Woodward (WWD) 1 May 232023 Q2 Earnings call transcript

Thank you for standing by. Welcome to the Woodward, Inc.

Second Quarter Fiscal Year 2023 Earnings Call. At this time, I would like to inform you that this call is being recorded for rebroadcast. [Operator Instructions] Joining us today from the company are Mr. Chief Mr. and Chairman Blankenship, Executive Officer; Chip Mark Financial Officer; and Mr. Hartman, Chief Provaznik, Relations. of Dan Investor Director

now to would Please I like go Mr. over ahead, Provaznik. to sir. turn the call

you the in XXXX earnings financial then of In We’d the welcome we like our Thank comment Chip discuss our results call. take questions. At second markets. strategies end you, year all our and today’s operator. related of earnings will fiscal release. quarter to presentation, will to outlined on call, as Woodward’s will Mark

For can those website who release, have not seen find at today’s earnings you our it on woodward.com.

again phone phone also to go accessible and through May on have will replay along are website. some our call that audio of our An call. website call We XX, as presentation on as of call included by the with repeated by available at for materials announcing this is the today’s and be audio be well release press on will the call operator XXXX. end The the this on website our replay the

would and cautionary on as shown highlight X. to like to statement Slide our I refer

net economy business, As ongoing our including our are chain frequently change. of this global based pressures. more supply the guidance, potential or elements our inflationary businesses segments, and outlook drivers Those and the our in elements updated and each for trends of our the forward-looking in current specifically, assumptions can labor and and effects always, on presentation and of do disruptions expected

in a risks we elements, number the and filings. of uncertainties forward-looking identify those Our including are subject surrounding risks to statements our

this reconciliations are non-U.S. your financial non-U.S. earnings information help today’s GAAP presentation included understanding GAAP and and We attention providing in will financial is to measures. financial Woodward believe results. which schedules. certain We related addition, release our slide additional our in measures, direct of the In

the and will Chip call to strategies results, over markets. further on I our to turn Now comment

strong Notably, and end sales a quarter quarter ongoing growth chain continued demand everyone. including had products our strong We business by sharp Dan, Industrial robust Woodward good and disruptions delivered for in to markets. driven second our challenges, supply in impact and by increase industry-wide across inflation, labor shipments. The you, Thank our afternoon, driven results. a the services and

we and we’re from by encouraged However, are seeing strategic the our resource realization progress investments, initiatives. price reallocation

streamlined our announced aerospace structures through and profitability customer organization execution. to simplify In enhance designed quarter call, operations and first industrial experience, the increase we improved

an performance. Industrial on has want to focus call. the provide the primary on three main that our change priorities I been where update Our to previous significant required segment, outlined on improve transforming is we

required First business. We align the actions the market structure Industrial was with to cost took current rightsizing our conditions.

of see impacts these some You in restructuring can charges. the

was pricing. Second

value as We better and own the are streams that we work offset reflect to prices wage capture we deliver inflation multiple as well from have suppliers our rates. had significant to executing absorb

year to We on are our fiscal track price realization for XXXX. target X% achieve

to is This this pulling and are the an excellent did and eliminated Third work some have X% so far, the there of do. portfolio to one just segment. Industrial while available job where was expand made lever to capacity, have improve but rationalization, approximately quarter To provide in progress, more we efficiency is product team SKUs continuing context, XX,XXX customers. care the we we executing of take still

across to develop addition, made retain our on talent. notable efforts progress we and In Woodward,

in become more from the as proficient our benefiting are a their of production in improvements form workforce We increased members roles. more and productivity output stable

June. to machines on output May the centers quarter contributions Our coming anticipate rapid response to machining in with online with output. We in contributions second are made our floor additional

in-sourcing We manufacturing provide support bailout permanent both for parts actions. and to machining centers supplier are capacity using also on existing

performance, we base While problem-solving in we have suppliers very sub-tiers. well are seen active their managing with as and still supply as improvement some

unrealized shortages not recognize ground to out and woods Short it, yet. still I of like recovery the are and are contributions are together taking would we Woodward subject but holding We’re summary, the of plans. to better, we suppliers our Woodward getting and but our team.

