Executive Summary

Q4 2024 delivered record company net sales of $854.5M (+10% YoY) with diluted EPS of $1.36 (+2% YoY); adjusted EPS was $1.41 reflecting a non-recurring acquisition-related charge, while Aerospace strength offset Industrial weakness from China On-Highway destocking .
Aerospace revenue rose 22% YoY to $553M with segment margin at 19.2% (+200 bps YoY); Industrial fell 6% YoY to $302M with margin compressing to 12.6% (-430 bps YoY) on lower China On-Highway volumes and unfavorable mix .
FY2025 guidance calls for total sales of $3.30–$3.50B, EPS of $5.75–$6.25, FCF of $350–$400M; Aerospace up 6–13% with 20–21% margin, Industrial down 7–11% with 13–14% margin; management highlighted a ~$175M YoY decline in China On-Highway sales to ~$40M as the primary headwind .
Catalyst setup: smart defense ramp and commercial aero pull should drive Aerospace; the Boeing rate restart remains a wildcard, and the sharply lower China On-Highway outlook is a key investor focus; consensus estimates from S&P Global were unavailable at time of writing (Wall Street consensus data unavailable due to S&P Global request limit).

What Went Well and What Went Wrong

What Went Well

Aerospace had broad-based strength: Commercial OEM +16% YoY, Commercial Aftermarket +22%, Defense OEM +40%; segment margin expanded to 19.2% from 17.2% on price realization and higher volume .
Record FY sales and earnings with improved cash generation: FY net sales $3.324B (+14%), EPS $6.01 (+59%), FCF $343M (+48%); adjusted EPS $6.11 and adjusted FCF $348M .
Strategic execution: smart defense portfolio growth expected into FY25; MRO facility transformation (Loves Park) completed to support aftermarket growth; multiple MRO agreements and innovation programs (NASA/Boeing X-66A, JetZero) position for future content wins .
- “We enter fiscal 2025 with strong momentum… Aerospace revenue and margin expansion… Industrial broad-based strength in power generation and marine transportation” – CEO Chip Blankenship .

What Went Wrong

Industrial margin compression in Q4: segment margin fell to 12.6% (vs 16.9% prior year) due to lower China On-Highway volumes and unfavorable mix; core industrial margins dipped sequentially to ~12% from ~14% on mix and OEM prioritization .
Boeing-related uncertainty: direct airframe content production paused; restart rate timing is a wildcard for Aerospace guidance range (6–13% growth assumes mid-2025 rates approaching pre-stoppage targets) .
FY25 headwind from China On-Highway: sales expected ~$40M (down ~$175M YoY), reducing FY25 EPS by ~$1.15 at midpoint of the bridges; quarterly sales below ~$15M produce negative margin for this business .

Financial Results

Key P&L Metrics (Quarterly)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$835.3	$847.7	$854.5
Diluted EPS ($)	$1.56	$1.63	$1.36
EBIT ($USD Millions, Non-GAAP)	$130.9	$131.9	$113.0
EBITDA ($USD Millions, Non-GAAP)	$160.1	$160.7	$142.4
Effective Tax Rate (%)	19.1%	16.4%	18.0%
Cash from Ops ($USD Millions)	N/A	N/A	$141.8
Free Cash Flow ($USD Millions, Non-GAAP)	N/A	N/A	$117.7

YoY context:

Q4 revenue +10% YoY and EPS +2% YoY .
Q3 revenue +6% YoY and EPS $1.63 vs $1.37 .

Segment Breakdown (Quarterly)

Segment	Q2 2024 Revenue ($M)	Q2 2024 Margin (%)	Q3 2024 Revenue ($M)	Q3 2024 Margin (%)	Q4 2024 Revenue ($M)	Q4 2024 Margin (%)
Aerospace	$497.5	19.8%	$517.6	19.7%	$552.8	19.2%
Industrial	$337.8	19.3%	$330.1	18.1%	$301.7	12.6%

Aerospace subsegments (Q4 2024):

Subsegment	Q4 2024 ($M)	YoY
Commercial OEM	$194	+16%
Commercial Aftermarket	$174	+22%
Defense OEM	$126	+40%
Defense Aftermarket	$59	+7%

Industrial subsegments (Q4 2024):

