WWD - Earnings call transcript Q1 2025

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Woodward, Incorporated First Quarter Fiscal Year 2025 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. I would now like to turn the call over to Dan Provaznik.

Daniel Provaznik

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

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

that accessible on our We have to materials also presentation go along are included some with today's call website.

references the X in call this be on year, will references and for years stated. are all year call A this webcast of otherwise to this our available all company's -- call website unless in references fiscal to

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

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

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

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

Chip. Now to I'll turn call the over

Charles Blankenship

strength customers. strategy, results from for thanks year, and and commitment in strong joining our the pleased our everyone start improvement our today. that corners a demand serving highlight our and quarter most robust report Dan, was continued first to market with you, to execution XXXX Thank that us of members' to of the I'm to

we our strong business. in quarter and growth our delivered year, compared are last core results Aerospace Industrial slightly segment While both down to first reported

labor across through and we managed both in able other in the Aerospace team deliveries Boeing, product to Industrial. a were some to product Aerospace lines balance lines pause our While of

events Woodward and the to growth, demand now We of made that demand. OEMs production. the engine represent for will in and out Boeing's and meet most rearrangement prior XXX be we workstation with additional ready airframe restart MAX that of has clear improved Kaizen from signals flow the to situation facility

We direct suppliers have with to hiring ourselves, labor a of do demand we work increased signal. some the have do to support lot to and

As have and are acknowledged, other companies some output there suppliers with still struggling quality.

and strong customers. deployed, our to problem performance Industrial remain was power working quarter marine and with generation, decline our China we sustained, improvements demand on-highway robust of transportation acceleration $XX tangible overshadowed Core our with Industrial on suppliers in in solving to operational to able the ensure and Across We the Industrial lean serve forward are markets. X% and million The year-over-year transformation. core gas results oil Aerospace, across sales see I'm pleased of growth. the

demand. enabling to increased is rate to stable disciplined and keep operations progress This pace customer with achieve us planning

delivery problem-solving their members a As I such lean to as shift skills sites, mindset and safety, in as in apply visit muscle and our our see improve I cost. build quality, areas

accomplish stations of I'm end Campus cobots as earlier pleased Cut bank tools dismissed commissioned Rock tasks an likely making the team The multiple we in automated at of a myriad also our impossible. and that automation progress journey. with deburring industry-leading quarter we're effect last to with

aircraft. strengthen These a shareholder the like will and aisle our to position to our for creation, take contribute offerings production value Rockford extremely first proud moment sites. our I'd across some contributing technology next I'm automation in and of strategic to decisions our the we highlight to our Woodward that single all competitive expand made team members quarter.

Defense & In system. The This actuation importantly, and our electromechanical and HSTA Stabilizer December, we or business. on Electronics Airbus steering, and shipset long-term Actuation customer auxiliary acquisition de-icing, for electromechanical acquire content Safran's includes Horizontal for includes increases signed Trim agreements a AXXX. definitive the the operational also agreement assets power technology, components to braking,

While of this flight OEMs study. provide control organically bolsters design we're acquisition with experience development pedigree electromechanical in These both flight significantly enhance controls our ability product actuation. capabilities, trade studies hydraulic to and and participate with insight valuable the in programs existing trade and on investing also sides investments aircraft our airframe single-aisle

Greenville technology-agnostic business all shareholder can serves service GE us electromechanical, quarter, revenues. that selling concentrate which industrial for offer that aircraft. hydraulic the X remain value best approach, we were Vernova. supporting or is hybrid create in In also winning most announced build-to-print we owns regarding nozzle Greenville on as allows divestiture Woodward the we plant whichever fuel industrial architecture customer, product our the The products to customers' a to The the goals. system while our

systems This deliver additional on control focused aero-derivative power by rationalization selling in discipline highest system. product generation gas product turbine product industrial it to Woodward resources remain are offerings progress allocate diesel our by enable engine fashion. turbine applications. the our products. for also product on operating of the to manage products We've gas life to a primarily frame our ability fuel small throughout legacy directly and liquid We're timely customers' heavy growth. inserting opportunities strengthening gas will our and to our critical genset certain us We industry-leading actively cycle These directly small our management lines, return more product and lines, made into

stronger, strategy equipped and well our near the growth. term a compete well in that's future positioned support to drive Woodward building actions to These more both of focused