efforts members up newer temporary us remain our learning sourcing steep curves, been Thanks our have improvement Our while stabilized and have to to good paths. and team solid experienced engineering, members for get on experienced coaches. Many members and come on members quality their results. assignments

European returned markets. also continue levels. rise has travel ease. increasing our to the for increasing restrictions XXXX Aerospace, traffic. Domestic utilization driven rates to in domestic and In fleet commercial as to Moving traffic near airline passenger is passenger U.S. by global China

U.S. In addition, the near-term procurement international as approved to XXXX at budget XX% to the anticipate higher full we In increase previous than slightly improve. year almost defense, year. travel was continues

defense addition, international increased tensions In rising geopolitical lead spending. to may

remains power in marine In and global demand with centers. utilization which LNG which demand demand. at normalizing have OEM rates. remains backup freight Industrial, and ship for transportation, driven greater enhance contain power utilization continued Cruise In generation to operations and as should recovered should Woodward for strong pre-COVID to growth increased healthy Global data increased fuels ferry and by marine multi-fuel increase, parts back engines continues interest spare content. result rates, in aftermarket alternative opportunities

although natural unclear. trucks remains for quarter in second In beyond in quarter, emerged demand third addition, future limited gas China demand

For higher aftermarket gas, commodity and increased result oil equipment should demand. continue in prices utilization, elevated drive which to

developing growth and talent growth will for position believe as Woodward. long-term continued remain and execution for Woodward enhance sustainable demand In operational heightened summary, indicate markets innovation, strong our signals focused retaining which the on and of improving shareholders. value for we for We and all opportunity are across company,

quarterly want XX achievements the best for Woodward future wish and turn over over Mark review the and year outlook, results outstanding to to Mark We the call last I to our his contributions Before thank I him his many years. fiscal XXXX in to endeavors. all

by aftermarket quarter from million, million currency XXXX an for the unfavorable of fiscal second sales XX%. quarter sales fiscal Sales of Commercial and of for were approximately $XXX respectively, were down continued the were $XX domestic in increase recovery an traffic due foreign Aerospace to aircraft sales sales passenger of guided Net the by OEM in increase segment exchange XXXX $XXX XX% Chip. and you, both utilization. quarter XX% sales were were million, driven XX%, increasing weapons. Defense and Thank up rates. second international impacted XX%. primarily and OEM lower of

remained aftermarket With stable XX%. defense elevated of levels. Defense OEM guided sales the demand exception at increased weapons,

in quarter was of primarily price higher segment or compensation. The as annual million costs incentive as OEM well higher earnings second and segment a segment of of Aerospace aftermarket XXXX inflation, manufacturing compared for XX.X% Aerospace to commercial earnings $XX partially result offset sales by $XX segment or sales. and increase XX.X% the million realization, were volume of

The annual segment and were quarter. Turning an higher sales quarter to to or XX%. Industrial Industrial mix, of increase higher impact compared by XX.X% million of partially XXXX to exchange of product favorable increase million of by $XX compared manufacturing segment across $XXX partially segment to or compensation. currency was of Industrial. $XX incentive sales. sales volume for were XXXX in volume million foreign approximately rates X.X% earnings was inflation, earnings $XX the offset Industrial sales the million, The negative segment all increases the $XXX driven quarter second segment for of costs increase offset second million fiscal markets. of due and by increased the

XXXX compared cost Non-segment to primarily quarter costs for rationalization for the quarter $XX second the quarter expenses million. expenses structure. XXXX the second charges product obsolete second were excluded compared to for to were million Adjusted fiscal of excess $XX million of Adjusted to non-segment expenses million. specific restructuring non-segment for and related $XX and inventory, optimize $XX the

second $XX The of the $XX effective sales. million compared R&D quarter of second the or for level, quarter was XXXX of second was tax million. rate quarter the for Woodward XXXX to X.X% for XX.X%. adjusted X.X% of second tax XX.X%. XXXX rate compared for $XX to to compared or effective to The of the compared XX.X% XXXX XX.X% was SG&A of $XX quarter million At sales million was the

