenses1 for the fourth quarter of 2020 were $12 million, compared to $20 million for the same quarter last year. Adjusted nonsegment expenses for the fourth quarter of 2020 primarily excludes the gain on sale of properties. Adjusted nonsegment expenses for the fourth quarter of 2019 exclude the costs associated with the impairment of Senvion related assets and Duarte move related costs. Reported and adjusted nonsegment expenses for the fourth quarter of 2020 primarily benefited from cost reduction initiatives.

Nonsegment expenses totaled $95 million for 2020, compared to $119 million for the prior year. Adjusted nonsegment expenses were $67 million for 2020, compared to $80 million for the prior year.

Cash Flow and Financial Position

Net cash provided by operating activities for fiscal year 2020 was $349 million, compared to $391 million for the prior year. Payments for property, plant, and equipment for 2020 were $47 million, compared to $99 million for 2019. Free cash flow was $302 million for 2020, compared to $292 million for 2019. Adjusted free cash flow was $315 million for 2020. The increase in free cash flow and adjusted free cash flow was primarily related to lower capital expenditures, aggressive cost control and effective working capital management.

Total debt was $838 million at September 30, 2020, compared to $1.08 billion at September 30, 2019. Debt-to-EBITDA1 leverage at September 30, 2020 was 1.7 times EBITDA, compared to 2.1 times EBITDA at September 30, 2019.

During fiscal year 2020, $51 million was returned to stockholders in the form of $38 million of dividends and $13 million of repurchased shares.

Fiscal Year 2021 Outlook

The global economic effects associated with the COVID-19 pandemic have been unprecedented in their scope and depth. We continue to see severe volatility in our markets, making forecasting of our future business challenging. With that uncertainty, we will not be providing financial guidance for fiscal 2021 at this time, although we are encouraged by recent developments with respect to potential vaccines and therapeutics related to the virus.

Our focus will continue to be on cash flow and liquidity as we manage through this challenging operating environment, said Mr. Thomas A. Gendron. Woodward has a history of resilience during difficult times such as these. We believe our strong balance sheet will allow us to strategically invest in growth opportunities and technology, return capital to our shareholders and emerge a stronger company.

Conference Call

Woodward will hold an investor conference call at 4:30 p.m. EST, November 19, 2020, to provide an overview of the financial performance for the fourth quarter and fiscal year 2020, business highlights, and outlook for fiscal 2021. You are invited to listen to the live webcast of our conference call, or a recording, and view or download accompanying presentation slides at our website, www.woodward.com2.

You may also listen to the call by dialing 1-877-231-2582 (domestic) or 1-478-219-0714 (international). Participants should call prior to the start time to allow for registration; the Conference ID is 3429007. An audio replay will be available by telephone from 7:30 p.m. EST on November 19, 2020 until 11:59 p.m. EST on December 3, 2020. The telephone number to access the replay is 1-855-859-2056 (domestic) or 1-404-537-3406 (international), reference access code 3429007.

A webcast presentation will be available on the website by selecting Investors/Events & Presentations. The call and presentation will remain accessible at the website for 14 days.

About Woodward, Inc.

Woodward is an independent designer, manufacturer, and service provider of control system solutions and components for the aerospace and industrial markets. The company's innovative fluid, combustion, electrical, and motion control systems help customers offer cleaner, more reliable, and more efficient equipment. Our customers include leading original equipment manufacturers and end users of their products. Woodward is a global company headquartered in Fort Collins, Colorado, USA. Visit our website at www.woodward.com.

Notice Regarding Forward-Looking Statements

The statements in this release contain forward-looking statements that involve risks and uncertainties, including statements concerning the companys quarterly cash dividend. Actual results could differ materially from projections or any other forward-looking statements and we have no obligation to update our forward-looking statements. 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, 2020, which we expect to file shortly, and any subsequently filed Quarterly Report on Form 10-Q.