Subsegment	Q4 2024 ($M)	YoY
Transportation	$131	-19%
Power Generation	$109	+4%
Oil & Gas	$62	+12%

KPIs and Cash Flow

KPI	Q4 2024	FY 2024
Cash from Operations ($M)	$141.8	$439.1
Free Cash Flow ($M, Non-GAAP)	$117.7	$342.8
Adjusted Free Cash Flow ($M, Non-GAAP)	$117.7	$347.6
Dividends Paid ($M)	$15	$58
Share Repurchases ($M)	$86	$391
Debt to EBITDA (x)	1.4x	1.4x

Consensus vs Actual (Quarterly):

Metric	Q2 2024 Actual	Q3 2024 Actual	Q4 2024 Actual	Wall St. Consensus
Revenue ($M)	$835.3	$847.7	$854.5	Unavailable (S&P Global limit)
EPS ($)	$1.56	$1.63	$1.36	Unavailable (S&P Global limit)

Note: Wall Street consensus via S&P Global was unavailable due to a request limit. Values would be sourced from S&P Global if accessible.

Guidance Changes

FY2025 Guidance (initial):

Metric	Period	Previous Guidance	Current Guidance	Change
Total Sales ($B)	FY2025	N/A	$3.30–$3.50	New
EPS ($)	FY2025	N/A	$5.75–$6.25	New
Free Cash Flow ($M)	FY2025	N/A	$350–$400	New
Effective Tax Rate (%)	FY2025	N/A	~20%	New
Diluted Shares (M)	FY2025	N/A	~61.5	New
Capex ($M)	FY2025	N/A	~$115 (press release) / ~$150 (call)	Clarified higher on call
Aerospace Sales (%)	FY2025	N/A	Up 6–13%	New
Aerospace Segment Margin (%)	FY2025	N/A	20–21%	New
Industrial Sales (%)	FY2025	N/A	Down 7–11%	New
Industrial Segment Margin (%)	FY2025	N/A	13–14%	New
China On-Highway ($M)	FY2025	N/A	~$40 (≈$175M YoY decline)	New

FY2024 Guidance Revisions (for context):

Metric	Period	Prior Guidance (Apr 29)	Revised (Jul 29)	Change
Total Sales ($B)	FY2024	$3.15–$3.30	$3.25–$3.30	Raised/Trimmed upper end
Adjusted EPS ($)	FY2024	$5.00–$5.40	$5.80–$6.00	Raised
Adjusted Effective Tax Rate (%)	FY2024	~21%	~18.5%	Lowered
Adjusted FCF ($M)	FY2024	$300–$350	$300–$350	Maintained
Aerospace Margin (%)	FY2024	18–19%	~19%	Maintained/tightened
Industrial Margin (%)	FY2024	17–18%	~17.5%	Maintained/tightened

Dividend:

Metric	Period	Value
Quarterly Dividend	Q4 timing (declared Sept 18)	$0.25 per share; payable Dec 5, 2024

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Boeing production rates	No explicit Q2/Q3 pause; Q3 noted supply chain challenges and inventory building	Direct-to-Boeing content paused; restart mid-2025 assumptions embedded in guide	Elevated uncertainty; guidance range widened
Smart defense ramp	Q3: defense OEM down 4% (quarter), planning ramp	Q4: strong defense OEM (+40% YoY); smart defense demand expected into FY25	Positive ramp; mix headwind for margins
Commercial aftermarket capacity	Q3: high aircraft utilization supports aftermarket	Q4: MRO capacity constraints cap unit growth; heavier work scopes; pricing modest	Plateauing units; pricing supportive
China On-Highway volatility	Q2: strong growth; raised FY24 Industrial margin guide	Q4: destocking and macro/fuel spread headwinds; FY25 ~$40M sales; margin negative below ~$15M/qtr	Sharp decline expected; visibility low
Pricing realization	Q2/Q3: price realization supports margins	FY25 ~5% price realization (Aero slightly stronger)	Sustained tailwind
Power generation & AI/datacenter demand	Q3: power gen +8%; strong demand	Q4: robust demand; expecting low double-digit growth in FY25	Structural tailwind
Capital allocation & Capex	Q2: capex ~100 for FY24 guide	FY25 capex guided ~$150; automation focus; leverage ~1.4–1.5x supports optionality	Elevated investment, operational excellence

