Woodward (WWD) 25 Nov 242024 Q4 Earnings call transcript

Thank you for standing by. Welcome to the Woodward, Inc. Fourth Quarter and Fiscal Year 2024 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 Chip Blankenship, Chairman and Chief Executive Officer; Bill Lacey, Chief Financial Officer; and Dan Provaznik, Director of Investor Relations. to call like Provaznik. to now would turn over the Dan I

Call. Chip our you, welcome and financial and as the Fourth Earnings to We'd related at Fiscal release and outlined we today's of XXXX Thank will then like take results Woodward's markets. all Bill operator. discuss our comment questions. will on you presentation, will to Year in of In strategies earnings call, our end Quarter our

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

years with some call our to references We materials this on All have included fiscal in presentation company's webcast the to for A are to call unless on this go accessible call website otherwise along be stated. available year. our today's are also will year of that X website. references

cautionary highlight shown like our Slide would materials. statement I presentation of X as the to on

of based do our our specifically. are elements economy and elements forward businesses always, current presentation for global change. including assumptions and can our and on Those looking, this the As are frequently more and guidance outlook

identify made statements our SEC. we a are subject we risks with law. to as of uncertainties filings do those as update are of forward-looking intend elements, today, the These by not risks number statements surrounding the including except required Our and to in and them,

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

turn the I'll call Now to Chip. over

us for thank Woodward. remarkable was and a XXXX you today. Thanks, all for joining Dan, year

that our values guided future. partners to make clean our energy purpose systems count continues control motivated by team progress by to on a design and deliver power to Our our significant and

exceeded $X our both and was XX% of a to time, first of billion dedication sales revenue which serving customers performance and Aerospace performance increased in for to points. a levels meeting of XXX expanded basis number in drove areas. segments. stakeholders, commitments margins approximately record the approximately Annual members' record our result Our all to strong

also Industrial, the boosted China by business. of line our and our performance product On-Highway sales record strong elevated in we continued In rest sales achieved from industrial

result, a share than earnings As more flow free $XXX by the delivered an million prior to compared we all-time per high increased year. and cash

Now of excellence base our and installed In strong on content remained to I'd demand some significant our Starting growth, supply delivered business combination each challenges, and Aerospace, extensive markets. driver agile of on highlight programs, We that The coupled us an has operational our growth. fact like forces pillars end growth members. across achievements and mitigate navigate continued to to adapted with and from demand with allowed our chain the noteworthy of in external an XXXX innovation. value with we uncertainty commercial changing conditions. team localized defense and and have to impacts unusual

GTF engines. into for move growth ready we we LEAP and As service XXXX, anticipated are from

created facility celebrated our of cutting-edge MRO September, which testing featuring we In Park the including transformation, infrastructure, completion Loves services advanced capabilities. new a

growth. with also their working are support to We customers

Technique, Alliance For with earlier year, new in technique. agreements announced the example, MRO and we Lufthansa Airlines Turkish

results. Industrial In strong our our portfolio delivered diversified segment,

to prioritize in deliver offerings. expand service capacity generation product value broke increase will growth Glatten industrial an facility, clear ground for streams lines. preparing expansion our We in streamline our flow recently to set on industrial specific marine continued transportation a power are We've to and We in growth markets. and applications also and multiple which strategy

for we overhaul to globe. installed The our it is the Woodward access control extensive, customers serve and repair, and easier to capability service better base with We Woodward. systems to around regionally are deploying upgrade customers OEM make intend

In addition, rationalization. portfolio we product to progress our on make continue

As we disposition is agreement and is all our product sell customer and good to consistent members lines Greenville for strategy a related focus line targeted return the component assets our GE fabrication combustion a best facility with for signed on definitive and to This product our to previously that our provide Vernova. announced, resources in our shareholders.

We with gas as small as we prime turbine metering dilutive earnings. mover focused greater systems that fuel and line control as turbines. our power gas the for Woodward aeroderivative and on such industrial are both heavy-duty exiting intellectual industrial offerings systems was liquid product are and turn, gas to property well and plant In profitability,

way is protection #X to excellence. supports impact HOP, our rest or XXXX, to that of our notable personnel our on by product and or anyone In see to if it an reduction their of error we sites. well-being so add The as several to feel our an contribute proactive HOP and implemented We've safety methodology in human error also does on of that not to operational quality. increase safety priority XXXX. of management focus and performance, unacceptable organizational every out human plan our well Moreover, to solution. day. across as welcome and in XXXX the my Turning a of quality and each a the engagement lead members and layers issue We to HOP raise they hand encouraging an is measures workforce team across seen roll taken. sites

