Fiscal Year 2020 Third Quarter Results

Fiscal Year 2021 Third Quarter ResultsAugust 2, 2021

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Today’s Agenda

© WOODWARD, INC.

Highlights

Market Review

Financial Results & Outlook

Q&A

Don Guzzardo

Tom Gendron

Bob Weber

PROPRIETARY

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Cautionary Statement

PROPRIETARY© WOODWARD, INC.

Information in this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statementsinclude, but are not limited to, statements about of the recovery of global economies following the COVID-19 pandemic, our continued ability to generate strong cash flow by leveraging our operational structureand optimizing working capital in the current environment; the continued and expected or potential effects of global supply chain disruptions, regional market volatility, and the COVID-19 pandemic and new COVID-19 variants on our business; trends in airline production rates and passenger traffic, the management of our business, including our operations and strategy, and our ability to increase our investments in growthopportunities and return to our pre-COVID capital allocation strategy to drive long-term shareholder value; and the markets in which we compete and the effect of COVID-19 and other factors on such markets, andour strategies and investments, including our intended strategic and operational focus. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, andassumptions that are difficult to predict. Factors that could cause actual results and the timing of certain events to differ materially from the forward-looking statements include, but are not limited to, the COVID-19pandemic, related public health measures, and the speed and effectiveness of the global rollout of COVID-19 vaccines or other therapeutics, as well as the related volatility in financial, commodities (including oil andgas) and other markets and industries (including the aviation industry), a decline in our customers’ business, or our business with, or financial distress of, Woodward’s significant customers; global economicuncertainty and instability in the financial markets; Woodward’s ability to manage product liability claims, product recalls or other liabilities associated with the products and services that Woodward provides;Woodward’s ability to obtain financing, on acceptable terms or at all, to implement its business plans, complete acquisitions, or otherwise take advantage of business opportunities or respond to business pressures;Woodward’s long sales cycle, customer evaluation process, and implementation period of some of its products and services; Woodward’s ability to implement and realize the intended effects of any restructuringand alignment efforts; Woodward’s ability to successfully manage competitive factors, including prices, promotional incentives, competitor product development, industry consolidation, and commodity and otherinput cost increases; Woodward’s ability to manage expenses and product mix while responding to sales increases or decreases; the ability of Woodward’s subcontractors to perform contractual obligations and itssuppliers to provide Woodward with materials of sufficient quality or quantity required to meet Woodward’s production needs at favorable prices or at all; Woodward’s ability to monitor its technological expertiseand the success of, and/or costs associated with, its product development activities; consolidation in the aerospace market and our participation in a strategic joint venture with General Electric Company may makeit more difficult to secure long-term sales in certain aerospace markets; Woodward’s debt obligations, debt service requirements, and ability to operate its business, pursue its business strategies and incuradditional debt in light of covenants contained in its outstanding debt agreements; Woodward’s ability to manage additional tax expense and exposures; risks related to Woodward’s U.S. Government contractingactivities, including liabilities resulting from legal and regulatory proceedings, inquiries, or investigations related to such activities; the potential of a significant reduction in defense sales due to decreases in theamount of U.S. Federal defense spending or other specific budget cuts impacting defense programs in which Woodward participates; changes in government spending patterns, priorities, subsidy programs and/orregulatory requirements; future impairment charges resulting from changes in the estimates of fair value of reporting units or of long-lived assets; future results of Woodward’s subsidiaries; environmental liabilitiesrelated to manufacturing activities and/or real estate acquisitions; Woodward’s continued access to a stable workforce and favorable labor relations with its employees; physical and other risks related toWoodward’s operations and suppliers, including natural disasters and COVID-19 related impacts, which could disrupt production; Woodward’s ability to successfully manage regulatory, tax, and legal matters;changes in accounting standards that could adversely impact our profitability or financial position; risks related to Woodward’s common stock, including changes in prices and trading volumes; impacts of tariffregulations; risks from operating internationally, including the impact on reported earnings from fluctuations in foreign currency exchange rates, and compliance with and changes in the legal and regulatoryenvironments of the United States and the countries in which Woodward operates; fair value of defined benefit plan assets and assumptions used in determining Woodward’s retirement pension and otherpostretirement benefit obligations and related expenses; industry risks, including increases in natural gas prices, unforeseen events that may reduce commercial aviation, such as diseases, epidemics, pandemics andnatural disasters, and increasing emissions standards; any adverse effects on Woodward’s operations due to information systems interruptions or intrusions; certain provisions of Woodward’s charter documentsand Delaware law that could discourage or prevent others from acquiring the company; and other risk factors described in Woodward's filings with the Securities and Exchange Commission, including its QuarterlyReport on Form 10-Q for the quarter ended June 30, 2021, which we expect to file shortly, and its Annual Report on Form 10-K for the year ended September 30, 2020 and any subsequently filed Quarterly Reporton Form 10-Q, and other risks described in Woodward’s filings with the Securities and Exchange Commission.

