WWD - Earnings call transcript Q4 2017

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Operator

Thank you for standing by. Welcome to the Woodward Incorporated Fiscal Year 2017 and Fourth Quarter Earnings Call. At this time, I would like to inform you that this call is being recorded for rebroadcast and that all participants are in a listen-only mode.

Following the presentation, you will be invited to participate in a question-and-answer session.

Joining us today from the company are Mr. Chief Mr. and Chairman Gendron, Executive Officer; Tom Bob and Mr. Chairman, Chief and Treasurer; Financial Officer Weber, Vice Don of Guzzardo, Director Investor Relations Treasury. and now would to like turn the I call to Mr. over Guzzardo.

Don Guzzardo

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

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

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

I we to cautionary our highlight on to as like shown Before and statement, slide refer X. would begin,

businesses for are global always, and those in comments of risks outlook uncertainties based economy the can and assumptions do Those specifically. As surrounding on elements. Please elements and our or forward-looking consider our elements presentation this our and more change. the frequently light of

today's included Woodward GAAP segment. evaluating Management your and direct presentation schedules. each measures performance in measures also attention our We slide ongoing of monitoring GAAP earnings of to the in reconciliations non-U.S. and business non-U.S. and the these uses related and release certain

were of per were year. quarter the compared an year, increase million the to the generated fourth flow to for $XXX an million was to of prior $X.X to $XXX of in prior compared cash Free for million prior million million X%. for the And year activities compared $XXX operating $XXX for included compared share sales fourth Now year, $XXX prior of lower fourth million quarter. Net the $X.XX were quarter million cash turning $X.XX, the year. XXXX compared results the to was Net $XXX net of per The to increase last for from sales an after-tax venture. quarter of share XX% year. the $X.XX full X% Earnings Earnings were the expenditures XXXX. XXXX. the for the $XXX than for proceeds to $XX of prior joint increase compared were $XX from million; the for million our year. Capital quarter billion, for XXXX formation

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

Thomas A. Gendron

everyone. Thank our line our results you, Don, largely Overall and guidance. good year and with for in strong were afternoon the

our our three cash earnings excluding grew free we of of Importantly, XXXX. rate times in the line at flow after growth, the than top the while more venture nearly proceeds our joint impacts doubling

challenging outperformed group Industrial expectations solid market some Aerospace conditions. results in Our delivered and

changes a much Boeing, I'd announced Aerospace Airbus going specific two said Before discussing initiatives I the like about supply of new in get macro the by our to and segment, on our some spend been markets, the In segments. others. chain into minute has

new Specifically, Woodward's strengthen sourcing industry we in to OEMs their to position desire communicated explore shifts these opportunities have industry. its models. see Overall, the

we previously Actuation expansion, Thrust on will gain TRAS commonly opening emission good in award economic and continue traditional programs share. Reverser September as the A MAX fully other When and that intact, up were from gas as Airbus to development TRAS example long-term positive opportunities regional supply fossil our bid becoming the segment, seeing sources, sourced already to are of of and System of other strict, announcement all is this trends secular In suppliers. well as aircraft. are AXXXneo. known population renewables the on standards Boeing power XXX We fuel increasingly on market the Industrial outpacing growth AXXXneos Airbus growth remained all launched, are natural our is driving

challenges, turbine us and power is benefit gas investments secular term landscape the the shift. aligned while Although, generation to with confronting closely trends, our near-term strategies long position are to continues

aerospace and Production continuing MAX Focusing related and more on markets our healthy the in to the rates traffic levels and Boeing ramping growth initial provisioning continue AXXXneo track and this to in with X% we both expect very at with on along commercial up cargo XX% detail, respectively. markets passenger global record XXX Airbus are remained at XXXX.