Looking decrease at expenditures the activities half for of EBITDA. Leverage at to end was fiscal EBITDA half $XX in million negative were $X Capital was compared of half The and $X negative was cash provided free first $XX $XX the compared by cash to capital of provided XXXX to cash XXXX flow X.Xx the fiscal compared XXXX million. the free increased was X.Xx second for net flows. quarter flow first million $XX operating to to related the for Adjusted Net expenditures. primarily of by $XX million. million flow million. XXXX $XX Free compared million. the of cash of to operating fiscal for cash was million first first half activities compared cash

million and $XX form of in a was dividends $XX to returned million repurchased shares program. of half first under share the repurchase of During fiscal stockholders of $XX Board-authorized XXXX, million the

XX%. turning Total year-over-year $X.XX is fiscal guidance. XXXX at full raising now well to lower XX% Due we expect as year, sales our between better-than-expected the aspects be to $X.XX the XX%. Aerospace growth continue our and to the between second of experienced half as XX% certain fiscal sales results expected is Lastly, second improvement expected Industrial income quarter full XXXX segment to unchanged are our in XXXX. net of and outlook, sales we fiscal for be between for to year anticipated and tax in are billion. growth now billion rate

net per to as rate free sales XXXX. XX%. now approximately compared capital approximately be $X.XX outstanding. a now earnings XX XXX expected diluted on million million fully percent to to as $XXX flat fiscal $XXX between be earnings and segment be still approximately and of to Aerospace expenditures expect to $X.XX of $XX still to to million. adjusted is We Adjusted percent expected of flow approximately share, tax expected XXX still increase average effective The Industrial shares between million earnings are be segment by basis net based adjusted and expected weighted segment is points. are a to be sales segment cash

business comments our for quarter and the the second results concludes on of XXXX. the This

Mark. Thanks

Before see now Operator, share more and X, we call call on information our Investor to be to ready that XXXX. open come, will are to New be the open I York we the There to December questions. hope want questions, will there. you to we for held in Day

comes first [Operator Melius our Spingarn, Rob Instructions] Research. And from question

afternoon. Good

Good afternoon, Rob.

to First, Mark, best wishes you.

Thank I Rob. you, appreciate that.

Industrial, am strength least on to are just focus surprised bit going sales both we at start I at the and Chip, And the margins. here because I at think to a all

on little? that a we about sales can growth, about out So sales, What parse the that volume. you price? take If talked first we

mark. X% we – break overall really it was out in price but the not segments, with are line the We don’t between largely the

what this? mean, by were margins, – in terms – in seems it again I extent you sales it’s to both just surprised of pretty just and Because it’s strong.

trying what sales on we working Well, challenges from on the the since post-COVID achieve the it’s to customer been demand. side, have

So increase come through. not to every there, really the you making point the other call, kind were of output at but making Industrial. that progress board we starting are it’s across conference The in was

Our quarter. Woodward this strong our campus L’Orange Fort shipments, Collins on facilities are as top levels of and achieving well came

We in a changes leadership. of have made number

have here are Collins new assembly at in that We lot proficient a more or of getting members and either test. anyway machining Fort

these healthier output. chain ability across increase supply getting contributing all the with to the to activities so, the board our And are

story profitability product it’s as of a goes, far mix. As

us of coming quarter helped Woodward that So because some convertible the inside back, the with we’ve highest seen, were L’Orange, and China along we’ve we and but OH ever better had out had levels dropped that’s a prepared. orders healthy to in coming mix inventory not aftermarket

sales of else little growth tails addition the half is in close margins on the you Is a was the the just just year. it the seems, it to second pent-up back – loop in bit, was the down. to – here, In just come off we said? see everything then And other Industrial some Was back QX guidance adjusted that quarter way will this, the the fair? Okay. that moderation words, in shipments

say largely supply I our – we Industrial. as in be these to we in – output on second we of seeing the deliver moderate will our customer at the we able fair as as think that factories, profitability half and to rates. if demand enough it’s can far kinds have well – we As expect to continue the to are do improvement in But chain

much. so thanks Okay,

bet. You

Suisse. Credit Deuschle, Scott is Next

the is in a Hey, year would good how evening. Mark, can China quarter were you compares gas natural give us far, to for market the what and Thank you. trending very so truck ago? gas sales if say you how that China natural that helpful? in sense Also, can be a truck XQ