Cautionary Statement

Information in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, statements about the continued and expected or potential effects of the COVID-19 pandemic on our business, and the management of our business, including our operations and strategy, as well as any potential benefits with respect to a vaccine or therapeutics for COVID-19; and our strategies and investments, including our intended strategic and operational focus. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Factors that could cause actual results and the timing of certain events to differ materially from the forward-looking statements include, but are not limited to, the COVID-19 pandemic and related volatility in financial, commodities (including oil and gas) and other markets and industries (including the aviation industry), a decline in our customers business, or our business with, or financial distress of, Woodwards significant customers; global economic uncertainty and instability in the financial markets; Woodwards ability to manage product liability claims, product recalls or other liabilities associated with the products and services that Woodward provides; Woodwards ability to obtain financing, on acceptable terms or at all, to implement its business plans, complete acquisitions, or otherwise take advantage of business opportunities or respond to business pressures; Woodwards long sales cycle, customer evaluation process, and implementation period of some of its products and services; Woodwards ability to implement and realize the intended effects of any restructuring and alignment efforts; Woodwards ability to successfully manage competitive factors, including prices, promotional incentives, competitor product development, industry consolidation, and commodity and other input cost increases; Woodwards ability to manage expenses and product mix while responding to sales increases or decreases; the ability of Woodwards subcontractors to perform contractual obligations and its suppliers to provide Woodward with materials of sufficient quality or quantity required to meet Woodwards production needs at favorable prices or at all; Woodwards ability to monitor its technological expertise and the success of, and/or costs associated with, its product development activities; consolidation in the aerospace market and our participation in a strategic joint venture with General Electric Company may make it more difficult to secure long-term sales in certain aerospace markets; Woodwards debt obligations, debt service requirements, and ability to operate its business, pursue its business strategies and incur additional debt in light of covenants contained in its outstanding debt agreements; Woodwards ability to manage additional tax expense and exposures; risks related to Woodwards U.S. Government contracting activities, including liabilities resulting from legal and regulatory proceedings, inquiries, or investigations related to such activities; the potential of a significant reduction in defense sales due to decreases in the amount of U.S. Federal defense spending or other specific budget cuts impacting defense programs in which Woodward participates; changes in government spending patterns, priorities, subsidy programs and/or regulatory requirements; future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets; future results of Woodwards subsidiaries; environmental liabilities related to manufacturing activities and/or real estate acquisitions; Woodwards continued access to a stable workforce and favorable labor relations with its employees; physical and other risks related to Woodwards operations and suppliers, including natural disasters and COVID-19 related impacts, which could disrupt production; Woodwards ability to successfully manage regulatory, tax, and legal matters; changes in accounting standards that could adversely impact our profitability or financial position; risks related to Woodwards common stock, including changes in prices and trading volumes; impacts of tariff regulations; risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and compliance with and changes in the legal and regulatory environments of the United States and the countries in which Woodward operates; fair value of defined benefit plan assets and assumptions used in determining Woodwards retirement pension and other postretirement benefit obligations and related expenses; industry risks, including increases in natural gas prices, unforeseen events that may reduce commercial aviation, such as diseases, epidemics, pandemics and natural disasters, and increasing emissions standards; any adverse effects on Woodwards operations due to information systems interruptions or intrusions; certain provisions of Woodwards charter documents and Delaware law that could discourage or prevent others from acquiring the company; and other risk factors described in Woodward's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, its Annual Report on Form 10-K for the year ended September 30, 2019 and any subsequently filed Quarterly Report on Form 10-Q, as well as its Annual Report on Form 10-K for the year ended September 30, 2020, which we expect to file shortly, and other risks described in Woodwards filings with the Securities and Exchange Commission.

Woodward, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited - in thousands except per share amounts) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Net sales $ 531,264 $ 736,537 $ 2,495,665 $ 2,900,197 Costs and expenses: Cost of goods sold 407,480 571,123 1,855,422 2,192,654 Selling, generaland administrative 40,675 51,441 217,710 211,205 expensesResearch and 27,105 35,748 133,134 159,107 development costsImpairment of ? ? 37,902 ? assets soldRestructuring 3,176 ? 22,216 ? chargesGain oncross-currency ? ? (30,481 ) ? interest rateswaps, netInterest expense 9,309 9,845 35,811 44,001 Interest income (424 ) (400 ) (1,764 ) (1,413 )Other (income) (24,175 ) (7,835 ) (56,166 ) (25,969 )expense, netTotal costs and 463,146 659,922 2,213,784 2,579,585 expensesEarnings before 68,118 76,615 281,881 320,612 income taxesIncome taxes 10,879 9,819 41,486 61,010 Net earnings $ 57,239 $ 66,796 $ 240,395 $ 259,602 Earnings per share amounts:Basic earnings per $ 0.92 $ 1.08 $ 3.86 $ 4.19 shareDiluted earnings $ 0.89 $ 1.03 $ 3.74 $ 4.02 per shareWeighted averagecommon shares outstanding:Basic 62,501 61,872 62,267 61,950 Diluted 63,997 64,553 64,209 64,498 Cash dividends pershare paid to $ 0.0813 $ 0.1625 $ 0.6050 $ 0.6300 Woodward commonstockholders