will body are and defense, return with strength that much activity to we're we to recently the tensions result defense related as narrow efficiency, increased increase may Shifting in weapons. on as solid Global particular production and rates these in defense in volumes It this continue expected productivity and the was smart in announced aftermarket investments. JDAM continues spending. XXXX. and our OEM improvement seeing believe be increasing, As both XX%

many is Turning appears comments are industrial and recession, of improving, to that years of now recent markets by of many recovering. encouraging. after customers Industrial, Global our are it our several economic data

short which gas In However, as share, a Woodward. gaining regulations, pockets emission to engines of favorable of were is natural beginning are cycle market large generation, to markets weakness in remain. see we result in power recovery particular;

renewables hand, other long cycle volatile. the markets such as gas On remain turbines and

natural but Asia Our the due in has overall vehicles to increased In content excess and significantly, renewables. the increasing. newer has fueled weakened the on inventory demand impact market of increased is near-term efficiency channel, in turbines the gas for gas transportation,

full demand is summary, natural and and and a continue rig aftermarket gas priority up utilization government. in the supporting year. remains quarter results future, this as Activity quality foreseeable for capital investments Increased to industry oil expect favorably solid for for the the for large we stronger both key again air once and activity. the Chinese counts engines impacting picking gas. are the improving trend also diesel In is delivered We as

look strategic our expand momentum out sustained expect cash we positive technology markets that growth, We and shareholder market aerospace and to leadership our to for we industrial XXXX, short-cycle value. priorities long-term in both position believe generation, robust Woodward to continue. As increased our

me let to over discuss financials detail. Bob to more our turn in Now,

Robert F. Weber

Tom. you, Thank

up the and the prior-year sales grew aircraft earnings XXXX, year three up at prior-year on aftermarket For next contributors and joint driver and after which times sales the growth. X% programs. by almost target. year-to-date. of made increased cash growth. before quarter, we Combined our sales was the compared tax and for commercial quarter, up generation initial were full the primary to passenger for quarter, generation growth provisioning compared Aerospace XX% traffic rate sales sales Narrowbody the to this were driven through and aftermarket venture, were defense the behind as ramp cargo XX% record including weapon of to define sales the the Smart again quarter major

we our a the launches. focus platforms As same with profitability the accelerate provisioning for year's XX.X% higher maintain and Aerospace up. quarter This than will proportion believe last sales this period to OEM expands in We edge strong coupled year. period other Aerospace year. of our fourth throughout build JDAM last in on initiatives cost to segment same Tom mentioned, the of commitment expect earnings the continue initial to narrowbody control support key on contained compared productivity strength rates XXXX and as XX% program the sales were to quarter

large compared Turning were in renewables. natural in segment turbines not vehicles were to fourth fiscal X% gas-fueled sales gas XXXX. and engines Industrial Industrial, in quarter and Asia Fourth quarter down to to of weakness enough offset the Strength industrial

declined, from sales fourth Segment strategic have the earnings increased by from initiatives of offset compared XX.X% in to of benefited cost savings the sales to prior-year X.X% previously implemented, period. realized impacts lower segment Industrial Although volume. sales segment quarter we the partially earnings

cost For from X.X% million margin the fourth fourth XXXX was for of of Research the prior-year initiatives. compared gross Gross XX.X% to the realized savings to was level, compared and the of for the year, the period. were in Woodward prior-year sales prior previous XXXX in fiscal quarter margin $XX in the of for X.X% sales fiscal of development year. compared to At sales reduction period. quarter full costs XX.X% XX.X% we XX.X% our

research were fiscal expenses fourth compared of XXXX. XX.X% for to X.X% effective fourth the compared XXXX. sales was X.X% rate For for tax to fiscal the development of for The and quarter quarter XX.X% XXXX, of XXXX

year fiscal the XXXX, was for compared to XX.X% For effective XX.X% tax fiscal rate XXXX.

XXXX. in the million formation Looking $XXX cash after-tax $XXX for year million of at flow were to XXXX million XXXX. for expenditures XXXX, Capital flows, million fiscal the $XXX prior The included fiscal for joint in from cash venture. $XX from proceeds was $XXX compared down million operating

fiscal after-tax for related to We be again, year expect prior million. million the in million $XXX XXXX to $XXX Once Free proceeds the flow capital $XXX compared for the $XXX included approximately was XXXX venture. million in joint year. prior cash to expenditures