year, accelerated our Over automation journey. have the past we

more transition From growth skilled results. enable quality. allows members impacts early future this a standpoint, seeing value-add work. will and approach Automation us workforce higher attrition positive the safety development to mitigate We're to improving while of and

program. make simplification provide suppliers and strategic with reduce on improve our complexity, We alignment focused our supplier to continue demand We're on better signals. to progress working

issues continuing we Response transformation addition, by internal on to provide and machining focused Rapid bottlenecks. predictable In consistent operating results. our capacity quest lean In to XXXX, and our centers flexibility alleviating are our supplier and continue achieve

innovation progress our great on made value Lastly, driver. we've

their it's related customer focused we're them to are to energy on achieve goals, for the whether stocking technology or aircraft aisle solve next We single innovation transition. helping the future challenges and for

for share next to demonstrator. aircraft. that Boeing, rotary NASA technical growth the In and X-XXA July, to Transonic Aerospace, provide selected aisle we for announced the are was Wing Truss-braced actuation we Woodward solutions prioritizing achieve single maturity In

to trim we were for control blended selected addition, provide JetZero's panel demonstrator. the In body wing

Last Airbus year, in we work Engineering component for construction and cell end our at our has part design of markets. investment to project Stuttgart potential demonstrator. Center completed for a conduct components This and both significant fuel the ZEROe deliver aerospace industrial hydrogen applications testing to as

shareholder accomplishments Woodward for these competitive of deliver decades be position to All long-term and to value.

continues. In markets. strong passenger traffic our commercial Aerospace, to Moving

demand persist, uncertainty creating build industry for challenges chain While strong, rates remains supply market and XXXX. impacting further operational

we future to Our and with Boeing and their remain responded by temporarily Boeing meet related negatively production work lines stoppage, by the impacted direct resources to sales and shutting working redeploying poised to other demand down have areas. closely been We're signals.

work for relevant delays engines at aircraft the are in and will Aerospace on near XXXX shop new deliveries, to scopes This implemented continuing to conversations high term. the rate, guidance aftermarket heavier manufacturers in Engine that a is resulting no have our Bill changes healthy rates legacy of visit to higher rates pull each and to remains steady been in for reflected longer engines. have in and due due indicated speak activity legacy aircraft later. utilization

drive are continue scaling to -- these developments to In remain and well demand operations, actively growth for capture we defense, defense opportunities. suppliers products positioned geopolitical

satisfy more expecting in order than and production strong activity, across lots. portfolio significant are will additional a growth defense in which We our open the increase including XXXX, smart defense remaining

compressed experience The continue current due price legacy supplier pricing lots levels at to increases. Woodward margins and to will

future on from pricing we delivery and rates. early our For improved in anticipate depending substantiated new XXXX increased late or XXXX lots, have costs margins

and industrial. renewable generation generation for support back for to in gas-fired enhance remains power demand both to grid primary Global power the expansion of Turning Investment up is energy. increasing and robust. power stability

for center includes and power fuel AI by this which actuation to positioned data to increasing driven sharply, and demand for capture diesel demands. backup is opportunity, is systems both control, forecast computing gas baseload metering natural Additionally, well applications. Woodward other and grow

return In utilization alternative multifuel fourth level industry trucks heavy-duty engines current enjoying aftermarket these across to investments global fuels are validates for feature Elevated kits local a continues R&D OEM new rates higher market to production and due opportunities. on at which with future strong for the shipbuild currently low aftermarket currently engine remains transportation, rates remains and service Woodward marine marine demand declined grow, In Demand economic as investments activity. driving content, we and our in quarter high engine as Demand meantime, the are the healthy. production. in support challenges. in the China

believe elevated to first the second we and material customers. we year last impact will in the local XXXX, spread In inventory sales health previously negatively our due the from saw a half On-Highway economic deteriorating decline than levels communicated Woodward price now China more half Since thought. our of to at narrowing fuel sales

outlook have section. orders. we discuss future particularly Bill visibility about past, will have line, is communicated On-Highway the As China for this his limited into volatile Demand in for in and we more product Woodward's

Both space refining China, and the enhancing are In U.S. in East XXXX prices investment stabilizing oil operations we've and In strategy in into ourselves commodity and pleased execution sentiment expect and driving results, by services we in this Positive our the and India. sustainable made gas, summary, efficiency supply petrochemical beyond. with positioning meaningful low progress our is Middle are and impacting upstream and for improvements well XXXX and momentum and growth. solid driven the in continued performance we innovation, chain, are on activities

Woodward dedication for to delivering want customers. members I all commitment their work, value thank our to to hard and

to shareholder This on XXXX, is innovation. focused we growth, profitable how and will operational look we maximize As remain excellence value. we

And share and around turn Bill? more I financial detail who Bill, XXXX will now over will our XXXX performance to guidance. it