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Q3 Fiscal Year 2021 Consolidated Results

© WOODWARD, INC. PROPRIETARY

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1

Q3 FY21 Q3 FY20

557 524

Woodward Sales (mil $)

Q3 FY21 Q3 FY20

4938

31

Net Earnings (mil $)

Reported

Adjusted

Q3 FY21 Q3 FY20

297

173 169

Free Cash Flow1 (mil $)(Fiscal Year-to-Date)

Reported

Adjusted

Q3 FY21 Q3 FY20

$0.74

$0.61

$0.48

Earnings Per Share

Reported

Adjusted

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Aerospace

© WOODWARD, INC.

Commercial aerospace Continues to recover Parked fleets being reactivated Increasing aircraft build rates

Commercial aftermarket 11% sales increase compared to the prior year period 3% sequential sales decrease compared to strong Q2 of 2021 Improving passenger traffic Commercial fleet now being utilized has significantly higher

Woodward content leading to strong long term commercial aftermarket sales growth

Defense Defense spending overall remains favorable Aftermarket remains solid due to aircraft utilization and upgrade

programs Guided weapons demand is softening, will continue into 2022

PROPRIETARY

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Industrial


Power generation Gas turbine demand is increasing Expect further improvement in 2022 due to growth in Asia and continuing

replacement of coal powered plants Aftermarket activity starting to increase Backup power for data centers continues to be strong

Transportation China natural gas trucks demand was soft in the quarter China VI diesel emission regulation implementation drove short term

demand for China V diesel trucks Natural gas truck market remains strong Quarterly volatility expected to continue Marine market seeing improving ship utilization which will drive

increased aftermarket activity

Oil and gas Global oil demand and increasing prices beginning to drive

investment

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Aerospace Q3 Fiscal Year 2021 Results


Segment net sales Significantly higher commercial sales Partially offset by global supply chain constraints

Segment earnings Higher sales volume, predominantly commercial OEM

Q3 FY21 Q3 FY20

341

306

Aerospace Sales (mil $)

Q3 FY21 Q3 FY20

15.6

13.4

Segment Margin %

Q3 FY21 Q3 FY20

53

41

Segment Earnings (mil $)

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Q3 FY21 Q3 FY20

12.6 12.6 13.0

Segment Margin %

Reported

Excluding RPS

Q3 FY21 Q3 FY20

2727 27

Segment Earnings (mil $)

Reported

Excluding RPS

Q3 FY21 Q3 FY20

217216210

Industrial Sales (mil $)

Reported

Excluding RPS

Industrial Q3 Fiscal Year 2021 Results


Segment net sales excluding RPS1

Favorable foreign currency exchange rate impact Partially offset by softness in China natural gas truck market

and global supply chain constraints

Segment earnings Consistent with prior year quarter

1 1

1

1

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Selected Financial Items

© WOODWARD, INC. PROPRIETARY

* Gross margin defined as (Net Sales less Cost of Goods Sold) / (Net Sales)