Excluding approximately proceeds, flow year. free of those the cash prior that double was

for repurchases, For to is in of that, stockholders of be stockholders to our returned is the XX%, let's to and form cash XXXX. fiscal for XXXX, earnings to items we with than net flow we our of level, fiscal we line effective turn impacting an on notably, approximately Woodward the target rate With a the tax to higher earnings. million. significantly expected million XX% $XXX approximately free At annual our XX% have in basis. $XXX Most our to couple which expect outlook. In significantly dividends XXXX return XXXX, XXXX share be approximately

program costs X% Additionally, we driven anticipate by recent award. as such research TRAS and remain approximately Airbus of the at to development sales wins

our sales. continue solid overall, Airbus Turning AXXXneo the anticipate production Boeing of in both aftermarket with increasing MAX momentum the with segments coupled XXX to Aerospace our we and segment, to

to overall accelerate smart defense also remain activity We solid. demand expect weapons and to

sales between we our result, XX% improve to expect slightly to we with Industrial and anticipate be continued to sales or oil and power gas. up up natural sales large flat in and and segment be slightly Asia will in turbines to continuing largely softness by Aerospace strength In our and in our industrial expect renewables. a gas maintain XXXX. and in in X% momentum or engine sales segment related offset segment vehicle sales ongoing of we As be This generation margins gas-fueled

$X.X sales margins to Woodward between compared $X.X billion segment At to level, flat We and slightly be up expect to billion. XXXX be XXXX. Industrial we anticipate to the

diluted shares questions. year diluted Operator, full results and business expect the quarter assumes ready open earnings takes This This which million year per XXXX. share the into be the increase in share fiscal tax our in comments We consideration of $X.XX the fourth fully to to call we outstanding. for to approximately range the on XX to $X.XX includes per rate. the and now are the

Operator

question this time. The you. Thank will and at begin session answer

Our first question Lipke from from comes Drew Stephens.

Your open. line is

Drew Lipke

guys. afternoon, good Yeah,

Thomas A. Gendron

Drew. afternoon, Good

Drew Lipke

the some about that a you've then percent XXXX the think you we as this as on on, and next the we Aerospace, several and incremental side, us ramp kind R&D entering margins the you of we're of mix update called for out at kind XXXX looking of think of can appropriate and you just Just just sales think had range OEM is over out production in benefits Aerospace, as years? an in what higher

Thomas A. Gendron

going what we on we're XX% still we're achieve see, we target and in to. what to to get margin what still and segment anticipate, and Well, that's track and for we're by XXXX, we're on that, to driving is Aerospace that

Drew Lipke

I maybe way if are And piece large incremental think we know OEM right I transport rates it now, the the the mean, it should margins and of what that Aerospace? kind low think commercial within is is just to on about that, pretty isolate one utilization your about ramp And the Okay. there? you

Robert F. Weber

quite are let as knows healthy – going are a that lower things than we me aftermarket. and the so historically mix in, jump everyone pointed can mix, obviously, which out on, I as margin OEM of there's

the the as maintaining. but total productivity has overall, And strong. our remained aftermarket the have contributed and of cost So, also OEM percentage a measures increased, to reduction has

said that, this track, believe to improve respect hit comments see as able A, we be Tom it we and and well just of and coming will wasn't we we've that with or that actions down, we margins out, taken OEM margins all XX%. do should on XXXX pointed So, we to target to overall, with long lot accordingly of a there our anticipated our still to believe and ago maintain our we're launch, was when that we've and

Drew Lipke

look frame heavy major And the are as just and of levels the in of to we the Industrial gas Okay. at basis visibility a any over quarterly that there of about that think we excess we your side, customers, piece there, you that be look are Industrial? then through of where guess the as I and on working called aftermarket, in terms kind inventory aware at turbine out at OEM you of need and on some inventory comps

Thomas A. Gendron

look you as are customers at in their been in well brought their looking come as that significant on new-build with looking and we projections we in Industrial pretty their Well, and down customers anticipating projections that respect in at forward, reduction and build with contact sales out have that. have as to their close rates, both part outlook our outlook aftermarket with We've together our aftermarket. market really large significantly, our put conservatively a we believe of

out probably think those we months softness in markets. looking XX So, you're another of

Drew Lipke

solid And on congrats back the Well, results. queue. I'll get right. in All

Thomas A. Gendron

Thank you.