Chip. everyone. you, afternoon, Thank Good

references references company's are otherwise all As reminder, comparisons year-over-year to years all are fiscal otherwise unless stated, unless a year and the stated. to

$X.XX. record. the prior to fourth Adjusted per Earnings earnings to XXXX XXXX in quarter and were XX%. adjustments year fourth $X.XX. compared XXXX no increase XXXX share the were Total on per Woodward fourth quarter were earnings sales XXXX Net the sales for billion were quarter both for of of an were $X.XX There quarter. XX%. $XXX increase the of the sales the share an quarter for highest year for of were for Net full of fourth million, $X.XX

For XXXX, of respectively. adjusted $X.XX, $X.XX earnings share share per respectively. per $X.XX earnings and share and and Compared adjusted to $X.XX, share earnings per per were and earnings

million Defense Aerospace were sales quarter up XX%. OEM segment the defense were $XX increase or The X%. segment earnings XX% aftermarket of were for volume, price or to million primarily were Commercial $XXX the result was segment an partially fourth offset of quarter XXXX sales of sales. and sales were XX%, up XX.X% earnings XXXX respectively. to segment for by and a $XXX compared higher million Aerospace sales of up of in inflation. fourth OEM million sales segment and and aftermarket XX.X% increase of realization XX% compared $XXX

sales XX%. for the Aerospace For prior XX% segment $X.XX sales year. prior XXXX, billion or for segment were segment million were earnings billion year, of $XXX Aerospace XX.X% of $XXX of compared or the increase million compared XXXX $X.XX sales an to to for segment

million Industrial to a sales including China up Power and primarily segment decrease an volume compared decline quarter, in sales, $XX XX%, XXXX a gas we million associated oil quarter rebate. and was sales was of had down Industrial. reversal for of generation Transportation to up were in fourth which the XX%. X%. with X% the due the million, were to of unearned revenue fourth China On-Highway Turning On-Highway was $XXX anticipated. $XXX

deteriorating expect the local China pressure the our of we efforts on diesel We mentioned, to narrowing these to economy continued spread. the customers. On-Highway have sales prolonged Chip believe natural As and conditions gas destocking due

quarter prior fourth China period While approximately the full same the higher sales On-Highway year was lower than XX% in than XXXX. were year, the

million. visibility XXXX $XX that and we both saw in first $X We approximately sales fluctuations anticipate expect in to million. approximately China business. to volatility sales These XXXX be clearly now this the demonstrate be in On-Highway limited quarter We

As million will business. negative this quarterly below approximately $XX margin for sales result a reminder, in

mix. production sales. fourth On-Highway price and approximately earnings realization. in were lower were for XXXX segment business, the other which mix. our sequential fourth business, to which XX% approximate is for than On-Highway, primarily including our industrial by The XX% customer of Industrial which decrease of the quarter, unfavorable for offset capacity earnings lower the segment China was $XX OEM decreased of Industrial shift temporary industrial recent or rate segment due quarters. to sales. requirements. due run a quarter than China compared to was we in mainly quarter Margins partially $XX unfavorable is achieved satisfy million or of core volumes the to XX.X% million XX.X%

Due quarter. On-Highway the China the rebate mentioned, in previously to were reversal margins I accretive

a million the or points sales compared approximately an compared segment increase prior were prior billion the For of showing year, million for earnings to XXXX, segment Industrial were segment sales $XXX year, Industrial record XX.X% industrial XX%. billion margins XX.X% for $X.XX $XXX year-over-year. or $X.X XXX core to basis sales of segment with improvement XXXX of of for

non-segment were compared $XXX $XX Non-segment $XX fourth XXXX XXXX non-segment no quarter. for $XX to expenses in were prior Adjusted million. million to the expenses million. million expenses compared million expenses year compared in for period. fourth the the million $XXX Adjusted in There were of $XXX to were XXXX quarter adjustments $XX expenses were non-segment Non-segment million. to

for level, fourth to or X.X% quarter Woodward the million X.X% of $XX of XXXX compared was of sales. the R&D sales or $XX At million

or $XXX of million or compared costs sales. R&D $XXX X.X% fourth to or or of XXXX, of X.X% of In were sales XXXX, For XXXX $XX or million $XXX sales. $XX $XXX of million X.X% compared SG&A million million, X.X% of X.X% or for was SG&A quarter of compared X.X% sales sales. million to was sales to the

was The tax fourth effective compared for quarter of year XX.X%. XX.X% the prior XXXX, effective The the no fourth rate to compared full effective for rate adjustments are was in XX.X%. XX.X%. year to There for to and adjusted XX% The tax rate tax period. was XXXX effective tax quarter rate the the

was For XX% rate to XXXX, tax adjusted compared the effective XX.X%.