Yes.

out gas from China have the we We break depressed frame. don’t So year-plus that levels much last the specifically. has don’t very recover been for it did some time at It visibility. natural

most as really we much that our of don’t at this think visibility I QX have in know, market you point. beyond

at And so point. improvement continued in on pausing this we’re what We that’s really China. don’t forecast

Are in that’s what the and QX? basically to in price all? were the that underlying changed at same diesel they natural driver trying the as – market gas spreads if Basically, just now

Yes. I mean capture buyers. the out spread truck the they demand heavy-duty been some level produced on-highway, that’s has to there historically of approaching have the end that from opportunities truck

happened. that that – been potentially of be so And the ballpark spread’s been have in the some reason that’s it’s that’s to for that appropriate demand been

China, think just another initial upside reactivate excuse in driver their in Or called or on Chip, any come? Thank the you’ve provisioning of is past potential into I MAX Has a come QX as sales then, that through And as you. to that so in Great. me, Okay. fleet. – still they far the out that question QX?

We seen any on haven’t that. activity

see waiting just that like else. to develops how We’re we’re – everybody

guys. you, Thank Great.

Welcome, Scott.

to Global. We Skibitski, Pete will go Alembic

Nice good quarter. guys. Hey, afternoon,

you. Thank

chain? think terms ability you more Industrial, deliver Rob little that in touched I this surprised your a to and sales characterize in opposed the Is the by quarter it in I this but to on way of this to Chip, terms bit, as demand? right end-market was were supply of

trying been to levels get these output Well, factories been with has in because I for now our We’ve quarters were pleased high. surprise. few of a flow the to would and our demand versus say we sustained

a of performance. And stick goes, wasn’t so as hockey made we far as each It that kind progress month.

working So confidence right the as that that these I making the as our us the achieving now. keep that suppliers and And kinds sure with levels we of have we sustainable achieving parts can you there. facilities. demand is our are in long keep gives right we time, assure we a because can at can right flow

Okay.

Okay.

of got that as bit demand little to better fair? the better a supply well. maybe both. your Is So Demand ability and got

than for ability It’s members I’d number to what speed Well, improved. our now, of is we’ve had the before demand our in at largely But quarters coming to team X say half they perform I’ve the helping direct workforce of to get our that’s quarter, even has because maybe less – and but really to us really about a said what’s proficient roles, role. perform. years their every up more

Okay. call at had Did And you it COVID-disrupted just to categorized know, kind think quarter, backlog, you you in work – of curious, $XX or I don’t was about down as everyone I $XX that that want million Industrial kind million you of, it? how last revenue disruption revenue. still

We’re due making past progress to customers. on commitments

number out such We’re it not a in-period anymore discontinuity. that be got really really that calling to doesn’t represent an it because

about. due backlog we’re we excited – we’re have which have And plenty on. to get that current trying and backlog So we of past

our a output, ability So progress made on good of to we some quarter. increase function and this really all that that’s

LNG just side? on China But that Appreciate to political me, for market are in of in you’re it. point China the anymore maybe the the situation, Last be one everyone given sorry on you and all this. not risk-reward guys past that the kind reaching interested in the Chip,

time. business, at a we It’s run right to we’re And as say as that challenging just to it this all have market. that’s we now. say have and we that our And I’ll about can. best going

enough. guys. Fair Thanks,

are You welcome.