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

affect market While robust, demand industry challenges rates. continue to remains supply OEM build

demand accordingly. I and quarter, respond we signal As will a OEM starting our earlier, in stronger stated we see second

high utilization driven for rates of aircraft extended is be actual in This product and rates high shop and to remains legacy aftermarket visit dynamics. by designed periods. plan activity engines. Our flexible to responsive has resulted Commercial healthy,

of some aircraft have of rates increased cases, delivery durability high the been scopes. issues Low and in willing visit contributed early the extending work engine to make engine to that newer airlines investment in LRU rate and legacy level fleet, shop and

defense, geopolitical to drive for continue demand developments defense products. In

robust in will XXXX, to driven substantial activity remaining smart we defense open which continue increase the growth anticipate production, fulfill by For in lots. order and

in We expect pricing rates. improved margin expansion on from delivery early XXXX, or XXXX, depending late and

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

significantly. expected demand Additionally, power for is data increase center generation to

market ship-build support opportunity. rates engine OEM Elevated demand the global and future marine remains strong transportation, aftermarket healthy. In

to as And to across to an drive current strategy high aftermarket reduction Demand industry-wide increase utilization emissions support rates goals. revenue. fuels transportation continue continues marine alternative for

As expected, challenges. demand heavy-duty local for economic China trucks in subdued due remains to

gas, production prices. U.S., is the levels record upstream and this low while efficiency not into at to oil service in remains growth due commodity and In translating improvements

markets, we and refining being Middle and Optimism we'll end opportunities demand petrochemical continue capitalize continue is in on. our India. robust are most China, in sustained In by East activities and across effectively of significant fueled investment leveraging we that providing to to summary, see

value. our we and long-term on for growth, opportunities, We're these guidance operational diligently to shareholder deliver future innovating pursuing the XXXX to remain excellence purpose. and seize on we focused create our deliver As on profitable track

now will our results. turn over Bill, And share who to financial I'll it

William Lacey

Thank you, good afternoon, and Chip, everyone.

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

the $X.XX. Earnings of for XXXX XXXX $XXX X%. first per share earnings decrease Adjusted million, a were quarter compared share Net first to quarter $XXX of of the quarter $X.XX quarter per million, of the compared an million for the increase sales were to for X%. were sales of segment to of first were Aero XXXX first compared $XXX $X.XX XXXX $X.XX. for

higher largely with sales was defense OEM the to work were more offset Boeing OEM stoppage. impact Commercial commercial up the up down X%. up than XX% by defense XX%, impact from aftermarket and due sales aftermarket XX%, This

earnings million earnings The of mix sales million lower for segment realization, increase segment of primarily quarter or XX.X% to partially of sales. inflation, the volumes. $XX were of first was price Aerospace by result unfavorable $XX in or offset XXXX XX.X% a segment compared and segment

$XXX the $XX we had Industrial. decrease to to XX%. compared down for Transportation of of sales XX% sales quarter was XXXX the because segment to which a were of due challenges. first million, million, economic sales on-highway $XXX On-Highway were Turning anticipated Industrial China a first local quarter. million in decline China in

broad-based each up core up driven strength X%. across and oil China on-highway, Our X%, generation gas transportation, with by and the business, power marine which sales, Industrial excludes were

to due offset XX.X% Industrial exchange business or of Industrial realization $XX first XX.X% price of unfavorable segment and mix, segment quarter for earnings lower partially quarter. XX% in million for and to core of China were $XX approximately XXXX sales. segment or foreign decreased million first were our earnings on-highway favorable volume segment primarily sales compared Margins the by rates. Industrial the

We to to margins the XX% expect Industrial continue of sales XX% of core year. for