primarily were cash $XXX XXXX compared operating $XXX to The in and to capital, XXXX XXXX cash Free to was working by free million provided by cash cash increase for higher $XXX free expenditures partially offset XXXX compared and cash $XX was $XXX cash compared to due Adjusted million at million. million to Looking adjusted was for Net $XX flows. increased activities flow million. for free million. earnings flow for was flow $XXX million. million $XXX flow compared expenditures. Capital capital improved

XX, EBITDA. debt As was X.Xx of leverage XXXX, September

million of includes $XXX repurchases we million of stockholders quarter. This and $XX comprised share fiscal to During XXXX, $XX returned of million share in of dividends of dividends $XX million fourth million $XXX and repurchases. the

are be is billion XX% as expected XXXX billion. between XX% net sales guidance. to are Aerospace Total X% $X.X our for Turning to XXXX segment be earnings to growth to to sales. $X.X expected to expected and sales be XX% of

and sales expect earnings to X the our want at of to in to to XX% XXXX earnings Core segment and you dynamics industrial in decline XX segment are These expect XXXX, bridges sales to our segment share our of I earnings materials. Slide are through We take to Industrial you sales XXXX per Due walk bridges total at X% from results to fiscal on midpoint that to guidance. XX% With of the core grow to presentation be X%. XX% and XX% XX% expected to sales. X% we industrial sales.

guide, to expected to At sales are of Industrial our grow X%. are million the million grow or Aerospace $XXX or X.X%. midpoint $XX sales Core expected

expect sales an share. additional of earnings to growth We into this translate $X.XX per

However, sales. significant decline we by On-Highway expect a to growth in be this offset China

million and would million of a $XXX a of in share. decline earnings XXXX Our $XX reduction only China which On-Highway be includes per sales, guidance $X.XX

tax XX%. to be the level, At expected the effective Woodward rate approximately is

future decision The We million. $XXX CapEx high-return represents be $XXX cash fully on a including in expenditures between $X.XX and per expected expected weighted growth. is investment assembly Earnings capital Capital test projects, in outstanding. flow shares added benefit approximately and [indiscernible] million manufacturing, $X.XX has invest to in expect free between XX.X million the allocation of be based share approximately to and to are enabling that be automation to average million. $XXX diluted

to your additional help items Some with you modeling.

about of X.X% price We year-over-year expenses X%. Non-segment should realization be sales. expect at approximately

business and the on year XXXX. comments fourth results our the for concludes This and fiscal quarter

turn to call I'd to like closing for some back Now comments. Chip the

demand. on XXXX the to are Thanks, Bill. Overall, positioned well robust we we with capitalize entered momentum. strong

segment is We're we forecast The core half, come As at our the track is year. and margins to do only back to decline grow we mentioned, in On-Highway, and Day China the deliver same. Bill on just our is see to may shall it industrial targets forecast expand significant provided Investor our Aerospace XXXX second last we the see. that

questions. we're ready open Operator, the to call to now

Instructions]. [Operator

Research. line question with Scott Mikus Your Melius first of comes the from

NG. Chip, of content I the part have LEAP thesis on Woodward doesn't Is a that provide a couldn't PMA though CFMXX-XB even wanted the GTF and growth? relative offering XXX the your can that reason to as programs. provider the boost gains PMA way aftermarket ask powers content not for predecessor investment to you why engine, typically the any you But on there for you're that Woodward shipset

in the the content with that isn't really and PMA new in of introduction. this agree don't have a that supplier. And the the thesis pursuing we're historically VXXXX we juncture if remaining of have and be LEAP and focused you on the XXXX that GTF product AXXXneo. of want capital, amongst and CFMXX-X the we we did the getting So investment even that options on prioritize at is not We're content to the LEAP a we supplier. We wouldn't we best and we have those But the investment engines for PMA and other use and the probably life for on ready that that growth GTF. on growth that customers serving

Okay. have for I a sense. then And question That makes Bill.

the in billion because order tail quarter. that defense Boeing received JDAMs You JDAM that was driven in much for was OEM How $X.X kits by May. strong had of a really the growth

then growth that you for if expecting are the wondering And how in guided fiscal throughout quarter. I'm 'XX? the the munitions drove growth So

Sure, saw other but across They in in Scott. also we the growth for part all OEM was JDAM growth that defense QX products smart defense of saw portfolio. the we contributed. our the

We well. expect to throughout for growth as provide to those 'XX continue products

from question the Wells next Your of Fargo. with comes Akers Matt line

you you've may now? Boeing confirm missed production And range? sort have for the you puts I of the the of Aerospace kind said I takes would end rates to get of you're are it, what Could low paused in What terms little you the REITs just, kind and you quarter. related at there? bit if during of higher guess, the but that, and a what production guidance and restarted to

that separate I'd content airframe-related from to direct more Boeing. the engine So that we content have the goes