Woodward, Inc. and SubsidiariesCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited - in thousands) September30, September30, 2020 2019Assets Current assets: Cash and cash equivalents $ 153,270 $ 99,073Accounts receivable 537,987 591,529Inventories 437,943 516,836Income taxes receivable 28,879 8,099Other current assets 52,786 55,691Total current assets 1,210,865 1,271,228Property, plant, and equipment, net 997,415 1,058,775Goodwill 808,252 797,853Intangible assets, net 606,711 611,992Deferred income tax assets 14,658 18,161Other assets 265,435 198,517Total assets $ 3,903,336 $ 3,956,526 Liabilities and stockholders? equity Current liabilities: Short-term borrowings $ - $ 220,000Current portion of long-term debt 101,634 -Accounts payable 134,242 240,460Income taxes payable 4,662 18,849Accrued liabilities 151,794 228,127Total current liabilities 392,332 707,436Long-term debt, less current portion 736,849 864,899Deferred income tax liabilities 163,573 151,362Other liabilities 617,905 506,088Total liabilities 1,910,659 2,229,785Stockholders? equity 1,992,677 1,726,741Total liabilities and stockholders? equity $ 3,903,336 $ 3,956,526

Woodward, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands) For the Year Ended September30, 2020 2019 Net cash provided by operating $ 349,491 $ 390,608 activities Cash flows from investing activities: Payments for purchase of property, (47,087 ) (99,066 )plant, and equipmentProceeds from sale of assets 30,173 1,010 Proceeds from business divestiture 10,443 - Proceeds from sales of short-term 12,700 22,252 investmentsPayments for purchases of short-term (13,109 ) (26,723 )investmentsNet cash used in investing activities (6,880 ) (102,527 ) Cash flows from financing activities: Cash dividends paid (37,664 ) (39,066 )Proceeds from sales of treasury stock 24,969 36,044 Payments for repurchases of common (13,346 ) (110,311 )stockBorrowings on revolving lines of credit 1,248,135 1,683,542 and short-term borrowingsPayments on revolving lines of credit (1,510,746 ) (1,690,035 )and short-term borrowingsPayments of long-term debt and capital (1,590 ) (143,535 )lease obligationsPayment of debt financing costs - (2,238 )Net cash used in financing activities (290,242 ) (265,599 )Effect of exchange rate changes on cash 1,828 (7,003 )and cash equivalentsNet change in cash and cash equivalents 54,197 15,479 Cash and cash equivalents at beginning 99,073 83,594 of yearCash and cash equivalents at end of $ 153,270 $ 99,073 period

Woodward, Inc. and Subsidiaries SEGMENT NET SALES AND EARNINGS (Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Net sales: Aerospace $ 336,308 $ 505,904 $ 1,590,963 $ 1,880,520 Industrial 194,956 230,633 904,702 1,019,677 Totalconsolidated $ 531,264 $ 736,537 $ 2,495,665 $ 2,900,197 net salesSegment earnings*:Aerospace $ 58,492 $ 111,312 $ 310,137 $ 389,126 As a percentof segment 17.4 % 22.0 % 19.5 % 20.7 %net salesIndustrial 18,681 10,984 100,321 93,521 As a percentof segment 9.6 % 4.8 % 11.1 % 9.2 %net salesTotalsegment 77,173 122,296 410,458 482,647 earningsNonsegment (170 ) (36,237 ) (94,530 ) (119,447 )expensesEBIT 77,003 86,059 315,928 363,200 Interest (8,885 ) (9,444 ) (34,047 ) (42,588 )expense, netConsolidatedearnings $ 68,118 $ 76,615 $ 281,881 $ 320,612 beforeincome taxes *This schedule reconciles segment earnings, which exclude certain costs, to consolidated earnings before taxes. Payments forproperty, $ 8,015 $ 21,162 $ 47,087 $ 99,066 plant andequipment Depreciation $ 23,599 $ 22,984 $ 91,700 $ 85,982 expense