$XX Nonsegment quarter first compared to XXXX the $XX the XXXX of quarter million, million of expenses million. for nonsegment $XX expenses were million $XX for compared adjusted were first to

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

$X activities quarter fiscal to $XX the compared were is million, cash flows. million. operating provided for to $XX compared to XXXX our was line Looking cash $XX $XX for quarter Free for at was Capital compared which flow Net million. cash fiscal in first by levels. typical $X first expenditures XXXX million with million million

The flow lower by lower decrease capital earnings, due in offset free expenditures. to partially was primarily cash

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

Our strategy unchanged. capital allocation remains

We pursuing continue to investing growth, organic prioritize M&A. cash returning stockholders and to strategic in

of $XX million stockholders $XX comprised of first quarter, share the we million During to of and repurchases $XX returned million dividends.

planning are million In of including in return we million and approximately million XXXX, $XX currently repurchases in dividends. $XXX approximately $XXX share aggregate, to

Turning to our XXXX guidance.

adjusted first our tax tax XXXX earnings share. the per the Based are guidance adjusted for effective the to we rate XXXX, rate rate now in effective with adjusted exception be on and tax favorable We expect XX%. approximately of reaffirming for quarter, the

we questions. XXXX. narrowing to result, now concludes and This to results a and we share Operator, are quarter range fiscal our on of business the $X.XX comments be year to call $X.XX. our first are between per ready the adjusted open and now expected the earnings As for

Operator

from question Research. with comes [Operator line Instructions] Our the Melius Scott Mikus first of

Scott Mikus

market you order think the on sales commercial in within aerospace, question had that the defense any quick last I just and end be a I'm The guidance aftermarket in you just that start is there And followed expected aftermarket? Bill, kind the to by the given commercial Chip, OEM change wide. growth fastest and for pecking the aftermarket mentioned defense you've wondering, OEM has defense strong been Aerospace aftermarket. of quarter, segment. then

Charles Blankenship

Yes, Scott.

So narrow the upper Boeing we're from wide range supply still yet the of standpoint to some other early range still performance yet. it's keeping of chain because issues and a that sort

last a is remind XQ 'XX. easy strong good aftermarket will to in the point it XQ. year, was one that a you Your commercial relatively I on compare XQ

this on for showed we quarter think of have digits compares. 'XX, moderate forward that FY significantly. double high rest going We we as will look that, difficult we more So the

performance the similar. be Sequentially, should

think be driver We OE this and and still fiscal I second for year. expect between be neck line. what's growth to it in aftermarket largest defense OE of for commercial the commercial will neck

Scott Mikus

you've alleviate to And invested helpful. quite years, bottlenecks supply a the your That's the chain some bit then production system. in Okay. past over own of several

then you if to could pre-COVID. chain supply the versus back performance wondering difference of there Is to performance in the the your And any it of material chain chain? Aerospace is just So Industrial relative segment your almost supply characterize normal? supply

Charles Blankenship

with know don't saying plenty knew to some the less still labor before get colleagues wish the of recently that chain normal things they really there we we're are left. quality people I'd yet. back There's supply retired experienced having echo of to the challenges challenges many issues the earnings labor, that we my of haven't that calls that or on So across solved do supply chain that how out supplier issues we pre-COVID do to due a for. post-COVID and I comments the

As those people more learning and the curves, problems, up . we're involved. getting come we're solving

Those are those As challenges having a in-source we're $XX loaded, machines you have add noted, still are manufacturing continuing suppliers X soft over million temporarily a supply flexible as trouble. X we the to equipment is capacity invested pretty to in ongoing. days our That or where dictate. would to week, shifts, permanently much chain

chain. suppliers have challenges Industrial looking on challenged say escalated I'd We're overall performance, half. XX similar list we about the Aerospace it's on supply and at in to highly half to XX and

Operator

the of question line Deuschle Deutsche Scott comes from next Your Bank. with

Scott Deuschle

purchase in they're to restarting of Boeing rates terms low a they Or strong coming is orders Chip, are you very out relatively asking the ship gates the rate? to? of at

Charles Blankenship

demand The is signal Boeing strong. pretty

So it's system. pretty as out And inventory some in there of gate. know, strong you the the is

bring responding to we're meet line our So up to that a in disciplined rates way demand.