So the are waiting thing really direct targets about that what from content be. paused. to is going only to confirmation we're anticipated we Boeing hear restart from to chipset And rate the Boeing the

restarted be rate we a they rates initial system, inventory get go in so to But haven't bit matter there's We'll So ready line yet. quite and what an see break not see. Boeing us they tells and steps that of restarted. to urgent the it's what

preliminary and information. firm back course, talking but of received And We forth we're haven't have a indication. some

matter So urgent restart. again, to an not it's

goes, midpoint the Boeing stoppage. As at of calendar the guidance far were of the rates our as they before the to guidance achieving gets work assumes that for talking kind the about that middle XXXX, previously of in

achieve something ready an goes, exact that, announced able but forecast that whatever they So to Boeing to -- are pull we're as the thinking to very we rates don't much short previously of 'XX prepared that, number rate to have we're as but at. far divulge calendar aren't

more helpful. capital kind And sheet balance guess the That's on I one of and deployment. Great. then just

and you ratio there to at? there's your that Just kind are what a stay of leverage want target if priorities

Yes, Matt.

high-return and and allocation to strategy, As and support capital our we it's about disciplined projects. be our to to support strategy balanced talked

our count are our we focus in we operational We making share on that sure any offset will also projects. on great focused dilution excellence

that's had in. see great that success one and you'll We We're operations. our investing in have in us about excited automation invest area

debt active around us strategy, variative on we very We're X.X% X.X%. focused stay like the keep have we stay M&A our pipeline. That X%, we We a very flexibility our after And options then making how is around go will though gives from M&A right. leverage and on if and that open. sorry, to we activities see -- something activity, sure

stay we in last with us. on. that million and that as And $XXX out have fiscal point still of also shareholders we're open options we disciplined of to returned these program execute ready Bill an all I'd front buyback to year, said,

line next of question Parsons Your from the with Gavin comes UBS.

pretty build prudent Just on sounds wider is Boeing Matt's kind than a still like think you'd XX% X% usually guide. assumption a first there. on the but question It follow-up I rates, you of to have

you in say well? conservatism a element there's would as that range Boeing So from the of good aside rates

limited the industry, Boeing. things board. of challenges the going to across 'XX with It's about lot on as I A said, not in chain supply the just

we headwinds of So taken is biggest out, being associated but Airbus some that taken the ability that wide the upward for some biggest things the on rate And mobility, see than usually there pointed that and but card. trying pull sure supply and range it have of smart but wider account we're we some chain, But is the give, into across as we to a be possibilities. to as wild could with supply have they those board, on defense the be at. a achieve Boeing's wildcard Boeing ability make there The have range. could we also kind you side chain kind

full that step-up given 'XX? you fiscal just That's XX% where to good for implies sense. then just in year from think was much the how great. industrial fiscal And I visibility XQ? a what And into have exited do margin, going that 'XX, core makes And you XX% on the

Yes.

we 'XX, to In down. we seeing expect year 'XX, So mix that in don't repeat. caused QX, XX%. Industrial XX.X%. We to we be saw the XX% Core again, and year to the again, that for are exited at full

XX% line to XX% to delivering have we business. good So the for Core 'XX of Industrial sight in our

of with from Research. comes question Wolfe line Your the Raffetto next Louis

sure I understood. to follow up, to just, Maybe I make and want Bill,

is at you so level, that million then I accretive. think And in rebate, which accretive asset you $XX you be it China also this was margins. would I said think sales had said

negative And to that -- mix? trying still the was I'm so all reconcile with that

Yes.

So couple $XX a in million, had is business OH one neither or also August accretive first, China margins. mentioned million, breakeven -- $XX now. we web thing is call, China first dilutive At to to core when try at the we -- On-Highway Back that industrial industrial our

there At that delivered, this to that price reversal we and line. was the million $XX that rebate bottom we was straight performed full

the caused accretive. from China what dilutive then, the that's to And missed not your On-Highway go second part So or Louis, of accretive being question. to actually I think I

basically, I And means that lower about? core mix you -- just was margins was and business so the talked guess that -- had the that

points, past core what that quarters. and us we down quarter. That's correct. total around fourth That's XX%. OEM truly the basis XXX in points basis shifting related XXX the That's what in that's previous burn aftermarket ended the was caused what from dues, year the The deliver we production industrial to to And saw mix up. to issue expect to