Thank you.

welcome. are You

question comes Kahyaoglu, Jefferies. Sheila from Your next

for years. help Chip over the and Thank Mark, thank you, the afternoon, Mark. all you guys. Good

Sheila. Hi,

prepared mentioned in your talk Hi, to Chip, about two things I you remarks. wanted

of First, just guess, questions line the in Industrial. the had, of the Pete X% rationalization, on SKUs I

portfolio metrics Sort of what do are use the And products? you that how the think you to rationalize like about overall?

part part? there in some it that’s that Is all with this are as we’ve So metrics an period life cycle? as well sort sunset product – part of the of key that using rationalization Is demand and the of Where alternative of cycle used type life part customer? of newer at what is opportunity that is is terms an profitability. demand. it newer we’re So consistency replace of the metrics there in a the as in to product to

And decisions. achieve can value the cost put these we’re together, stop when lower all supply biggest better them a introducing customer. our to is we to base, our opportunity really parts And us to we to so discontinuities and capacity. more ability you making that to The supply our at how a better that into factory have with if for our and that’s we us move customers to a

then in Where when Okay. in in improving And whether you whether labor When of some aero And are you’re or mentioned do XXXX levels about process. it’s maybe you improvement the expect just you for capacity switching that Great. your or you current normalized, to seeing think be Industrial. gears, have? that’s pool, outlooks in your terms you improvement?

to place terms level So by of been basis the this a a and capability go-forward of we’ve forecasting that proficiency talking about at year. that we’re sort end getting targeting fiscal in being of you’re of on

track for so And feel our like that we’re team. with I on

we’ve yet. prepared more it I to add not added. watch like as the said the list, We quarter well. graduated suppliers base – from the But remarks, seen some well. the we in this We’re woods improve we graduate out than as we’re but escalated supply some We of

forecasting good calendar year fighting least. rest at a the this through sign. of we’re that’s But So probably this

Thank Great. Okay. you.

Welcome.

Oppenheimer. will we go Christopher to Next, Glynn,

Thanks. back Industrial go to I to wanted the outlook. Good afternoon. margin

for a – you’re certainly in the year-over-year it and improvements back back evidence making the second implies some of changes in some flat the quarter. lot half, about and So half, while

masking what’s read-through? wondering just that So

get to don’t quarter, to from terms mix first what ourselves, be – – of quarter standpoint ahead want profitability. it were of want to we and we deliver. The we in our a profitability capability was on Chris, second in short was Well,

to want a view have we on second half. So balanced the

everything better. than we it forecast now, way ground we the with between is in we’re and then there because a make if that planned. lot We’re that through of a can want better But be cover to it favorable the doing levels get And to get and now we it achieve price flows sticking that could and productivity, we then. a we mix right

And or to benchmark any X% of ultimate the mind? range the ballpark what Understood. is, you way kind relative reduction SKU Okay. have of SKU reduction, to in target what might

Well, isn’t isn’t because the really there necessarily number the goal.

of we’re We’re trying those the substantial. we that the numbers to effort customers and have is up shareholders with set our at most tracker, the understand just And driving that serve just customers are can to wanted time. the forward mix what ability happy give That’s not supply our as profitable towards. is that here happy it are because so size involved to necessarily our I to a but everyone same

ways goal. wouldn’t the got go, it think a not a really we’ve because that’s I I on put to number but

internationally. And or international just switching demand then serve seeing an remind what maybe And Okay. inquiries to proportion defense. you up RFPs or for you us actual shaping foreground renaissance? Are

We’ve change those and the associated in haven’t towards a develop environment a business what Well, more but RFIs, That’s saying we that those of looking something nothing really as that or with at two far that, about. demand were we that. remarks That’s as levels seen really seen there. point much could of one lines. might new goes, sort along

demand. any seen turn really haven’t we into So specific programmatic that

our lot related international-related, do the much the a directly. go DoD And is to – through Yes. how of sales

some the with that we as just our up have – always knowing government partners. foreign relates it a sales that of military specific to U.S. our end So to on do don’t number

Got it. for the Thanks answers.

Welcome.

Barclays. Your Strauss, next question comes from David

good afternoon. all for Thanks, thanks your and help Mark, of best luck.

you. Thank

to is on side, defense so, still drawdown how OE that there if JDAM? defense we’re I JDAM? And still on Back this downside side, the mean the the much is more seeing

Yes.