Operator

Thank you.

the from Sheila comes Our from line of next or Jefferies. Kahyaoglu question comment

open. line Your is

Sheila Kahyaoglu

thanks question, my for and taking afternoon good guys. Hi,

Thomas A. Gendron

Hi, Sheila.

Sheila Kahyaoglu

Hey.

I'm So, what the to would I there? the guess, trouble I'm you end the just one factors wondering be low getting guidance. having first driving of

Robert F. Weber

rate obviously, pretty low given, can time. a that. guys and help So, it and around yeah, there's give exhaustive be of We on be lower guidance but you all take try analysis you it some higher give little to the end as try to as little we have can, of remember do you to a a tax variability a, a were the we to always to as close from to would Clearly to we've can the if time you take well, number this.

to of the that You range. bottom definitely get can

believe that most why which range. say a that's give is likely to the we that you not all that's at Now we

take growth, take you of other is the areas, respect made earnings able consistently get with sales tax the comments it's you a end well, part to the just a in low the the with up take year of the and The it's of lot – we've uncertainty – if to the reflects fairly a bit wide growth range there. math, rate prior a that be the but low working you'll and and some

Sheila Kahyaoglu

Industrial, Okay. I guess, specifically Bob. on asking I'm

Robert F. Weber

I'm sorry. Oh.

Sheila Kahyaoglu

No. And there. to I generally hard comment, just No. but an It's okay. I get find overall it was making

leaving in a wondering lack leeway there's Industrial within visibility. I some So was if the case of business you're

XX% do is In terms XX% the market you think you it significant a of said what in think business, for should about reduction just that Industrial, we XXXX? guys or IGT down about you as down

Thomas A. Gendron

side our decline be on XX% But that still customers cautious We're but the Yeah. down, working have that Sheila. in particular refining having, with certain settles the making comments in of wanted to sure trying with exact outlook. we there, aftermarket down good on customers everybody outlook, slightly amount they're as it and all are and our sure as the field make area. little we were a conservative beyond in it's We're we the our definitely a to bit conservative in gas turbine

Sheila Kahyaoglu

peak growth off levels, And it? that currently at just and in sort driving and business, reciprocating you the do of offsetting that terms is what's that, of of engine what's expect

Thomas A. Gendron

renewables see but seeing nicely up products. in and And The Bob mean we we're renewables the as gas that business. for steam are solid side. growth gas, to as of in Woodward area. turbine to the ramping offsets, in highlighted, oil to as growth some production, management and a The We're bus is were natural seeing side. in ramp so not shorter. on well construction, I turbine truck tied is power some and in continued as as power cycle really it market, in in that power, gas, faster. highlighted, We're our going well seeing and we're is We're ability fast lot lead seeing ordered recip demand Yeah. the China, only times

Sheila Kahyaoglu

got the Okay, you. back I'll Thank it. in jump queue.

Thomas A. Gendron

Okay.

Robert F. Weber

Thanks, Sheila.

Operator

Thank you.

question from next line Glynn Our the or from Christopher comment of comes Oppenheimer.

Your line is open.

Christopher Glynn

Good afternoon. Thanks.

Thomas A. Gendron

Hello.

Christopher Glynn

think turning renewables, way, directionally what's But of kind so as segment you us specifically long percent could program are the then cycle you because a and if of customer understood. to your on Industrial mix in reminder visibility of and I timing Wondering markets to your fairly trends point terms do well again IGT call renewables, speak? the what

Robert F. Weber

Sure.

On recall of the industrial higher much pockets we very and There not the of are it's within pie long of show, a longer total, XX% and recips, category, we obviously, the about that item expenditure precise type cycle. roughly measure it's if so cycle, kind the the you gas chart turbines roughly renewables total consider therefore XX% rest. of a and a capital but much overall

year so this will then some engines that are see shorter shrink very probably but derivatives are recip cycle. there also industrial the the bit, a renewables a mentioned, gas we've percentages cycle, large down As bit. come turbines those we'll longer are Aero and

see period will coming of we some although see wind, predominantly are And in on over there transitions that do year. program of to And over with some So, not also actually themselves are respect we programs see that is very on part the to believe also hesitate strong the time, some down causing wind get be overall we not going that that of precise we customer give wind believe other equation, are that long we've out Europe there some to you called world side differences your regional of as it's the on of of as not temporary back and on that cycles question kind cycle. base will newer longer and try but but of some as increases Europe, in kind and the parts changing. been are To longer the we us number, has those renewables should a haul, our is I well. second that what we a do