Yes, it to to earlier wanted material led to to was and serve we that a that because to due that respond our gap serve inability them situation. a customer raw customer emergency

and pull higher-margin of to at XXXX. clear in that So do that had lever it's our same don't understanding the channels, have aftermarket we that customer. when anticipate expense serve problem to a very We we we it

same going I is to in do mean from of But the also went marine. about as sort sort quarter. look the seeing AI gen I X and guess in for a of within about think up really the plus plus we from, maybe Great. just maybe, in China It just you, fourth went at transportation. I bit talked first I went businesses, the think quarter? strength appreciate you're a we excluding those natural then fourth from reaccelerate? to to XX I the in of gen little power gas quarter that. plus sort you And that? And power Chip, it How thing think, XX for

maybe. ], 'XX [

book you power a wouldn't segment maybe XXXX, projects of get serve then quarter-to-quarter, and I And And know is about that and about you of too about order to bit measuring gas at But fourth similar mid-single if the and at quarter some time and and ebb we snapshot, in both gen in gen in with our if flattish will, be that. digits. growth you gas power So customer excited flow look customers of whole going see equipment. channels power oil you'll see and oil the think it's excitement low that in up We year a we then quarter. and level, the we that gen is then double-digit double and marine maybe and when look our up digits. XXXX and little

see we XXXX So the that's what we fairly feel on like based in some high from comps also. year before

being that one guidance is it in it? just the rid more is already? business then Or you'll and it in divested appreciate how you out there Maybe, The accounted or for Bill, get for it. until I of follow-up. taken account

that part a the of it's Yes. Louis, and small again, provided guidance we that is business, our you. factored into to industrial

of line with Strauss next David the from comes Our Barclays. question

much when you do aftermarket is contributor? expect for LEAP to to it I on that And how is how do a wanted Korn today? David. to meaningful Josh ask become This you grow? contributing And expect

Sure.

small 'XX, for the a that isn't and us. much of -- that's a have our again, we off to in moving the a So small total off 'XX. in pretty from really doubled almost aftermarket were it from from 'XX of But year, all needle year-over-year earlier and standpoint again and base starting GTF good that earlier LEAP year-over-year aerospace aftermarket, calls, I commercial base, said some one comps of

as our in we're was to wildcards And think Boeing's aftermarket. production with fact we base and that, And the accumulating latter that few in said terms engine our ground But want installed for. will that like rivaling as GTF GTF we original the are the rates, in as many there the lines like a like demand XXXX, model. legacy on the sort also we and early year cycles not Investor of be Day, there's aircraft models and XXXX, growing per to the we LEAP of know

Some happens. sticking that into But it's or of these kind by things late can impact of time we're XXXX whether when forecast XXXX for that now. line

Okay. free And of for the segment, in cash are out still all laid flow underlying then you those assumptions Or target the XXXX the that any there valid? have have changed? EPS,

so progress our like in and We and intact. those. we to ability the see Still close deliver far,

This on the One really LEAP takes we're longer foundation about that play. GTF when really and over. things strong when and abridge the said, a seeing nice is into legacy higher VXXXX you that CFMXX-X and of come shop with does rate for helping visit

that's good from standpoint. a XXXX So performance

Our of Cowen. the Gautam TD question with from comes next Khanna line

was markets in the I in lay expectations if lowest, could out our had a perhaps by defense which growth is be couple wondering report, OEM already you script, for just of your aerospace of you that but X terms questions. the which highest, will I turns maybe and [indiscernible]. commercial mentioned you

Yes.

military in on We And a working something customers capacity we're that's comp that very is operational of excellence we're could get and our to near Commercial be share, year-over-year. we working the wildcard. provide available see would the we but there. way probably that then to Boeing year-over-year. strongest growth there, We I think the think to still some and growth see to very summarize in turnaround And to are what times our OE if grow aftermarket, is more they're off a on. best strong be that is defense our that opportunity easiest standpoint. that think from XXXX in the XXXX business back that expecting up they terms commercial a going that have next growth earn to aftermarket strong do But there OE and they said comp. is

forecast laying up year, we're don't we that So to lot a that keep being next but groundwork growing the out years. in the

products Or channel That's quarter, to of if the to the related to aero, that And are now? mentioned Boeing, And that relative last on some also you was in at of engine engine context. just certain products prior side? think side? helpful of the what right inventories kind characterize build inventory you just the could consumption is you strike Woodward's underlying Boeing

and Boeing quarter And help the now, in inventory were being to to like relayed and that towards that rate us they're both on supply My all capable restart the a customers of rate to is the increase and is chain We're talking to willingness what's to the time. pushing comments invest the content. allow our engine eventually. rate content to airframe crazy XX Airbus last right get believes them

to inventory, to So them. as in keep as got capacity player satisfying keep the long willing the we've investing

for expectations segment, lastly, That's And then would you are it give pricing. great. color. us fiscal in helpful And What by to your if products 'XX. but that could pricing just be any

the you sure sorry, of that? wasn't could about some I'm words. repeat I

just Yes, perhaps pricing give expectations if can XXXX, apologize. that. in I segment by you