Woodward, Inc. and SubsidiariesRECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS ^1(Unaudited - in thousands, except per share amounts) Three Months Ended Three Months Ended September30, 2020 September30, 2019 Per Per Before Net of Share, Before Net of Share, Income Income Net of Income Income Net of Tax Tax Income Tax Tax Income Tax TaxEarnings $ 68,118 $ 57,239 $ 0.89 $ 76,615 $ 66,796 $ 1.03(U.S. GAAP)Non-U.S. GAAP adjustments:Gain on saleof properties (11,131 ) (8,376 ) (0.13 ) - - -^2Duarte move - - - 3,930 2,968 0.05related costsMerger anddivestiture (2,299 ) (1,730 ) (0.03 ) - - -transactioncosts^3Restructuringcharges 3,176 2,421 0.04 - - -related toCOVID-19Gain on saleof renewablepower systems (2,025 ) (1,436 ) (0.02 ) - - -and relatedbusinessesImpairment ofSenvion - - - 12,601 8,937 0.14relatedassetsTotalnon-U.S. GAAP (12,279 ) (9,121 ) (0.14 ) 16,531 11,905 0.19adjustmentsAdjustedearnings $ 55,839 $ 48,118 $ 0.75 $ 93,146 $ 78,701 $ 1.22(Non-U.S.GAAP) (2) The gain on sale of properties includes (i) the gain on sale of the Duarteproperty and (ii) the gain on sale of the Loveland property(3) Merger and divestiture transaction costs include, as applicable, (i) costsassociated with the now-terminated merger with Hexcel, (ii) costs associatedwith the divestiture of the renewable power systems and related businesses

Woodward, Inc. and SubsidiariesRECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS ^1(Unaudited - in thousands, except per share amounts) Year Ended Year Ended September30, 2020 September30, 2019 Per Per Before Net of Share, Before Net of Share, Income Income Net of Income Income Net of Tax Tax Income Tax Tax Income Tax TaxEarnings (U.S. $ 281,881 $ 240,395 $ 3.74 $ 320,612 $ 259,602 $ 4.02GAAP)Non-U.S. GAAP adjustments:Gain on saleof properties^ (24,653 ) (18,551 ) (0.29 ) - - -2Impairmentfrom assets 37,902 28,016 0.44 - - -soldDuarte move - - - 27,089 20,385 0.32related costsL'Orangebacklog - - - 21,100 14,964 0.23amortizationimpact^3Merger anddivestiture 16,355 12,307 0.19 - - -transactioncosts^4Restructuringcharges 22,216 16,621 0.26 - - -related toCOVID-19Loss on saleof renewablepower systems 515 365 0.01 - - -and relatedbusinessesAccelerationof stock 2,376 1,788 0.03 - - -compensationNet gain oncross-currency (27,481 ) (26,904 ) (0.42 ) - - -interest rateswapsImpairment ofSenvion - - - 12,601 8,937 0.14related assetsSub-totalnon-U.S. GAAP 27,230 13,642 0.22 60,790 44,286 0.69adjustmentsTransitionimpact of U.S. - - - - 10,588 0.17taxlegislationTotal non-U.S.GAAP 27,230 13,642 0.22 60,790 54,874 0.86adjustmentsAdjustedearnings $ 309,111 $ 254,037 $ 3.96 $ 381,402 $ 314,476 $ 4.88(Non-U.S.GAAP) (2) The gain on sale of properties includes (i) the gain on sale of the Duarteproperty and (ii) the gain on sale of the Loveland property(3) Represents the purchase accounting impacts related to the amortization ofthe Woodward L?Orange backlog intangible.(4) Merger and divestiture transaction costs include, as applicable, (i) costsassociated with the now-terminated merger with Hexcel, (ii) costs associatedwith the divestiture of the renewable power systems and related businesses

Woodward, Inc. and Subsidiaries RECONCILIATION OF NET EARNINGS TO EBIT ^1 AND ADJUSTED EBIT ^1 (Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Net earnings $ 57,239 $ 66,796 $ 240,395 $ 259,602 (U.S. GAAP)Income taxes 10,879 9,819 41,486 61,010 Interest 9,309 9,845 35,811 44,001 expenseInterest (424 ) (400 ) (1,764 ) (1,413 )incomeEBIT (Non-U.S. 77,003 86,060 315,928 363,200 GAAP)Non-U.S.GAAP (12,279 ) 16,531 27,230 60,790 adjustments*AdjustedEBIT $ 64,724 $ 102,591 $ 343,158 $ 423,990 (Non-U.S.GAAP) *See Reconciliation of Earnings to Adjusted Earnings^1 tables below for the list of Non-U.S. GAAP adjustments made in the applicable periods.