Christopher Glynn

are Thank rounding at if credit on giving billion, me maybe you to billion range to little the And look with $X.X $X.X That's gave you. give think the perspective billion, enough you helpful. respect the we you Can great. to the for stretches a segments just that ranges bit. $X.X closer I observations? and the just just as not Okay, but a those to

Robert F. Weber

kind look – there would the believe I I'd to think right at at of end, the Yeah. top. near is upper have but and again, that I total, my that

it's anywhere if single you're low $X.X all billion definition what and and – the slightly should be the on what but than Obviously, slightly from side kind for to of we using definitions. little depend a We've obviously you're it that, up, So, of to take depends call. precise, it on on earnings X% a probably used Aerospace bit up. a for said on using digits to, more you would the is is less little harder sometimes the Industrial some those the XX%

Christopher Glynn

Thanks. Okay, fair enough.

Operator

Thank you.

the question Our line of from comment comes Khanna Cowen. next or from Gautam

Your is open. line

Gautam Khanna

Yes, evening. thanks. Good

Thomas A. Gendron

Good evening.

Gautam Khanna

What are doing? – how commercial you

Thomas A. Gendron

good. Doing

Gautam Khanna

guidance initial engines your And you In aftermarket next growth what are on for terms for are rate? the provisioning you assuming what of Aero commercial assuming year? growth new in

Robert F. Weber

see out don't itself, Right. by towards growth and looking We break overall the in digits. provisioning we're high aftermarket, initial initial but provisioning single solid we

Gautam Khanna

aftermarket What aftermarket? was in the commercial quarter, the

Robert F. Weber

remarkably XX% were the but for the this in quarter, up the time. close – XX% year they quarter full and

Gautam Khanna

Okay.

Robert F. Weber

Yeah, we've got...

Gautam Khanna

go Have sorry. you any seen – ahead,

Robert F. Weber

initial also the a just we've fleet commented say little that called out, above to And our had as that and very somewhere overall, us the that's neighborhood of provisioning, overall was it's of traffic fairly going I volatile. in put we've strong but then that dynamics bit kind growth. we've

Gautam Khanna

what's strong you're at? pretty Okay. M&A on your pipeline, appetite and acquisitions looking there for if you you are flow, comment now opportunities cash can guys are And as your generating

Thomas A. Gendron

strengthen access. the strategies our groups, tied build pure not know, we're you you where and know, is Well, M&A. We're companies not of approach to have can to strategic we to a market M&A high rate and like technology, our the – business some growth and a that on plan always

some and filling are increase as it's now. funnel. call really number definitely, we've got So, working we well, do, definitely think generation the We – pipeline, a next pretty call to over on we're a I cash just kind solid working we of the do approach disciplined delivering going the saying on And that knows, we're we years. the of everybody it. to right what on funnel, We

base, look we of we so that So, to activity. have strengthen M&A add the try resources The be places will can the customer to core grow, and there we're are it's part try I'm lines, each product is that and is we we lot of say seeing except in And outlook. to it. working now, more And Gautam, of whole marketplace. the our sure activity definitely a not lot in

and watching then are assets the we'd that what's of that, that. we're be the there going up happening from OEMs, happening. what in interested up, maybe with that will disruptions so be on Some that be that may And frees free there's some of mergers from

So active. right of the we're and staying on be comes, it top if asset we'll

Gautam Khanna

that in is what is And if could so, current And us? there range? that any if you for guidance the – implied quantify buyback

Thomas A. Gendron

Yeah, you can almost out. work it

XX% this kind our little a to form Analyst back being of bit – in have to at so our the in that strategy XX% We look approximately dividends. earnings, We of returned clarified deployment think do I net Day. of we capital the shareholders our last

take whatever upon And cash And else would where always every can choose that kind at to total and of and do element top the in become addition does stock you share a on share positions and then we that or that. depending everything look buybacks, to anything and buyback so a is, year. dividend the price imply so, of

Gautam Khanna

Thank you, right. All guys.