Yes.

price realization, in seeing 'XX and X% X% and delivering around we're that's 'XX. So after X% in and 'XX

see to terms to X%. In of approximately and segments pricing aero both industrial, in than those might slightly expect industrial. stronger we we that the contribute Aero be

the from Truist comes Securities. of line question Michael Ciarmoli Our next with

there. aero stay but potentially newer hitting some we on distinction of pricing I between to pricing think called pricing? out outside and commercial of aerospace, pricing questioning Can you out the fiscal this defense of lots maybe about just in Gautam's Maybe year? any think call kind line you If

-- about I Michael, we're again, X%. it's think

[indiscernible] We are that stronger. coming fixed be expect had Aerospace say were little we price would TSAs some just for negotiation. to that I up now a that

negotiated what's some in sort of within we to 'XX business. there So some Aerospace carryover be will realization that will will that carryover we those be in price so Aero that, driving the the also have that the of related the with deal and contracts

could assumptions the of provide some quarterly your it. it. the guidance down shut a fourth or given you've of hit we there? And Boeing strike about cadence, 'XX, production of margins weaker of maybe Aero quarter that to you the then more got still Should think on think for maybe little Got any we bit kind quarter? this impact maybe about ongoing being distinction How the and just obviously, the this disruptions. Got bulk back an strike should

fewer I at compared ours. bit a softer to OEMs aero and managing say looks industrial, inventories year of to their quarter think first it's than year-end the rest their workdays fair for and little the

in from know, softer price see year. the usually So quarter a commercial us. start on bit on don't want little to softer All for first also escalation of aero lead it. these a perspective, calendar little bit the the -- we to seasonally I experienced that things you the a contract XQ anything if Bill, put more

back then QX and the will a usually [indiscernible]. other the of volume rest that's we is typically of bit, throughout on see at think I and growth you Chip, back down the some and see we of the price it, what covered you areas of look if

with question comes the next line Sheila of Your Kahyaoglu from Jefferies.

up about 'XX 'XX? My was keeps in same XX% in How on after think on what thoughts is first volume Any outperforming? in fiscal 'XX. when do for it the versus question aftermarket incrementals And the Aerospace. guidance 'XX OE you

Sheila. first the part Taking first here,

are not little a X shops just about or that, of online narrow-body we players of it's of very more couple a a see year. in that for coming but that that double-digit strong aftermarket, I think again growth nice a most The to part, overhaul at thinking this say off engine really full, at fair years X sort we're leveling as coming after the commercial continue plateau. will bit capacity

bit of Some in opportunity for a that price little realm.

we a there. aftermarket definitely share volume bit And a as for is more aftermarket. defense We're capacity and open the more little up a little more get looking So in bit price little in after then we're at bit that. and XXXX what going commercial of can

leverage will going you're are volume. volume correct aftermarket. point is 'XX -- to Sheila, on and is a than drive hire that out lower price But mix that resourced OE we're what we get, that to for the the be in will incremental,

much so is won't arrows, cost that's and driving up add XX%. us to we need provide what that incremental above through, And leverage flowing that some will and

top then maybe question. another Aero And one more line Okay. and on

the you growth And do should uptick? what in how with XX%, drove that but quarters, of fiscal at? is driver looking it? a growth strong obviously how but 'XX, what So And then a driver be we flattish up X defense first in think about it's that

briefly quarter defense the really as there. supply business the our related some speak products in as chain overcoming defense. of those smart well That fourth challenges on across smart Yes. demand was all our I'll to in

demand defense how do to really to expect We'll So the portfolio. -- defense have our up, in that's we in what are supply growth And OE. drove and to have ramp things see behavior how chains in pulled smart our see sequential but military, expect XXXX. we across that good same the

challenge just suppliers We that see demand rest We us Bill. with and Sheila, the from are well. The what achieve chain, demand, can they supply a our customers on well based our the just that moment, build pull for sequencing XXXX to though beyond. defense as isn't always for smart see of their into on their

one variable like might and growth fourth some downs we the across sequentially is there that's So that for in create but the quarters, demand experienced ups quarter.