Woodward, Inc. and Subsidiaries RECONCILIATION OF NET EARNINGS TO EBITDA ^1 AND ADJUSTED EBITDA ^1 (Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Net earnings $ 57,239 $ 66,796 $ 240,395 $ 259,602 (U.S. GAAP)Income taxes 10,879 9,819 41,486 61,010 Interest 9,309 9,845 35,811 44,001 expenseInterest (424 ) (400 ) (1,764 ) (1,413 )incomeAmortizationof 9,977 10,552 39,458 56,022 intangibleassetsDepreciation 23,599 22,984 91,700 85,982 expenseEBITDA (Non-U.S. 110,579 119,596 447,086 505,204 GAAP)Non-U.S.GAAP (12,279 ) 16,531 27,230 39,690 adjustments*AdjustedEBITDA $ 98,300 $ 136,127 $ 474,316 $ 544,894 (Non-U.S.GAAP) *See Reconciliation of Earnings to Adjusted Earnings^1 tables above for thelist of Non-U.S. GAAP adjustments made in the applicable periods. Note thatall Non-U.S. GAAP adjustments are reflected in this table, except for the purchase accounting impact related to the amortization of the WoodwardL'Orange backlog intangible.

Woodward, Inc. and Subsidiaries RECONCILIATION OF INDUSTRIAL SEGMENT EARNINGS TO ADJUSTED INDUSTRIAL SEGMENTEARNINGS ^1 AND ADJUSTED INDUSTRIAL SEGMENT EARNINGS EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES^1(Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Industrial segment $ 18,681 $ 10,984 $ 100,321 $ 93,521 earnings (U.S. GAAP)Purchase accounting - - - 21,100 impacts*Adjusted Industrialsegment earnings 18,681 10,984 100,321 114,621 (Non-U.S. GAAP)Renewable power systemsand related businesses - 810 3,602 (3,788 )earnings (losses)^1Adjusted Industrialsegment earningsexcluding renewable power $ 18,681 $ 10,174 $ 96,719 $ 118,409 systems and relatedbusinesses * Represents the purchase accounting impact related to the amortization of the Woodward L'Orange backlog intangible.

Woodward, Inc. and SubsidiariesRECONCILIATION OF INDUSTRIAL SEGMENT NET SALES EXCLUDING RENEWABLE POWERSYSTEMS AND RELATED BUSINESSES^1(Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019Industrial segment $ 194,956 $ 230,633 $ 904,702 $ 1,019,677net salesRenewable powersystems and related - 24,607 67,663 87,997businesses salesIndustrial segmentnet sales excluding renewable power $ 194,956 $ 206,026 $ 837,039 $ 931,680systems and relatedbusinesses

Woodward, Inc. and Subsidiaries RECONCILIATION OF INDUSTRIAL SEGMENT EARNINGS EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES^1(Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Industrial segment $ 18,681 $ 10,984 $ 100,321 $ 93,521 earningsRenewable power systemsand related businesses - 810 3,602 (3,788 )earnings (losses)Industrial segmentearnings excluding $ 18,681 $ 10,174 $ 96,719 $ 97,309 renewable power systemsand related businesses

Woodward, Inc. and Subsidiaries RECONCILIATION OF NONSEGMENT EXPENSES TO ADJUSTED NONSEGMENT EXPENSES ^1 (Unaudited - in thousands) Three Months Ended Year Ended September30, September30, 2020 2019 2020 2019 Nonsegmentexpenses (U.S. $ 170 $ 36,237 $ 94,530 $ 119,447 GAAP)Gain on sale 11,131 - 24,653 - of propertiesImpairment oflong-lived - - (37,902 ) - assets heldfor saleNet gain(loss) on saleof renewable 2,025 - (515 ) - power systemsand relatedbusinessesMerger anddivestiture 2,299 - (16,355 ) - transactioncostsRestructuringcharges (3,176 ) - (22,216 ) - related toCOVID-19Net gain oncross-currency - - 27,481 - interest rateswapsAccelerationof stock - - (2,376 ) - compensationImpairment ofSenvion - (12,601 ) - (12,601 )related assetsDuarte move - (3,930 ) - (27,089 )related costsAdjustednonsegmentexpenses $ 12,449 $ 19,706 $ 67,300 $ 79,757 (Non-U.S.GAAP)