Scott Deuschle

Okay.

quarter? given quarter? tougher in we the to comp should return commercial expect that the be see second OE down could the second growth you So still revenue that to Or it in

Charles Blankenship

the do will an of quarterly While guidance, growth second confidence, in we standpoint. don't be half mode a more -- from I year have this OE give I

Scott Deuschle

the And aftermarket aftermarket fair. the few LEAP to then point over materially new bleed of have that a does retrofits That's normalize growth? been last system engines valve the for has contributed growth if at the driver the then some Okay. quarters? that very reverse company's And

Charles Blankenship

program reverse aftermarket our contributed -- to has significantly valve growth. the bleed That fleet not

Operator

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

Sheila Kahyaoglu

Maybe obviously, When question we about a just you last off about LEAP first maybe X,XXX you your -- just guys but indicated I any on Can talk off, to about great could those drove visits, we percentage of visits given you you you think the engine would aftermarket off shop XX%. do said would sort maybe how in, visits. the start, what fleet, shop level those coming quarter of think that, given last level shop guide quarter, think provide?

Charles Blankenship

standpoint. the about I commercial sent we from So think the that full aftermarket guidance we year was a that

was X, first relatively just So it easier than that X it quarter the to pointing a and in back year. compare the X is for

better that. and want sort -- And of We're aftermarket, out your draw customers show attention back to some product is the our us times to as in turn of supply just well. the to allowing I the board. chain more So alleviating across lean the issues transformation it to was get

the So market those we bit to contributed our serve than quarter in in ability a did little 'XX quarter to first first better 'XX.

of the top as And the sorry. some well, which up shows Of your I'm price what course, there there's was in . line. on rest question, Sheila,

Sheila Kahyaoglu

really think what's Just we like about And the the shop that think about XX% just current Is given visit we overall with Woodward? of it could like revenue, up content? LEAP cadence your do like picks how when fleet?

Charles Blankenship

So to is aftermarket units. content our you like also much replaceable remind of that I'd line

do say, shop visit while a from interesting see the during repair removal. shop rate LRUs compound XX-XX route a and So largely some I'd or we about, line customers shop is just also it's whether visit, for LRUs, split visit

we're -- are really it's correlated we And visits. shop engine overall better hours event-driven with than

Woodward understands that, everyone make to sure that's content. still the I want So case for

that like We and modeled inputs we GTF on We're for track it. have grow growth LEAP are year-over-year. seeing

at pleased how very that's we're So developing.

Sheila Kahyaoglu

I I Aero. didn't core on I Industrial you And come in maybe has if through your that margins remarks, walk And Can licensing but mentioned was you think catch prepared What one like XX% then a switching the sales, plus. Industrial could it gears little bit. Okay. us of certain ask how if Profitability improved? drives in or deceleration? better,

could If you clarify that.

Charles Blankenship

and it I'll clarify to then that Bill. turn point, over I'll

of earnings. of in So and our we adjusted Industrial, did product small divest some that's lines out

the margin relatively XX%. in big GAAP makeup a the and a but that on amount see to results, the number. Over You'll not driver of Bill small that in included it's not

William Lacey

Yes.

are of we coming real out core the at yes, with pleased gate the Industrial XX%. So

Sheila, on As our core between you is and know, industrial guide margin XX% XX%.

exchange This quarter, favorability rates. QX, -- foreign in some did we see we did related to

And through rates a see on finishing expect given their year, margins that Industrial And we'll so that we'll we to margin XX% that backing mix XX% volume us the the in were and strong QX, of XX%. core the comes and quarter. out, sort the through between in with closer through -- depending . go quarter

So we when Industrial core I the about good feel single here, we've -- in work the that really I started remember single digits, high all were done. X%. margins

we've And working the lean, operational so in that improvement. Industrial price, XX% And seeing we guide really we work excellence, year. done good driving all core for that our about XX% to on are feel the on