Thomas A. Gendron

Yeah.

Operator

Thank you.

Drexel Hamilton. the Our of next Peter question line comment from Skibitski or from comes

open. is line Your

Peter John Skibitski

Nice quarter, guys. year. Hi, nice

Thomas A. Gendron

you. Thank

Robert F. Weber

Thank you.

Peter John Skibitski

tell Hey, on to talked in Sheila's just buckets roughly? grounded line Can terms you about fiscal with of I how get guys transportation gen. questioning in you could those three sit buckets each XXXX continue just oil, so the to Industrial, want gas, us and of three power just – of with Industrial,

Thomas A. Gendron

want models as rate certain our was gen renewable, in from customers, and we'll as a turbines, world. well in yeah, gas growth models, now then primarily shift if to due Power their negatively in Well, impacted, in of – was and directionally. give call regions to – was we there the you renewables, Bob you highlighting,

just we sold. some that not models So decline lower some on we sales, the the but did fact weren't of with that were being

down. So down, wind gas went turbines went

Now as and trucks significant then transportation, and into oil pulls gas in vehicles as off-highway there China. go in buses. we locomotive, And had primarily That the out well natural we as gas marine, increase a which lump of start recovery to started engines rigs, see coming the around activity that a active we the showed and particularly more good things gas there some we in which new diesel aftermarket were seeing builds mid-size becoming other us and up.

So, were the the picture the decline And real the in coming into oil and back look was kind power that's negative, we growth power. the others as going both continued side, nicely. gas same and XXXX, growing ongoing XXXX in of transportation into

Peter John Skibitski

Okay.

Okay. worst It's the And you. I some GE just is have some Thank of languages ask, then ever want seen. Tom, result to I obviously because the of very helpful.

seeing And bad power there really that in weakness so factoring don't to they're want kind just just it through I I the remember ask feel in going of now? as do gen, you're you extreme they're seeing right fully like

Thomas A. Gendron

Yeah.

those pointed but speak, and factored customers as that. top severe I to reduction it it's believe factor also all As other more to on in we and sell GE, in in we've outlook so we're we've well, than out, a as we of you

seen. poor So, outlooks of it the that definitely one we've probably is

Peter John Skibitski

it. Got

how could I and of there but even give sense then you And which on give know it your a great. you that just TRAS be... Airbus, remarks, Okay. on touched I many can on other TRAS us was sense TRAS in with that thought beyond or maybe of Can the opportunities out are lastly a you

Thomas A. Gendron

Yeah.

Peter John Skibitski

to upside ...an outlook? your

Thomas A. Gendron

pipeline in Yes. we It's in as as equipment current, interesting development programs. And an well are time activity the seeing on in industry. the resourcing

tied multiple that. We to are on working today bids

think, it, will we beyond is a development the long-term and see everybody, But there if I year will for Aerospace to to you successful. in our XXXX will strengthen those, pressure, be good. of using in revenue. still want time fiscal to But be strength tied marketplace business, quite this to a just any fairly caution the try it call And market to So, we're long change it share. – be our and

have through winning year. And we this and wins announce believe so far to we'll we're more new

Peter John Skibitski

That's Thanks, great. great. That's guys.

Thomas A. Gendron

Thanks.

Robert F. Weber

Thank you.

Operator

Thank you.

next the comment Our comes question SunTrust. of or line Ciarmoli from Michael from

is open. line Your

Michael Ciarmoli

quarter. Thanks Hey. questions. for taking Good evening, Nice my guys.

Thomas A. Gendron

Sure. Thank you.

Michael Ciarmoli

seems Just of think and called flat. to think on I – you about just called be or strip out effectively the that's margins any go expansion we softness, you I calibrate at of just the even another to months mean, margin bit, for as think slump a Industrial Industrial margin out for sales. we target go given plus trying IGT the in? target looking XXXX you've expectations our XX% to margins, that and moving got high to some Industrial should little sort into a just I'm maybe it XX like the going any I be of in from

Thomas A. Gendron

was around on XX gas first turbines. so months clarity, Yeah, the

Michael Ciarmoli

Yes.