it. if And one you strategy. on Okay. just Got mind, last don't question,

you anything a divested gas business last IGT week, turbine to keep. thought You I would I aligned guess actually,

thought And dilutive? margin asset can be it through behind would why process us sale? that So the walk you

solves to the them And as of at and about Vernova. design, makes we which really intellectual an aftermarket. was and for. combustion just control customer to XXX% GE aftermarket, you their strong asset It's fabricating their wanted model, primarily it our build-to-print intellectual property acquisition and components a look that stream the usually And access to blame property. really That service business don't Sheila. sales what Sure, for

members enough wasn't and standpoint but a have carry good day the some really there a some to from earn to manufacturing on. really We customer return know-how, great value

a make what do, our was chain the with talked both idea it GE best part time we Vernova, as period become internal over having about supply of options so for customer parties. quite And and to of their

the Your Goldman line question from Poponak of with Noah comes Sachs. next

inflation Chip, you sounds or on mean, is saying and of mid- of side, or are better is that basically are assumption by aftermarket understand I better digits. me aerospace very assumes growth price It be probably is the it's pricing decels, historical that, X% to high year. still for like which could sounds you're X% your guess if next up guidance averages decelerating all to yes, kind units I'd those. making as of surprised I single but your the both wanted so see than the market help pricing I X%. the aerospace X% like up rate that tight is aftermarket of peers

but global wide-body the come still tough, lot understand of high And a air unit then total travel that the digits, on side, I compares the is growing yet. back single are hasn't

of getting call the stuff got flying in small, lot. GTF. it's acknowledged and You've that the a larger, the you've a it's lot growing and on it's LEAP this is longer know legacy but here I

much that price. than of I all better missing? am X% units So and like X% both sounds something to What on

legacy to a lot that is that a Fact matter But to the utilized for visits are the would those to So of there The with just GTF saying positive say bunch all that isn't shop come those could kind that about the X% We're our out of slots indicators. to there's a with year-over-year experience not a legacy. on narrow absolutely segment not that to on lot a MRO your the been you're on guidance right of segment. more ready get whole deliver taking assumptions challenge body not I just is capacity and of is X%. going lot specific such stands more up engines capacity more have fleet in.

our customers visit, some scopes, see Now going so heavier are per they're will. work of shop more you if experiencing to dollars

overhaul in not, upgrade So as fleet. customers. have suppliers an for our that some us, of LRU into there's of the whether do for not for active an much But the scope. that an selling we've variation We and is well an or some answer in VXXXX quite comes for been

intending a that longer. units fly is uptake upgrade. that of additional upside to the enjoy to airlines might if from So bit more the little We due some

just are year capacity more set there's to it I so high going year your a was last is that that next notes. there because So positive some to don't be expectations meter that. physics naturally like of will involved few just want

to mean up commentary the qualitative for you commentary were single guiding that that aerospace triangulated digits not low had all your correct? Is interpreted Okay. 'XX. I aftermarket or

not guiding basis. was trying just guiding commercial. low I do a We're at relative specifically not on We're to on single digits. aerospace

then a up of military our think that, long driven OE commercial the volume. price combination then of as get Boeing commercial most, a by can and little as I is OE bit traction. and And probably after

I off it the think, appreciate as enough. Fair you're guess, lowest in disruptive incremental And so your guess the I being was, margin, how Okay. on strong mix selling of aerospace was. the then turning a I defense to is the line as year. headwind? into quarter detail I margin? dollar extra the OE Does the that there. Is

for question, Noah, around and the To first incrementals XX% Again, quarter look we you're the right. fourth Aero exactly Yes. for was XX%. incremental

It good of lower of related is the it the sort that to fact seen than benchmark. defense So driven previous was and is the OEM. much what in we've quarters, from QX by the in growth

the able to are turnoff? Boeing that? Okay. have that Does margin? just And to you is of a overcome the I guess Or lot disruption

year We're able a to up overcome It's impact back running a that. and long get we as soon. big as not

over lines other as do we And as opportunity industrial in aerospace also a taken we forward some lines Fort Collins. the well redeployed to to then work Kaizen have here rearrangement were have those We and shutdown. pull both resources planning to that

it So things and pretty we're well. some we've resequenced kind digest able to think I of

evaluating generally Or one Great. one specific, Okay. without term. saw if had, just sales in you're to And possible even we the speaking, medium are do being from still just last the I is you portfolio? other then likely asset your all

that. done very, we already And or some product lines. things facilities sales So some we've before very small involved and dispositions like this, haven't of

to we're portfolio. an use stewards in And with So sure to and we'll continue the make investment returns. on discipline of continuously their of the trying the best that. eye just sort shareholders' evaluate we're active product we're management to No,

no you. at are conference questions there further now will Blankenship, back to this time. Mr. turn the I

All right. call. hope thank like the joining I happy have Thanksgiving. a to I'd you everyone for

your A year. participation conference at that will for on please be website, concludes rebroadcast today's X and our today. that ask company's you gentlemen, you for We your the Ladies www.woodward.com and thank disconnect available call call lines. conference