Operator

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

Matthew Akers

XX,XXX XX,XXX you think acquisition. more that I we content is? give wanted Safran to color previously. there a maybe the it capital a here? of that you part sort think strategy that, and Any I one-off said of still And just do up? kind like ask was of what opportunity about as Or as new of I think to you boosted the came M&A we curious, can the AXXX allocation should this see decent

Charles Blankenship

part still when the last the market I technology to adds, think taking good on or we're So for bolt Woodward see as customer strategy looking to I a opportunity M&A first. we mean, portfolio. adds

So we're additions unique our electromechanical actuation very us a from this one. technology business about some It excited brings to standpoint.

the do we to standpoint having do that the we quantify stabilizer We for AXXX means the didn't the actuation though. from I look to. was And And horizontal add trim a -- shipset referring what system content for that AXXX. that's forward

Matthew Akers

Got Yes. it.

remainder Are deployment just is you think Okay. of of depending kind . to maybe of on as Or that market you something? we of potential -- should kind upside the that. opportunity? is above And to for earmarked this Maybe curious, I free flow your a follow-up, plan $XXX million called guess then return out cash you cash as I think year.

William Lacey

and how We where there think to areas at are possibility it the there's organic don't more. us some will we're have if our other buy now, Yes, see going we And for There's investment, things if progress. earmarked look more, on we have are will do look shares. of potentially feel some to we more. Matt. we a Again, about a we to -- our we good doing capacity. And at right that opportunity it take growth do

about So of share offsetting $XXX over how then dilution, year. million right and with million $XXX our develop the we'll deal rest now see the repurchases that things of represents

Operator

Global comes question the with of next Pete Skibitski Alembic Advisors. Your -- from line Partner

Peter Skibitski

bookings the in Chip, are at just your Or order being wondering ongoing impacted that flow? in pretty defense, all? CR the has forward-leading OEMs

Charles Blankenship

Pete. impact We on that, haven't seen . any

Peter Skibitski

multiyear get in just put digits. improving. follow-up. a and low we your I outlook weapons maybe I Or kind the out sense And sort a expect for the Okay. that maybe you is to the defense not single current multiyear double that's is there spending -- just Should of low visibility that? mean guided yet? kind on target exceed weapons visibility of that Is meaningfully that basis guided of there? the

Charles Blankenship

early what past visibility kind on. much have we've comments that's and we XXXX, limited public think don't our I of

Operator

comes the of question Glynn next from Your Christopher Oppenheimer. line with

Christopher Glynn

gen power demand into little the go if markets Curious just could a signals long-term bit. have a drumbeat. So some you pretty consistent had steady, of

announced recip the you're Caterpillar pretty substantial gas and of years? for capacity plans next the the of think over market I how turbines. handful telling Is at looking that

Charles Blankenship

would We're the engine are and that our reciprocating customers. very bullish capacity demonstrate aligned and mean us Yes, with both it investments what on pushing meet is. gas our turbine we're that actions pretty market. I to making, all customers they're be well darn to our

renaissance be for and for gigawatts that. should Just due grid to all to in I but industry still and year to terms take see the power big the power base growth but gas of required renewables, we both generation, alone aside, also AI that per poised gas for us DeepSeek just data a demand demands, tells also the math stability and we're support demand. turmoil center growth in part the mean of there

Christopher Glynn

pretty to had also Great. fourth the on or I through consistent don't a loaded? to It wanted what you bear the load-in that's through area, that weapons steady maybe and program level looks seasonality a year some kind quarter JDDAM the But is how ask guided I about in of up. that is the cadence like the know year? ramp comes ramping expected -- a

Charles Blankenship

issues then and pretty aircraft it part start for industrial. of plan to of in it just world, to chain not the I'll a Bill. that lot but too. commercial turn We It's limited supply level, there's

for puts our on performance So supplier there as takes that not can and or pull suppliers they a be high rate from cause of quarter. based also of and demand them month transmit that can some production other customers as a to standpoint initially