DoD, on So the still some seen orders the weapon that you is will, we’ve softness the the that. is on if guided softening still on defense based There side the from programs.

upside military are seen we – put was as some haven’t just anything Chip there that the on always front. that Now there if is in. mentioning, there foreign partners orders But

some forward. So softening there will is going that we see there still

you assume Industrial Okay. you excess non-recurring quarter, The expect should of Is items we kind to non-recurring this more the to in inventory, that rationalization the the of is most see of correct? through as out go so called restructuring, related there? business. these I And on, items

Yes.

that on that there There looking give called flavor restructuring the rationalization Industrial was few mentioned, mainly and side, was different – the on items the in The The were at was from whole them out. there. consider a for of across just We we’re it on the another business. SKUs So of primarily business a that the perspective. We trying other on as piece was charge with Chip Industrial there. those some the ones of one that to number obviously, went discrete happened quarter. side what operationally

And out we so called that’s specifically. why those

would to come the up. out forward, we we again. adjustments, not of had items anything continue that But in we be that that in would of a would this lot lot occurring a quarter, may quarter anticipate obviously, Going call

guess, down? for I growth you the a we inventory us an I little was in mean again, expect Okay. balance see more didn’t one, sales of come would the When drawdown start you, is. Mark. I given last seeing And inventory quarter the surprised to

Yes.

and be year out this what the progresses, half a as So is we was second quarter to story. even improvement called last this that even going

last anticipate the I think we quarter in the about we significant that quarter. improvement didn’t capital even inventory, working second in talked

$XXX in guide inventory. million we have flow free working capital cash that $XXX will our on including decrease improvement, And part so to anticipate do as we of million a

I expected what that’s with expectations. that our always we on say we’re track the And would and year, so

much. very Thanks Alright.

Welcome.

We will now hear from Khanna, Gautam Cowen.

Hey. Good afternoon guys.

afternoon. Good

been It’s you. great of luck. working And you, we miss Mark. with will Best

Thank Appreciate that. you.

Of course.

this, but any of You have do you couple point? in wondering, that quantified the dues I past was at Do So, that? past you quarters don’t said segment. know guys have level you by if this have guys I

it’s have bit just impacting sales. and due past that a quite it’s – our quarter not going to that think we what’s helpful quantify do We isn’t don’t forward of because due, past the

So, we are burning that down.

second do forecast But we – forward improvements go on customers demand been year, will as with to half. the the we through significantly in placing we the make We continually that upon are that impressed have the us.

the as our continue we improve So, dues in past we up backlog. output, some pile to

we anticipate like have quantifying So, I said, don’t that going forward.

Okay. And this in for The going is for guidance that’s do anticipate be? one what’s for always a non-segment you to tricky Like what the us. year, the implied non-segment?

Recently, been in guidance X%, we sales. the what’s of range have X.X% kind of is implied

And Of or the it. are sales, just you in? is and is or SKU appreciate you limited rationalization, review is within SKUs, are – to it it industrial, thank it there pretty on entire much markets portfolio I participating reconsidering

peak, its we cycle. old-fashioned it marketplace, there we in get should At should on this is it phase, to in the product behind management, a this life the path, more and sell comes a in products that at time, behind is is can treat way. good at that a up, how its customer that it and product we price value how the looking Gautam, offers doing it early it’s product Is really is adoption it just sunset

having be terms come we eliminating in factory should In the running how of often in through have lot some you capacity and the and tied see got in those from terms our be strangers this assembly it you of costs of a our aliens, thinking lines. through efficient. do we about chain and and and lot of of our strangers those supply hidden like our as operations runners, of world factories, planning hidden or is differently supply more aliens in a repeaters, up chain some say, running There

about So, out markets. that more than it’s getting of really

Okay. And Chip. last just one,

what I LEAP just did about on matter? contracts CFM implications aftermarket to am is that One any have talks for in is the they was curious now these we does on past? which OEM hour, I the about rate things attach on different i.e. of about powered that the just the sales aftermarket, OEM? the customer Woodward, CFM. am XX% bigger about on a if economic it Xx by is GE should Does that than think see And curious how a service

may frankly, from we The short how but where answer the us. is some we subtleties there happen for no. units think for be the about see in there, at basis shops, of the things types it us same and in mean come about that’s transaction I overhaul

we really we So, know ourselves. it think treat I differently difference, wouldn’t don’t and wouldn’t the

in be would in other similar pricing The either words? case,

Yes.

