Jul 29, 2026 earnings call — Sales growth and raised earnings guidance
Raised adjusted EPS guidance to between $9.30 and $9.50 for fiscal 2026.
Revenue $1.1B (est $1.1B) · EPS $2.52 (est $2.44)
Key quotes
"We delivered significant margin expansion, primarily driven by pricing actions."
"During Airshow Week, we announced a partnership with HAECO, establishing the third elite license service facility for Woodward LRUs on the CFM LEAP engine."
"We are targeting a reduction of approximately 1,000 incremental hires by 2029, in many cases, by automating repetitive, less desirable work."
Analyst Q&A 10
Aftermarket growth and spare parts trend
Q (Gavin Parsons · UBS): Analyst asked why aftermarket growth slowed and how spare LRUs are trending versus recent elevated levels.
A: Management said monthly inputs from airlines and MROs are steady to increasing across LEAP GTF and steady on legacy, wide-body and regional. They said spare LRUs are tracking to their original model and they do not see an overdue backlog or pull-forward. Bill added LRUs were strong in Q3 and likely remain elevated but may come down slightly into Q4, more like the first half.
"The inputs that we've received from airline customers and other MRO shops have been fairly steady to increasing, I'd say, across the LEAP GTF product portfolio and very -- and quite steady on the legacy and wide-body and regional." — Charles Blankenship (CEO·CHAIR)
Legacy inventory and power-gen growth outlook
Q (Scott Mikus · Melius): First, are airlines or MROs building excess inventory on legacy platforms and is there a destocking risk? Second, should we model power generation revenues growing at a mid-teens CAGR like Rolls-Royce said?
A: Management said their monthly LRU inputs show only normal variation and no trend of excess inventory. For power generation, they see data-center demand growing at a high rate while grid-based power is somewhat less but still strong; customers are raising forecasts and Woodward is discussing capacity and prudent capital allocation with customers and will give more detail at Investor Day.
"So for the data center demand, we do see that growing at quite a high rate, whereas the demand for, I'd say, more generic grid-based power generation is a little bit less than that, but still reasonably strong." — Charles Blankenship (CEO·CHAIR)
Aero incrementals and free cash flow guide
Q (David Strauss · Wells Fargo): What were the clean incremental Aero margins after backing out pricing, and why hasn't free cash flow guidance increased despite higher EPS?
A: They said the clean incremental margin is about 31% on Aero. On free cash flow, they expected to get efficiency improvements in turns but chose not to pursue supply chain and commercial changes that would add risk given rising demand, so they invested more in inventory beyond the original guidance and that used up the EPS improvement in the guide.
"So that added the investment in inventory beyond what we had in our original investment -- in our original guidance." — William Lacey (CFO)
Industrial margin and Q4 capital spending
Q (Louis Raffetto · Wolfe): Is the 21% Industrial margin this quarter one-time or operational, and will Q4 CapEx really more than double to hit the guide?
A: They said the margin beat was operational and driven by favorable product-line mix this quarter, but the lower-mix product should return next quarter and core Industrial earnings should revert to first-half levels. On CapEx, they said there are some large, visible Q4 items (Spartanburg finish, A350 spoiler machinery), with "5 to 10" in the mix and they expect to consume most of it to reach the $290 million guide.
"5 to 10 is in the mix there, but I think we will consume most of that and get to the $290 million that we guided towards on capital expenditures." — William Lacey (CFO)
Industrial long-term margin potential
Q (Gautam Khanna · TD Cowen): With SKU rationalization, pricing, and efficiency programs, what level could Industrial margins settle at long term?
A: They deferred detailed numbers to Investor Day but said in the current demand environment, with price and accelerated lean transformation, they can improve from here. They reiterated they had said mid-teens at the last Investor Day and have been demonstrating better than that, and they view themselves on a continuous improvement journey with more productivity to capture.
"We said mid-teens at the last Investor Day, and we've been demonstrating better than that fairly consistently." — Charles Blankenship (CEO·CHAIR)
Aerospace pricing and flow-through
Q (Kyle Wenclawiak · Jefferies): How did price and other items affect Aero flow-through, was price assumed in the full-year guide, and can you name the customer or end market for the price?
A: They said they will not name the customer. Price for the full year is being guided to be close to 8% for the company; Q3 price was 10% with Aero contributing more than 10% and Industrial less. They expect price to moderate toward a more normal 3% to 5% and that price plus productivity will drive margin expansion going forward.
"As it relates to the price overall, we're guiding for the full year for that to be close to 8% for the company." — William Lacey (CFO)
Defense OE outlook and commercial restocking
Q (Kenneth Herbert · RBC): How do you expect defense OE to trend into Q4, especially on munitions exposure, and was the commercial OE 34% growth driven by restocking or anything unusual?
A: They said defense OE shows no real change from prior quarters; price rolled through smart defense in Q3 but that should moderate in Q4 and they do not see defense OE as a large growth lever right now. For commercial OE, they said customer stocking has returned to normal or slightly below MRP, and the growth was mainly from their ability to increase production plus some price rather than unusual restocking.
"I guess the way I'd describe it is no real change from prior quarters in terms of defense OE." — Charles Blankenship (CEO·CHAIR)
Aerospace aftermarket growth and platform mix
Q (Noah Poponak · Goldman Sachs): What is realistic for Aerospace aftermarket growth over the next 4–8 quarters versus recent results, how does wide-body compare to narrow-body for growth, and can we use 30%–35% incrementals off your planned 2026 end point?
A: They said they still believe Woodward could grow roughly twice the market over the long term given product positions and installed-base trends, but short-term quarters can be noisy so they will update Investor Day. Wide-body platforms like GEnx and GE90 are important and growing businesses, and while they have long-term incrementals they said it is premature to formalize next-year guidance as they finalize planning.
"we believe that the Woodward case could likely grow at twice the rate of the overall market based on our product positions in terms of what's the installed -- where the installed base is growing." — Charles Blankenship (CEO·CHAIR)
Automation impact and supply chain weak points
Q (Alexandra Eleni Mandery · Truist): Which end markets benefit most from increased automation, and what supply-chain weak points do you see and actions taken with customers to mitigate them?
A: They said automation is a manufacturing solution that benefits all end markets equally (it is manufacturing-driven, not market-driven). They identified castings, forgings and rare earth metals as the main concerns, described moves to billet machining and design-for-manufacturability, and said they run rapid response centers (processing over 15,000 machine pieces) and are managing 5 to 10 problematic suppliers.
"So the ones that we're struggling with the most are the ones that like the entire industry has on the forefront of their work list." — Charles Blankenship (CEO·CHAIR)
Q3 aftermarket dip, 2027 margin plan, engine mix
Q (Scott Deuschle · Deutsche Bank): Why was commercial aftermarket revenue down sequentially, can Aerospace expand margins in 2027 despite headwinds, and where are LEAP/GTF revenues versus CFM56 and V2500?
A: They said the sequential dip reflected timing: Q2 had strength because some shipments that were delayed in Q1 were cleared in Q2, which reduced Q3 sequentially, though year-over-year remained strong. For 2027 they plan to expand margins and are measuring product managers and business-unit leaders on margin targets, and they believe they have the investments and capability to drive expansion. On engine mix, they are moving toward crossover from a repair standpoint and have already crossed if spare LRUs are included, while legacy business has stayed stronger than modeled.
"We're measuring each of our product managers and each of our business unit VP GMs on a margin expansion target." — Charles Blankenship (CEO·CHAIR)