Operator

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

David Strauss

how any develops in on-highway thinking year? this around has your there been China Chip, that . and change

Charles Blankenship

to in. we're Unfortunately, change thinking. It's a I report product no volatile that my just line

ready control uptick. should fixed team working are down to and when costs to an there Our volumes is hard respond be

of I to customers. inventory we think how like mindful load respond in position demand we'll a we to also We want where of a signals be terms from did get up don't in we year. lot last

So be to very we're of going that. mindful

is try think to the so back. fixed comes thing our volume costs load when level better we I we'll other amortize can

are those changes. guess the to not thinking, I So but refinements

David Strauss

Okay.

in So sales then second $XX a in thinking to and minimal million $XX QX quarter you're quarter still million QX. and the

William Lacey

we've about We that China feel on-highway. . still there estimate million Right. put out the $XX for best

David Strauss

than business manufacturing Canada if tariffs, and maybe Mexico, you it Chip, tariffs And the in don't these Safran other had like have think Okay. Any exposure looks I any [indiscernible] some.

Charles Blankenship

largely footprint in turns forth and regions. X it the out, we're our We've chain back it mostly regions, is region got and things globally, go some supply as but that manufacturing serves. that Well, in we're

fluid don't on we see as fairly So . this know, a But at you time. this tariff at environment. risk moment any day substantial it's this

David Strauss

. Yes, exactly.

Operator

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

Gavin Parsons

also considered ask airframe is kind have some versus like is you the destocking sounds and just it that to there. I of what end, take might on that aero but in low And side? just high to guide, appreciate color pieces the or wanted the the on you engine

Charles Blankenship

The a and performance, could the that, the take nonperformance take standpoint. are side commercial of us high us that high side. the quite supply headwinds defense that low chain is the frankly, towards side think the to So supply business would from things chain the I additional the things OE the us that take to on side or

Gavin Parsons

Great. for lap? revenue, good with still to of the that have start you guess guys on down, rest out And then into visibility the volume Does you called aero I price do price year.

William Lacey

as expecting Yes. to last to we Woodward about expect the quarter, Industrial. we're at be price And price talked Gavin, -- stronger be total level to aero X%. we than around deliver

So we've visibility. got good pretty

we number As dealing of contracts X that you remember, with renegotiated. due came a were last year got that

we'll year. a So to some we're to of contracts, continue those see still that we through And through mostly deal year. come the this but few have with

Operator

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

Noah Poponak

in was GTF contribution the the revenue LEAP What quarter? and aftermarket

Charles Blankenship

to Noah, Yes. growth strong Noah, it we of a lower real very we're low grow to as as strong seeing into a in nicely, base. there. see and be still 'XX, it very we And is base. grow. Again, -- talking won't continues we we But see these about these growth early 'XX, nice continuing obviously, very it get to a rates as quarters, off continue

it perform, seeing. we're with So pleased as have really it's expected and we what performing we're to

Noah Poponak

to Is because you'll then, to from you that flip see it specific because of right full though guidance actually of or when very critical waiting growth that doesn't you're framework, know a you you year ton to XXXX whereas that's assume assume mass. by correct even mass critical have a reached have guidance contribution now, kind the

have very what sure to specific assumption you do in guidance? not just the a 'XX? contributes Or it you're 'XX So

William Lacey

-- standpoint, that, and GTF a and jump speak turn aftermarket. we I'll The good Chip. contribute over expect from to it Yes. of what the LEAP Noah I'll then to -- has feel team a on for range to

are with far. this. experienced the been estimates -- with pretty Have far, so So their accurate who team very have

So to again, I a Chip? have of feel of we comfortable good that in deliver business what piece the 'XX. that expect we range

Charles Blankenship

more equal Yes, the it's to at Bill was our their pretty would terms contributions see tracking, modeling I like and Day it's at Investor And to say good legacy what XXXX LEAP it we market. fleet time GTF we think fair and of said. frame as we're that in be really shared we're where to that