Quarter and Year-to-Date Comparatives

Gross Margin * 24.1% 24.5% 24.9% 26.3%

SG&A Expenses - % of Sales 8.6% 11.0% 8.9% 9.0%

R&D Expenses - % of Sales 5.3% 6.6% 5.3% 5.4%

Effective Tax Rate 16.8% 14.6% 14.1% 14.3%

EBITDA1 (mils) $ 99 $ 85 $ 307 $ 337

Adjusted EBITDA1 (mils) $ 99 $ 84 $ 307 $ 376

Cash from Operations (mils) $ 318 $ 212

Capital Expenditures (mils) $ 21 $ 39

Free Cash Flow1 (mils) $ 297 $ 173

Adjusted Free Cash Flow1 (mils) $ 297 $ 169

Q3 FY 21 Q3 FY 20 YTD FY 21 YTD FY 20

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Fiscal Year 2021 Outlook


While we expect sales, earnings and free cash flow results for the fourth quarter to be higher than the third quarter, considerable uncertainty remains with respect to the COVID variants, global supply chain disruptions, and regional market volatility, all of which are expected to continue. Accordingly, we are not providing more detailed guidance at this time.

Appendix

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Non-U.S. GAAP Measures


Earnings Before Income Tax Net Earnings

Earnings Per Share


Earnings Per Share

Earnings (U.S. GAAP) 58,698$ 48,861$ 0.74$ 45,016$ 38,465$ 0.61$ Non-U.S. GAAP adjustments:

Merger and divestiture transaction costs3 - - - 1,732 1,304 0.02 Restructuring charges related to COVID-19 - - - 19,040 14,200 0.22 Loss on sale of disposal group - - - 2,540 1,801 0.02 Acceleration of stock compensation - - - 2,376 1,788 0.03 Net gain on cross-currency interest rate swaps4 - - - (27,481) (26,904) (0.42)

Total non-U.S. GAAP adjustments - - - (1,793) (7,811) (0.13) Adjusted earnings (Non-U.S. GAAP) 58,698$ 48,861$ 0.74$ 43,223$ 30,654$ 0.48$

Three-Months Ended June 30, 2021 Three-Months Ended June 30, 2020

Woodward, Inc. and Subsidiaries

RECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS1

(Unaudited - in thousands, except per share amounts)

(3) Merger and divestiture transaction costs include, as applicable, (i) merger-related transactions costs associated with the now-terminated merger with Hexcel, (ii) divestiture-related transaction costs associated with the divestiture of the disposal groups(4) The net gain on cross-currency interest rate swaps includes (i) the net realized gains on termination of the instruments and (ii) the swap breakage fees associated with termination of the instruments

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Non-U.S. GAAP Measures (cont.)



Earnings Per Share


Earnings Per Share

Earnings (U.S. GAAP) 184,769$ 158,744$ 2.42$ 213,763$ 183,156$ 2.85$ Non-U.S. GAAP adjustments:

Gain on sale of Duarte facility - - - (13,522) (10,175) (0.16) Impairment from assets sold - - - 37,902 28,016 0.44 Merger and divestiture transaction costs3 - - - 18,654 14,038 0.22 Restructuring charges related to COVID-19 - - - 19,040 14,200 0.22 Loss on sale of disposal group - - - 2,540 1,801 0.02 Acceleration of stock compensation - - - 2,376 1,788 0.03 Net gain on cross-currency interest rate swaps4 - - - (27,481) (26,904) (0.42)

Total non-U.S. GAAP adjustments - - - 39,509 22,764 0.35 Adjusted earnings (Non-U.S. GAAP) 184,769$ 158,744$ 2.42$ 253,272$ 205,920$ 3.20$


RECONCILIATION OF EARNINGS TO ADJUSTED EARNINGS1

(Unaudited - in thousands, except per share amounts)