Woodward, Inc. and Subsidiaries RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW^1(Unaudited - in thousands) Year Ended September30, 2020 2019 Net cash provided by operating activities $ 349,491 $ 390,608 Payments for property, plant, and equipment (47,087 ) (99,066 )Free cash flow (Non-U.S. GAAP) 302,404 291,542 Cash proceeds from the sale of the Duarte 30,089 - facilityCash paid for merger and divestiture 19,853 - transaction costsCash paid for restructuring charges 18,065 - Net cash proceeds from cross currency (55,191 ) - interest rate swapsAdjusted free cash flow (Non-U.S. GAAP) $ 315,220 $ 291,542

1Adjusted and Non-U.S. GAAP Financial Measures Adjusted net earnings, adjusted earnings per share, adjusted Industrial segment earnings, adjusted EBIT and EBITDA, adjusted effective tax rate, Industrial segment sales excluding RPS, Industrial segment earnings excluding RPS, adjusted Industrial segment earnings excluding RPS and adjusted nonsegment expenses exclude, as applicable, (i) the gain on sale of assets associated with the sale of the Companys real property, (ii) the charge from the impairment of assets held for sale, and the losses, associated with the Companys divestiture of its renewable power systems and related businesses, (iii) Duarte move related costs, (iv) the purchase accounting impacts related to the amortization of the backlog intangible acquired in connection with the acquisition of Woodward LOrange on June 1, 2018 (the LOrange Acquisition), (v) the transition impacts of the change in U.S. federal tax legislation in December 2017, (vi) costs associated with the previously proposed merger with Hexcel Corporation, which merger agreement was terminated on April 5, 2020, (vii) transaction costs associated with the completed divestiture of renewable power systems and related businesses, (viii) restructuring charges related to the COVID-19 pandemic, (ix) acceleration of stock compensation expense related to restructuring activities, (x) the net gain on settlement of cross-currency interest rate swaps, (xi) costs related to the fourth quarter of fiscal year 2019 impairment of accounts receivable, inventory and certain other assets in connection with Senvion, a significant customer of Woodward renewables business, which declared insolvency in fiscal year 2019, (xii) renewable power systems and related businesses sales, and (xiii) renewable power systems and related businesses earnings. Woodward believes that these items are short-term costs/benefits or are otherwise not related to the ongoing operations of the business and therefore, uses them to illustrate more clearly how the underlying business of Woodward is performing. Adjusted free cash flow is free cash flow (defined below) plus the cash proceeds from the sale of real property at our former Duarte operations, cash payments added back for merger and divestiture transaction costs and restructuring activities, and excluding cash proceeds from the settlement of our cross-currency interest rate swaps. Management believes these adjustments to free cash flow better portrays Woodwards operating performance.

EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization), free cash flow, adjusted free cash flow, adjusted net earnings, adjusted Industrial segment net earnings, adjusted net earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, Industrial segment sales excluding RPS, Industrial segment earnings excluding RPS, adjusted Industrial segment earnings excluding RPS, and adjusted nonsegment expenses are financial measures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Management uses EBIT and adjusted EBIT to evaluate Woodwards operating performance without the impacts of financing and tax related considerations. Management uses EBITDA and adjusted EBITDA in evaluating Woodwards operating performance, making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Management also uses free cash flow, which is derived from net cash provided by or used in operating activities less payments for property, plant, and equipment, as well as adjusted free cash flow (as described above), in reviewing the financial performance of Woodwards various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use EBIT, EBITDA and free cash flow in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of any of these non-U.S. GAAP financial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Because EBIT and EBITDA, and adjusted EBIT and EBITDA, exclude certain financial information compared with net earnings, the most comparable U.S. GAAP financial measure, users of this financial information should consider the information that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Managements calculations of EBIT, EBITDA, adjusted net earnings, adjusted earnings per share, adjusted EBIT and EBITDA, adjusted effective tax rate, adjusted nonsegment expenses, free cash flow, and adjusted free cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.

2Website, Facebook, Twitter: Woodward has used, and intends to continue to use, its Investor Relations website, its Facebook page and its Twitter handle as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Don GuzzardoContact: Vice President, Investor Relations & Treasurer 970-498-3580 Don.Guzzardo@woodward.com