But come will legacy where by think in maybe a changeover we we plus also. time 'XX Now time that's down would the that see frame. some

GTF less is baseload starting be of a footnote more and LEAP a our into contribute of and to shop. and

think a yet. said, numbers really I in it's to So big don't as the want a not the aren't way standpoint needle from yet. But meaningful moving growth you Bill

Noah Poponak

Okay. then And Aerospace to just wanted ask also I side. original on the equipment

had the growth rate, its while with guidance off. you You had turned provided assumed Boeing

I So XX% surprise. huge the guess isn't a down

lot Just And in just XX% few guess, a back a were thinking curious half to down maybe -- is you compared to a what much how the of ago. then speaking sort months recovery how us than I of Boeing the faster thought.

was. maybe But of guess, talking growth where than ramp faster the guidance Boeing other hand, I -- on about you yes, So lot to a a the get to on the one your hand, down anticipated? XX%, actually needs is it

Charles Blankenship

do there, lot but I'll Noah, a my There's best.

developing the of purpose our is think our off guidance. because top were sort at start I lined when to was Boeing a guidance -- just wide we end range down on

So all them in and wider certified a revenue for time by pause of line. on first and really kinds jobs before these back-to-work a from that's a the it's and things quarter that being get of the moving started not to where in workers they're on airplanes period and foremost, range they a move back just sort is taking it standpoint, first on of surprised why being based really turned on

they really impressed understand, is from my breaks going rate set the the to experience well they're based their they they rooting is the half them out aggressive them all right that laid goals where month a out customer, want talk get are that I'm back they've We're on they per that X-month of come for as how XXXX. really for up to what as I with second for thing as how stabilization about We're to industry, in way and and achieve years, goals And all U.S. behind citizens. now those hope watching. an they've XX can the the we're all running. and

Operator

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

Michael Ciarmoli

in XX% Chip, in on had the OE. margins you the a just Aerospace, sequential I decline mean, there quarter.

you the aftermarket strong got mix. held Obviously, flat. You margins the

You mentioned margin? just flow to really Do up? negative ramp Boeing just have you of to OE shift? and starts that And kind anything about then Kaizen that events. and that But mix to helped drive when thinking battle else

Charles Blankenship

actually So might lean I there. it as think. hand making commercial progress had -- and deliver The I'll customer, the as some flowing transformation, mix to I'll we mixed in the aftermarket Bill the model useful we're for our our and over of overall because to on mechanics on our guess start, But from ability to some product standpoint, wasn't lines. you get headwinds a

people months We job couple speed. to years of X of a up the months been instead the or now about we XX They've coming have on talked before.

All are things the productive. flowing through to So members more bottom are line. these our

Aerospace, addition, the In aftermarket side. on healthy the some especially price

I'll hand if anything it want over to share... to Bill, you more

William Lacey

Yes.

about Mike, year, the we I excited about think flat XXX sequentially. aero last that are basis points also you improvement about XX.X% it, delivered, and just, talked over

provide as leverage, a does little do price And mix though, expansion. us provide there. OE, margin with drive so increase, volume with headwind a with now realization that will bit in continues kind volume some of We for to the that it of will year-over-year, good defense good which us

initiatives margin, us quarter how XX%, guide which price and about good on really, started we feel continue our what full guide. deliver year-over-year, work operational that this our drove to -- the to that of So get to to it was allowing XX% excellence and year

Michael Ciarmoli

of... though, maybe you mentioned What was with mix, Chip, on elaborate a there kind bit? you some just Can that actually Okay. negative aftermarket.

Charles Blankenship

was I not No. mix. OE the just saying was a Well, defense that negative.

no all So not -- up it and pressure. aftermarket other wasn't

was So mentioning. I what that was

Michael Ciarmoli

And for it. Got one then last me.