guys. Thanks

welcome. You’re

next, Michael Securities. Up from we will hear Ciarmoli, Truist

Hey. Good evening the guys. taking Nice quarter. questions. Thanks for

Thank you.

best Mark, pleasure. been a It’s forward. going wishes

you. Thank

Did of robust. of even seeing guys though backlog mean seems sounds quarter? guess are in there be chatter just is grow I I the And aren’t industrial. it recession, like one that. the everything based question on to lots you on you industrial continue seeing, it like orders

on backlog color any there? the Just

seeing saw are of our deliveries out our We We grow some not the record backlog of plants. R in spite word. of our

the be SKU rationalization just that multi-quarter of there some it volume I there? that quarter Any aerospace, provide any or that there, on the mix mentioned think gears, kind think had going could was last in I quarter, before maybe maybe shifting aero aero. margins? color drove just the kind to of benefit or Was impressive you then you And end this margins high. benefits was there quarter Okay. pretty

the improvement some at and learning speak improvement, the aero, in target of to Aerospace this curve cost the delivered margin members, the really newer with our year. achieve back, the we on price time. getting no margin this getting productivity price improvement is going For of trying volume the improvement are rationalization segment largely at to And that

tell build What’s guidance you right on Got Last OEM us maybe GE specific narrow-bodies production terms you the color in specifically in there? Are terms can do us and now in in LEAP? or rate of any terms by Safran of underlying What aligned you give anything just assumptions? with terms in the it. can of you platform? rates, one, think of

removed Well, that to I that rates the published we somewhat announce support. like airframers think build are say the I and from

We where obviously, components the we to closer provide. are depending are are it, in – on that on we the tier, engine we

line demand power from Whitney pure in GE with on on side right are We Pratt and the & the and side. Safran the CFM

they us we best – do very just we to our supply and ship the time. demand, on So,

guys. Perfect. Got Alright. it. Thanks

You’re welcome.

will go to Suisse. Scott We Deuschle, Credit

Chip, any in which side, follow-up. on my taking long-term protection like, defense profitability in for inflationary it have many understanding Thanks is is the what’s of part them. cases sounds on agreements that Hey. constraining aerospace really my don’t the

here, is, still at So, profitability now, a are I we you stable increases, guess cost have re-priced my some point defense of are kind contracts so of those question you but is where getting near-term should be or think profitability Just to about down, inflection at trends it point, or that from aware and an defense how trying and of? the up in are you we medium-term.

to should standpoint, from defense the side. I think a I that idea with stick commercial actions referring on price that’s was you stable. the

Okay. Day? the And then at what’s Investor the focus any to going preview for be

Preview, the preview. it’s early for a little

second call to looking on are the half, that the and let’s deliver We preview.

guys. Alright. Fair enough. Thanks

Yes.

will hear Poponak, Noah Goldman from Sachs. we Next,

all? to of and How the Hey adjustments those half, the guys. Thanks. Thank earnings back again much do the cash? expect non-GAAP occur at you GAAP in earnings are for you the And if the which of time. between

Yes. cash. We so significance much the I reported flow. had there free cash was It quarter, a and was cash minor free will in between, $X in million, it, difference adjusted not call flow

charge, will sizable of it a to mainly there some some number. difference but isn’t be forward, restructuring the Going related

year, the – is Mark, to it. strong. to half Got obviously get back pretty And the the full

capital is just about historical talk much of You release? minute to seasonality into working some and visibility that have how degree. Maybe the you that that can a for

Yes.

if component for component there So, will be front back at the improvement earnings on capital was then is look working second compared half improvement, on the I And speaking and half, you to inventory the earlier call, as earnings obviously, the side. the the improvement includes, the half. a which rest

also million capital there million the side So, we $XXX opportunity part $XXX on gave. as that is to working guide that of