Nine-Months Ended June 30, 2021 Nine-Months Ended June 30, 2020

(3) Merger and divestiture transaction costs include, as applicable, (i) merger-related transactions costs associated with the now-terminated merger with Hexcel, (ii) divestiture-related transaction costs associated with the divestiture of the disposal groups(4) The net gain on cross-currency interest rate swaps includes (i) the net realized gains on termination of the instruments and (ii) the swap breakage fees associated with termination of the instruments

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Q3 FY21 Q3 FY20 YTD FY21 YTD FY20Net earnings (U.S. GAAP) 48,861$ 38,465$ 158,744$ 183,156$ Income taxes 9,837 6,551 26,025 30,607 Interest expense 8,397 8,737 25,552 26,502 Interest income (308) (377) (1,086) (1,340) EBIT (Non-U.S. GAAP) 66,787 53,376 209,235 238,925 Non-U.S. GAAP adjustments* - (1,793) - 39,509 Adjusted EBIT (Non-U.S. GAAP) $ 66,787 $ 51,583 $ 209,235 $ 278,434

*See Reconciliation of Earnings to Adjusted Earnings1 tables above for the list of Non-U.S. GAAP adjustments made in the applicable periods.


RECONCILIATION OF NET EARNINGS TO EBIT1 AND ADJUSTED EBIT1

(Unaudited - in thousands)

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Q3 FY21 Q3 FY20 YTD FY21 YTD FY20Net earnings (U.S. GAAP) 48,861$ 38,465$ 158,744$ 183,156$ Income taxes 9,837 6,551 26,025 30,607 Interest expense 8,397 8,737 25,552 26,502 Interest income (308) (377) (1,086) (1,340) Amortization of intangible assets 10,526 9,728 31,555 29,481 Depreciation expense 21,717 22,378 66,244 68,101 EBITDA (Non-U.S. GAAP) 99,030 85,482 307,034 336,507 Non-U.S. GAAP adjustments* - (1,793) - 39,509 Adjusted EBITDA (Non-U.S. GAAP) $ 99,030 $ 83,689 $ 307,034 $ 376,016

*See Reconciliation of Earnings to Adjusted Earnings1 tables above for the list of Non-U.S. GAAP adjustments made in the applicable periods.


RECONCILIATION OF NET EARNINGS TO EBITDA1 AND ADJUSTED EBITDA1


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Q3 FY21 Q3 FY20 YTD FY21 YTD FY20Industrial segment net sales $ 215,763 $ 217,332 $ 648,330 $ 709,746 Renewable power systems and related businesses sales - 7,730 - 67,663 Industrial segment net sales excluding renewable power systems and related businesses $ 215,763 $ 209,602 $ 648,330 $ 642,083


RECONCILIATION OF INDUSTRIAL SEGMENT NET SALES EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES1


Q3 FY21 Q3 FY20 YTD FY21 YTD FY20Industrial segment earnings $ 27,166 $ 27,438 $ 87,925 $ 81,640 Renewable power systems and related businesses earnings - 252 - 3,602 Industrial segment earnings excluding renewable power systems and related businesses $ 27,166 $ 27,186 $ 87,925 $ 78,038

Woodward, Inc. and SubsidiariesRECONCILIATION OF INDUSTRIAL SEGMENT EARNINGS EXCLUDING RENEWABLE POWER SYSTEMS AND RELATED BUSINESSES1


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Non-U.S. GAAP Measures – (cont.)


