Woodward Soars on Strong Aerospace and Industrial Demand, Raises Full-Year Outlook

FORT COLLINS, Colo. – February 2, 2026 – Woodward, Inc. (NASDAQ: WWD), a global leader in energy control and optimization solutions for aerospace and industrial markets, delivered a powerful start to its fiscal 2026, surpassing expectations and raising its full-year forecast. The company's first-quarter performance underscores a resilient demand environment and its successful navigation of persistent supply chain challenges.

For the quarter ended December 31, 2025, Woodward reported net sales of $996 million, a significant 29% increase compared to the prior-year period. Earnings per share surged 54% to $2.17. This strong momentum was fueled by outperformance in both core segments: Aerospace and Industrial.

"2026 is off to an exceptional start," stated Chairman and CEO Charles P. "Chip" Blankenship during the earnings conference call. "Robust demand across both our aerospace and industrial segments, combined with disciplined execution by our teams worldwide, drove these results. We are seeing sustained high utilization across commercial aircraft fleets and strong growth in our key industrial end markets."

Aerospace Momentum and Strategic Shifts

The Aerospace segment was a standout, with sales climbing 29% to $635 million. Segment margin expanded by 420 basis points to 23.4%, driven by strong commercial aftermarket activity, including spare LRU (Line-Replaceable Unit) orders, and favorable pricing. Commercial services demand exceeded forecasts across narrow-body, wide-body, and regional platforms. While management noted the recent spike in spare LRU orders—attributed to customer under-provisioning rather than a long-term demand pull-forward—the underlying repair and overhaul business remains robust.

To capitalize on this demand and improve turnaround times, Woodward is expanding capacity at its Prestwick, Scotland MRO center and adding test stands in Rockford, Illinois. The company is also forging partnerships with third-party MRO providers to offer licensed support, expanding customer choice and capacity.

Industrial Growth and Portfolio Pruning

The Industrial segment sales grew 30% to $362 million, with margins improving 410 basis points to 18.5%. Growth was broad-based across power generation, marine transportation, and oil & gas. Notably, the company announced a strategic decision to wind down its China on-highway business by the end of the fiscal year. This unit, characterized by inconsistent order visibility and financial volatility, no longer aligns with Woodward's long-term focus on more predictable, strategic industrial markets.

"This decision further aligns our industrial portfolio with our long-term growth strategy in priority end markets," Blankenship explained. CFO William F. Lacey added that wind-down costs are estimated at $20-$25 million, primarily in cash, but are not expected to have a significant long-term financial impact.

Raised Guidance and Cautious Optimism

Bolstered by the Q1 strength, Woodward raised its full-year sales and EPS guidance. The company now expects consolidated sales growth of 14-18% and EPS in the range of $8.20 to $8.60. Aerospace sales are projected to grow 15-20%, with Industrial sales up 11-14%.

Management struck a balance between optimism and realism. While order books support the high end of the guidance, execution hinges on continued supply chain alignment and the company's ability to ramp internal capacity. Inventory levels are expected to remain elevated in the near term as Woodward prioritizes meeting strong customer demand over immediate efficiency gains.

Analyst and Market Reaction

The results were met with positive sentiment on the Street, though analysts probed the sustainability of certain drivers. Questions focused on the mix between high-margin spare parts and repair work, the trajectory of OEM production rates, and the timeline for operational improvements to flow through to cash flow, which the company chose to maintain its prior guidance for.

Voices from the Street:

"This was a clean, strong beat across the board," said Marcus Thorne, portfolio manager at Horizon Capital Advisors. "The margin expansion is particularly impressive. The decision to exit China on-highway is a smart, focused move that the market has been waiting for. It shows disciplined capital allocation and a clear strategy."

"Let's not get carried away," countered Dr. Lena Vance, independent aerospace analyst and frequent industry commentator. "A huge chunk of this 'beat' is from one-off, lumpy spare LRU orders they admit won't repeat. They're guiding the next nine months essentially flat to the old plan. This feels like a 'kitchen sink' quarter where they pulled forward every possible order. The cash flow guide tells the real story—working capital is a mess. Color me skeptical on the second half."

"The operational execution seems to be turning a corner," noted David Chen, senior analyst at Clearwater Research. "Steady output despite fewer working days is a good sign of internal process improvements. The partnerships with external MROs for LEAP and GTF engines are a capital-light way to capture more aftermarket share, which is a high-value segment."

"The raised price realization guidance from 5% to 7% is a subtle but very positive data point," added Rebecca Shaw, managing director at Shaw & Partners. "It speaks to pricing power and the value of their technology in an inflationary environment. Combined with volume growth, it's a powerful margin driver."