Woodward Inc

Strong Q3 operating/financial performance; margin expansion largely pricing-driven - Sales +$21% YoY to $1.1B; Adjusted EPS +43% YoY. - EPS $2.40 vs $1.76; Adjusted EPS $2.52 vs $1.76. - Free cash flow $87M; $196M YTD (+23%). - Margin expansion driven primarily by pricing actions (including a notable ~100 bps one-time retroactive Aerospace pricing adjustment).

Aerospace: aftermarket and services strength; growth resilient with “calm” industry backdrop - Segment sales +$19% YoY to $709M. - Commercial OEM +34% (output aligned with steadily increasing airframer build rates); Commercial services +24% (high utilization of legacy fleets, plus strong LEAP & GTF activity). - Defense OEM -6% due to a one-time revenue recognition adjustment; excluding it, growth would be mid-single digits. - Services continued strength: Defense services +20% (including a large T700 spares delivery). - Management cited Farnborough as reinforcing strong commercial outlook and potential defense acceleration; also highlighted improving supply chain visibility/predictability (though disruptions remain).

Industrial: very strong profitability jump, but some mix “noise” expected - Segment sales +$26% YoY to $401M; Core Industrial sales +$19%. - Industrial earnings $88M (22.1% margin) vs $48M (14.9% margin) prior year. - Margin drivers: volume leverage + pricing, partially offset by inflation; management says Q3 included favorable mix tailwind (one business line grew less than higher-margin lines), so core margins may normalize next quarter toward earlier-in-year levels. - China on-highway: better than expected $40M in Q3; management does not expect significant Q4 sales as wind-down completes. - Industrial opportunities: power generation and data centers remain strong; upstream capex in Middle East showing signs of recovery.