Thomas A. Gendron

in and significantly. are The other some are increasing, Industrial parts increasing

But gas your us. good mixed to a for a turbines it's point, So is latter picture. market

We that. worked continuing to do we're and have have on our structure, been cost

improve to driving improve, sales margins see with and even that even expect margins flat sales We to to slightly hard flat was we're environment. the in guidance, hold up or

I still the is our times we've for but a goal, that some goal XXXX highlighted think couple the industrial of recovery Industrial we XX% markets. in needed the

As this of we seeing we're it. recovery in parts think year goes,

to back into and have those As it see rest numbers, at markets – hit we'll the how will to come level. the we what XXXX, go of

So, challenge it see the become don't we increase. sales if could a

Michael Ciarmoli

overhead are revenue of out kind or contraction general – comfortable you that the the terms are IGT, take best you the in trying anything else the guess you of where your given just with in to and cost footprint of guys doing And have right now? or sizing

Thomas A. Gendron

the looking onto benefits reduction have absorbing we always cost, as with areas. we've the people a of we're of lot our the there, had portfolio growth at is we're but Yeah, some one

like add And in so us not Aerospace. that's allowing to

So, have electronic example, and – we got of business controls use we've enormous lot people. Industrial a one talented our I'll capability in in

over people we've in a Aerospace Aerospace work the programs. on significant new those lot a have to electronics We work side transferred of on those and of amount

things our on well taken years, the look those outlook as at cost with segment. the So to those up have – based continuing the to some sales couple we the type and do to actions each market last line costs, as are we've facilities over at it looked hold appropriately manage at look of to continue of we'll

Michael Ciarmoli

specifically it. everything every that business? is real channel And market phenomenally headwinds in sort Are there the guys it. of moving business just helpful. guess, are right Aero, then mean, thinking Got that back you direction on any That's or here. I well I you Got jet, performing for guys? in about rotorcraft,

Thomas A. Gendron

interesting and actually you I'd almost really doing we're production probably as I highlighted for everything it's But the seven support seeing have smart hate doing is even to we is Helos is very still that eight softest Commercial It's say aftermarket looks area as improving. to outside have. Aerospace, well well. almost of is ever on We say cylinders. say defense but well. looking weapons, that, is like positively, of Defense firing which jets biz progressing an good. one, actually

Michael Ciarmoli

I direction up housekeeping expense? Got we of level kind XXXX expect we for that there? be Bob, give with there should it, mean, It's perfect. it's And any then of what corporate popped can to just the come in down. or XXXX, last flattish expect us should you for

Robert F. Weber

very be should be level, a down the XXXX it might hair. It Yeah. close to

discussed the that be this respect bit with a that but last with line down. of little year facilities costs on going are largely time We around, will year maybe in it have we some another to

Michael Ciarmoli

I'll guys. Got it. Thanks back lot, jump a in.

Robert F. Weber

you. Thank

Thomas A. Gendron

Yeah.

Operator

I over you. Thank will queue turn in you. the there further the Gendron to questions at this like back are no time. conference to Mr. now

Thomas A. Gendron

for your today. joining questions. Conference Investor there make you going on do X business a hope overall all as it. Woodward. we are like and can review appreciate having us strategies, our thank remind that today. on York. you see of where I to the Well, call our I we appreciate segments, everybody New We'll to One and us as hope the in – our We thing Okay. you comprehensive December joining everybody of I'd a company, we're

Operator

today's on you today. thank please ask call conference call line. our for concludes that conference and participation this you gentlemen, and disconnect We your your Ladies

Don Guzzardo	Woodward, Inc.
Thomas A. Gendron	Woodward, Inc.
Robert F. Weber	Woodward, Inc.
Drew Lipke	Stephens Inc.
Sheila Kahyaoglu	Jefferies LLC
Christopher Glynn	Oppenheimer & Co., Inc.
Gautam Khanna	Cowen and Company, LLC
Peter John Skibitski	Drexel Hamilton LLC
Michael Ciarmoli	SunTrust Robinson Humphrey, Inc.

Woodward (WWD) 8 Nov 172017 Q4 Earnings call transcript