Q3 FY21 Q3 FY20Selling, general and administrative expenses (U.S. GAAP) $ 48,021 $ 57,361 Swap breakage fee - (3,000)Merger and divestiture transaction costs - (1,732)Acceleration of stock compensation - (2,376)Adjusted selling, general and administrative expenses $ 48,021 $ 50,253

RECONCILIATION OF SELLING, GENERAL, ADMINISTRATIVE EXPENSES TO ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES1


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YTD FY21 YTD FY20

Net cash provided by operating activities (U.S. GAAP) $ 317,915 $ 212,416 Payments for property, plant, and equipment (21,347) (39,072)Free cash flow (Non-U.S. GAAP) 296,568 173,344 Cash proceeds from the sale of the Duarte facility - 18,767 Cash paid for merger and divestiture transaction costs - 17,624 Cash paid for restructuring charges - 14,052 Net cash proceeds from cross-currency interest rate swaps - (55,191) Adjusted free cash flow (Non-U.S. GAAP) 296,568$ 168,596$

Woodward, Inc. and SubsidiariesRECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW1 AND ADJUSTED FREE CASH FLOW1


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Explanation of Non-U.S. GAAP Measures


1Adjusted and Non-U.S. GAAP Financial Measures: Adjusted net earnings, adjusted earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, Industrial segment net sales excludingRPS, Industrial segment earnings excluding RPS, and adjusted nonsegment expenses exclude, as applicable, (i) the gain on sale of assets associated with the sale of the Company’s real property, (ii) thecharge from the impairment of assets held for sale, and the losses from assets sold, associated with the Company’s divestiture of the renewable power systems and related businesses (which we refer to as“RPS” or the disposal group), (iii) restructuring charges related to the COVID-19 pandemic, (iv) RPS and related sales and earnings, (v) costs associated with the previously proposed merger with HexcelCorporation, which merger agreement was terminated on April 5, 2020, (vi) acceleration of stock compensation expense related to restructuring activities, and (vii) the net gain on settlement of cross-currency interest rate swaps. Woodward believes that these items are short-term costs/benefits or are otherwise not related to the ongoing operations of the business and therefore, uses them toillustrate more clearly how the underlying business of Woodward is performing. Adjusted free cash flow is free cash flow (defined below) plus the cash proceeds from the sale of real property at our formerDuarte operations, cash payments added back for merger and divestiture transaction costs, and cash payments made for restructuring charges, less net cash proceeds from cross-currency interest rateswaps. Management believes these adjustments to free cash flow better portrays Woodward’s operating performance.

EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and amortization), free cash flow, adjusted free cash flow, adjusted net earnings, adjusted net earnings pershare, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, Industrial segment sales excluding RPS, Industrial segment earnings excluding RPS, and adjusted nonsegment expenses are financialmeasures not prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Management uses EBIT and adjusted EBIT to evaluateWoodward’s operating performance without the impacts of financing and tax related considerations. Management uses EBITDA and adjusted EBITDA in evaluating Woodward’s operating performance,making business decisions, including developing budgets, managing expenditures, forecasting future periods, and evaluating capital structure impacts of various strategic scenarios. Management also usesfree cash flow, which is derived from net cash provided by or used in operating activities less payments for property, plant, and equipment, as well as adjusted free cash flow (as described above), inreviewing the financial performance of Woodward’s various business segments and evaluating cash generation levels. Securities analysts, investors, and others frequently use EBIT, EBITDA and free cashflow in their evaluation of companies, particularly those with significant property, plant, and equipment, and intangible assets that are subject to amortization. The use of any of these non-U.S. GAAPfinancial measures is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. Because EBIT, EBITDA, adjustedEBIT, and adjusted EBITDA exclude certain financial information compared with net earnings, the most comparable U.S. GAAP financial measure, users of this financial information should consider theinformation that is excluded. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs. Management’scalculations of EBIT, EBITDA, adjusted net earnings, adjusted earnings per share, adjusted EBIT, adjusted EBITDA, adjusted effective tax rate, adjusted nonsegment expenses, free cash flow, and adjustedfree cash flow may differ from similarly titled measures used by other companies, limiting their usefulness as comparative measures.

2Website, Facebook, Twitter: Woodward has used, and intends to continue to use, its Investor Relations website, its Facebook page and its Twitter handle as means of disclosing material non-publicinformation and for complying with its disclosure obligations under Regulation FD.

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ALWAYS INNOVATING FOR A BETTER FUTURE


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Fiscal Year 2020 Third Quarter Results

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