You squeezed your direct Chip, any really terms need out, or meet objectives you to I labor called just here? efforts? What the kind think, in on color get headcount comments, looking hiring What do guys and you of add in at? hiring. to not are the of And

Charles Blankenship

we in nothing this really the that of challenges usual Yes, environment. out have

the down strike Boeing staffing of softness our little So and kind walk we let the during some a attrition other number demand. our of in bit -- numbers

back right it we levels as to And it out saw coming just I face want And of -- we this staffing worth call the a demand that. hiring months' probably of return part have to we because of to saw make time so at need to up -- plenty all But the signal the challenge to serve signal. is and of we couple demand it we coming look now. we

Operator

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

Louis Raffetto

the just a for Bill, quarter? pricing the or maybe X the amount you to question do last questions just have follow-up ago, pricing,

William Lacey

Yes.

a total contributed For the that with us aero level, the came talked guide year, total at heavily we for the but X%. the about it provided also around for quarter, is to Industrial X%. in good Again, total Woodward contribution. as around And X%, year

Louis Raffetto

that to is, Appreciate All Bill. I understand exactly we're that, excluded. now some right. Great. quarter what it's the sort business that I'm just And -- fifth excluding is, expenses. why trying maybe this development just of being then maybe think,

William Lacey

Yes.

trying related Louis, the quarter, performance. expenses different sure operational activity about. we're we the provide clear make was that business around And that to deals This as we always, you talked the with development to

so And that what adjustment. that is drove

Louis Raffetto

Great. the larger think way that? is Any the I about but than And is missed do cash-wise, other? divestiture sort maybe have they to before, may like then are they -- offset? acquisition this one the and -- Or of

William Lacey

I you don't a want more insight these too get things with Yes. far. And close, we'll Obviously, financials. into as provide little to the

Operator

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

Gautam Khanna

I the was level to of on commercial wondering Woodward? OE was what if strike prior you could profitability of comment

William Lacey

down really don't at that detail, of Gautam. level We go

Gautam Khanna

a, I a... it, can is -- know. you b, it profitable; it relative like is ballpark But to

William Lacey

it's is and business sure. for profitable, OE business a good commercial Our

enough. And so that is so ballpark hopefully, yes,

Gautam Khanna

enough. Fair guide? kind of then with Industrial come And mentioned from this, being tariffs respect demand in into to that destruction of you business, that's country, in your could factored the any there but is the kind

Charles Blankenship

When no you orders? or longer destruction, demand ordering say like you mean customers canceling equipment

Gautam Khanna

Yes.

weakens environment. it that And is because margin, the the factored demand On in?

Charles Blankenship

me for That as maybe doesn't out question of at a customers, jump risk. our a big but better one it

Operator

from next with Tony of comes And Funds. your question line the Bancroft Gabelli

George Bancroft

Great great job and the overall. on job quarter

customer the and you acquisition business what the And recent weapon control and pure get the the recent about acquisition yourselves to on adds, obviously, with Just give ] [ actuation is, you're that of play what's customer from just saw -- and is X sort hip-pocket size us obviously with Safran's ] on of see play, want actuation. more their business potential [ adds little market, of like and focused. like of view, desirable of you years -- you with today market bit system a that just side the could the defense a your as some just sort your you strokes. pure -- now, you of very broad mentioned your business. the Triumph do fuel where But Maybe most lecture

Just could just a give picture maybe that. you of us

Charles Blankenship

will single-aisle the on most a broader the explain it increase think and our shipset next simplest on we the way this, I way I is, I shed simplest stated our that have -- think aircraft. to than it's the light to think strategy content there but strategy

lot activities about So for the path very a potential when investment us that competition organic or got around a next we've standpoint, of you'll a acquisition clear standpoint talk from sure see making starts an content be to from single on competitive the aisle. bolt-on that is

technology, that components. them. and with high We kinds precision opportunity components love manufacturing systems healthy like we a aftermarket of And associated challenging have

how we So that. about that's of think kind

Operator

session. today's concludes gentlemen, to Mr. and conference will you. ladies now over question-and-answer the turn that back I Blankenship, And

Charles Blankenship

today's for I'd a hope call. you great joining to just like I thank day. everyone have

Operator

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

Woodward (WWD) 3 Feb 252025 Q1 Earnings call transcript