The have in you – think revenue supply revenue made The quarterly it what and want Chip, industrial kind running you when the a while. are literally. sequentially it million. made if implies if speaking that – of Is levels. for improvements think from sequentially at guess steps step-up said you your improvements pretty industrial down in were of that the stated XQ. the I and $XXX off to about these I have works sure Okay. just But higher could keep analysis of for what here, kind I that you operational goes a you million take up low-$XXX is performance the keep chain you where scenario significant I you It’s industrial you posted just quarter? I XQ, make second guidance to

in No. I foresee is was left demand much don’t the perhaps And There China didn’t highway we mean the off lumpy, on I in a really, other the bit half. sequentially that second variable little higher. quite XQ. and is

we L’Orange, in Colorado So, and facilities foresee taking out that line from out But a bit. down we our deliver little the to delivered like the industrial products Woodward ability of March. top would baseline in the coming bring

Great. Okay. better. understand that. me helps I That

so Okay. Thank you much.

you. Thank

You’re welcome.

Research. question Raffetto, Your is next Louis Wolfe

luck to as Mark, you Hey. of best well. Good evening.

you. Thank

gas that the it go to back guess going not necessarily that’s to it in back are bring that’s the in I what’s China the going to what of given those half, I that margin see the the some last quarter don’t natural Maybe lot attribute guide half just question, you the then back kind the margins, you and down? to drove of pop what a we if back pop? can to the – And strength in of

two as mix the from extent, Colorado, some coming our plants. but German would things. well to out L’Orange aftermarket to Yes. China Louis, Woodward product of OH as mostly attribute The I and it

that of it and aftermarket the the China than predicted. made mix So, the OH combination that was better quarter

Okay. growth Great. And and maybe do with engine? machinery then the you segment just happen to have between industrial,

am understand the I couldn’t words. last I sorry. few

the just industrial? turbomachinery so growth and of underlying industrial reciprocating the the engines quarter, Sorry, businesses in of

up was both turbomachinery in very and engines up over quarter. Recip XX% over was XX%. They grew Yes. strong the

Alright. Great.

or real of still rate maybe it more, million there. interest good guide, change And another any sort is there? just So, interest the guide plus-$XX year-over-year quarter one or

That’s accurate.

Alright. Great. much. very you Thank

welcome. You’re

Pete Skibitski, is follow-up Alembic from Next a Global.

guys. Yes. Thanks

kind of kind characterize seeing businesses. for or fairly some demand-wise a one proportion sort you? sensitive if does any of businesses you lot of economically industrial follow-up, steady weakness, you you early Was Just are could things of short-cycle, it. global wondering these or of Are in state short-cycle have economic are what seeing

state demand-wise. pretty steady It’s

coming, us We part our from are demand there. looking that hinting see but really or right That hard our at poking short know cycle are the are at customer the that should the be any base. times at canary. because industrial we kind don’t of a of we longer challenging on the letup thing should are same That let now you

Yes.

you. Okay. it. Thank Appreciate

welcome. You’re

[Operator Instructions] Tony We Funds. will Gabelli go to Bancroft,

for on fair Chip and all team, support for taking your work. my congratulations the hard Thanks Mark, winds, and quarter. thanks question gents.

farther, – merger Woodward Woodward team, look at different out I at a years but maybe ago. realize Looking a looked few

are yourself strategic have your got positions pretty you conversion and anything energy got in do in guys aftermarket markets healthy, looking you your X aerospace good to term changed overall, years? that you decarbonization. leader longer plan good defense. see everywhere Has Now condition, be next the Where the

widebodies are does maybe is that more that just give update make change? excel still kind possibility, or any me Now favorable, sense, could you looking of a

at time. Well, update announce to this no

focused. I now, on on in Investor Day the right how for say see we future. that’s You company focused we we where longer are mission But our can the fulfilling term as would are tune Woodward

Got it. so Thanks much.

further will you. this conference no to questions the Provaznik, I are at there Mr. now And hand back time.

today’s Thanks call, to joining we look and continuing conversations. operator. want to thank We for our everyone forward

today. Ladies gentlemen, that our concludes call and conference

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