Management Commentary

“We enter fiscal 2025 with strong momentum… Aerospace revenue and margin expansion driven by commercial markets and increased defense activity; Industrial strength in power generation and marine transportation offset by a significant decline in China On-Highway” – Chip Blankenship .
“At the midpoint of our guide… Aerospace +$196M (+9.7%), core Industrial +$54M (+5%) add ~$1.14 EPS, offset by ~$175M decline in China On-Highway reducing EPS by ~$1.15” – CFO Bill Lacey .
“We paused direct-to-Boeing airframe content; restart not urgent given inventory… Mid-2025 rates approaching prior targets embedded at midpoint of guidance” – Chip Blankenship .
“We expect ~5% price realization in FY25, after 6% in FY23 and 7% in FY24; Aerospace slightly stronger than Industrial” – Bill Lacey .
“Smart defense demand continues into FY25 and beyond… margin compression in current lots due to supplier price increases; expect improved margins in new pricing late FY25/early FY26” – Chip Blankenship .

Q&A Highlights

Boeing production cadence and Aerospace guidance: Management assumes mid-2025 rates near pre-stoppage levels at guidance midpoint; direct Boeing content restart awaits firm signals; impact manageable with resource redeployment and Kaizen work .
Defense OEM and smart defense: Q4 growth broad-based (including JDAM contribution); continued growth expected across smart defense portfolio in FY25 .
Aero aftermarket outlook: Unit growth constrained by MRO capacity; heavier work scopes and pricing provide support; management refrained from specific low-single-digit unit/price guidance .
Industrial margins: Core industrial margin ~14% FY24; sequential dip in Q4 due to mix and OEM prioritization; China On-Highway breakeven ~$15M/qtr, accretive at ~$22M in Q4 due to rebate reversal .
Capital allocation and leverage: Balanced approach; automation capex; target leverage ~1.5x enabling M&A optionality; returned $449M to shareholders in FY24 .

Estimates Context

Wall Street consensus data from S&P Global was unavailable at time of writing due to a request limit; therefore, explicit beat/miss vs consensus cannot be shown.
Directionally, FY2025 guidance implies Aerospace-driven growth and core Industrial expansion offset by a substantial China On-Highway decline; the explicit bridges suggest consensus may need to recalibrate Industrial and EPS for the China headwind if not already reflected .
Pricing realization (~5%) and smart defense ramp are positive contributors potentially underpinning margin and EPS expectations .

Key Takeaways for Investors

Aerospace strength is durable: commercial OE and smart defense should drive FY25 growth; margin mix may vary with defense OE intensity, but pricing and volume leverage support ~20–21% Aero margin .
Boeing rates are the biggest wildcard for the year; midpoint guidance assumes mid-2025 rate normalization—monitor restart timing and supplier readiness for upside/downside .
Industrial exposure is bifurcated: core power generation and marine transportation healthy; China On-Highway sharply lower (~~$40M FY25) is the dominant EPS headwind (~~$1.15/sh) .
Pricing realization remains a tailwind (~5% FY25), with Aerospace slightly stronger—supports margin resilience amid supply chain variability .
Cash generation and balance sheet provide flexibility: FCF $350–$400M and leverage ~1.4x–1.5x enable continued buybacks, dividend support ($0.25 declared), and high-return operational investments (automation) .
Watch near-term cadence: Q1 seasonally softer (fewer workdays, OEM inventory management); sequential recovery expected as pricing escalators and volume growth kick in .
Portfolio focus continues: divestiture of combustion parts business to GE Vernova reduces dilutive exposure and tightens strategic alignment to IP-rich, higher-margin offerings .

Appendix: Non-GAAP Adjustments (Q4 2024)

Adjusted EPS adds $0.05 related to a non-recurring charge from a previous acquisition; adjusted EPS $1.41 vs GAAP $1.36 .
Adjusted EBITDA $146.8M vs EBITDA $142.4M; non-U.S. GAAP adjustments $4.378M before tax .

Additional Q4 Press Releases

Quarterly dividend declared: $0.25 per share, payable Dec 5, 2024 (record Nov 21, 2024) .
Agreement to divest heavy duty gas turbines combustion parts business to GE Vernova; non-material transaction expected to close early 2025 .

Woodward, Inc. (WWD)·Q4 2024 Earnings Summary