Woodward beats earning estimates while Hexcel misses as companies continue merger

FORT COLLINS and STAMFORD, CONNECTICUT — Woodward Inc. (Nasdaq: WWD) beat Wall Street revenue estimates in the previous quarter, while Hexcel Inc. (NYSE: HXL) missed expectations as they begin a merger valued at more than $6 billion.

Fort Collins-based Woodward reported $720.46 million in revenue for the quarter between October and December, a year-over-year increase of 10.3 percent and beating Wall Street estimates by $48 million, according to Seeking Alpha consensus estimates.

Its non-Generally Accepted Accounting Principles earnings per share figure was $1.10 for the quarter, which beat estimates by 7 cents.

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Woodward CEO Tom Gendron said the quarter was stronger than expected, even though much of the aerospace industry is in a holding pattern due to The Boeing Co. (NYSE: BA) grounding of its troubled 737 MAX commercial jets.

That segment saw sales increase 20.6 percent to $474 million for the last quarter.

“Aerospace continues to perform very well despite ongoing uncertainty surrounding the 737 MAX aircraft, while Industrial performance was in line with our expectations,” Gendron said in a prepared statement.

Stamford-based Hexcel posted revenues of $564.3 million for the period, an increase of 0.6 percent year-over-year and a miss from analyst consensus estimates by $26.8 million. Its non-GAAP earnings per share was 86 cents, beating estimates by 2 cents.

In a prepared statement, Hexcel CEO Nick Stanage said the company is dealing with Boeing’s production cuts from last year, but expects the company to remain healthy in 2020.

“We are staying close to Boeing, and all our customers, as we monitor the uncertainty regarding the timing of the 737 MAX’s return to service and expected production levels,” he said.

Woodward and Hexcel announced a merger of equals in mid-January, which they expect will create a company with annual revenues of $5.3 billion and $1 billion of free cash flow for shareholders. The combined Woodward Hexcel would be based in Fort Collins, with Hexcel CEO Nick Stanage taking over as the company’s chief executive. The two expect to close the deal in Q3 2020, depending on antitrust review.

The merger is primarily focused on the two companies combining their aerospace divisions between Hexcel’s focus on lightweight industrial materials and Woodward’s power control systems. The two would also become a larger supplier for the wind turbine market.

Woodward employs 1,172 in its five sites across Northern Colorado, while Hexcel employs about 100 people at its Windsor wind turbine materials plant.

In a separate announcement earlier in the day, Woodward said it agreed to sell its renewable power systems and protective relay businesses in Europe to German asset management firm Aurelius Group (ETR: AR4) for $23.4 million in cash and debt.

That deal accounted for a $27 million revenue write-off for the quarter.

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