Woodward, Inc.

Thank you for standing by. Welcome to the Woodward, Inc. Fourth Quarter Fiscal Year 2020 Earnings Call. At this time, I'd 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, the company, are Mr. Tom Gendron, Chairman and Chief Executive Officer, Mr. Bob Weber, Vice Chairman and Chief Financial Officer, and Mr. Don Guzzardo, Vice President of Investor Relations and Treasurer. I'd now like to turn the call over to Mr. Guzzardo.

Thank you, Operator. We would like to welcome all of you to Woodward's fourth quarter fiscal year 2020 earnings call. In today's call, Tom will comment on our markets and related strategies. and Bob will discuss our financial results as outlined in our earnings release. At the end of our presentation, we will take questions. For those who have not seen today's earnings release, you can find it on our website at woodward.com. We have, again, included some presentation materials to go along with today's call that are also accessible on our website. An audio replay of this call will be available by phone or on our website through December 3rd, 2020. The phone number for the audio replay is on the press release announcing this call, as well as on our website, and will be repeated by the operator at the end of the call. I would like to refer to and highlight our cautionary statement as shown on slide 3. As always, elements of this presentation are forward-looking or based on our current outlook and assumptions for the global economy and our businesses more specifically, including the expected and potential effects of the ongoing COVID-19 pandemic and related measures taken by individuals, governments, and private industry. Those elements can and do frequently change. Please consider our comments in light of the risks and uncertainties surrounding those elements, including the risks we identify in our filings. In addition, Woodward is providing certain non-US GAAP financial measures. We direct your attention to the reconciliations of non-US GAAP financial measures, which are included in today's slide presentation and our earnings release and related schedules. We believe this additional financial information will help in understanding our results. Now turning to our results for the fourth quarter. Net sales for the fourth quarter of fiscal 2020 were $531 million. compared to $737 million for the prior year quarter, a decrease of 28%. Net earnings were $57 million, or 89 cents per share, compared to $67 million, or $1.03 per share, for the prior year quarter. Adjusted net earnings were $48 million, or 75 cents per share, compared to adjusted net earnings of $79 million, or $1.22 per share for the prior year quarter. And results for the full year, net sales were $2.5 billion compared to $2.9 billion for the prior year, a decrease of 14%. Net earnings were $240 million or $3.74 per share compared to $260 million or $4.02 per share for the prior year. Adjusted net earnings were $254 million or $3.96 per share compared to adjusted net earnings of $314 million or $4.88 per share for the prior year. Net cash generated from operating activities for fiscal 2020 was $349 million compared to $391 million for the prior year. Free cash flow was $302 million compared to $292 million for 2019. Adjusted free cash flow was $315 million for 2020. Now I will turn the call over to Tom to comment further on our results, strategies, and markets.

Thank you, Don, and good afternoon, everyone. During fiscal year 20, Woodward and the world experienced incredible volatility brought on by the COVID-19 pandemic. We acted swiftly to ensure the health and safety of our entire Woodward team and took immediate aggressive actions to mitigate the adverse impacts on our business. While we continue to grapple with this volatility in our markets, we remain keenly focused on diligent cash management, enhancing our financial strength and flexibility, and optimizing our cost structure to align with a lower demand environment. Our team has executed well throughout the pandemic, and I'm proud of their commitment and dedication to ensure we are able to successfully navigate the headwinds in front of us and position Woodward to emerge stronger. Moving to our markets in more detail, our aerospace markets were mixed for the quarter with weakness in commercial OEM and aftermarket, but with strength in defense. Commercial markets were impacted by the sustained decline and global passenger traffic and OEM production activity. Commercial passenger demand remains weak across the globe, with industry sentiment generally predicting a prolonged recovery for travel. With traffic well below past levels, we are seeing a significant number of retirements of older aircraft, and the fleet is predicted to be smaller for several years. On a positive note, the FAA approved the return to service of the Boeing 737 MAX, Together with the MAX, the post-COVID fleet will be comprised of newer aircraft with greater Woodward content. When a recovery does materialize, we anticipate the commercial aftermarket will be first, which will bode well for Woodward in terms of earnings and cash flow. In defense, we continue to see strong aftermarket demand related to upgrade and fleet readiness programs. Military OEM remains strong for fixed-wing and rotorcraft. Guided weapons volumes have increased substantially over the last several years, and we anticipate some moderation going forward. I'll turn to our industrial markets. The power generation demand for gas turbines improved from a very weak 2019, but it remains soft, driven by impacts related to COVID-19. Engine applications are down across the board, except for data center backup power. On a more macro level, developing economies across Asia, such as India and China, continue to show signs of energy demand growth with natural gas and renewables, expanding their share of the energy mix. In transportation, marine markets have been depressed in almost all areas as a result of the pandemic, which has caused reduced demand for oil and gas and decreased ship utilization. These headwinds were partially offset by the continued strength of the China natural gas truck market driven by more stringent emission regulations. Oil and gas markets continue to be pressured due to a drastic decline in oil and gas prices and weak customer demand. However, natural gas and crude oil prices appear to be stabilizing around current levels. Rig counts are increasing, which may indicate the potential for future growth in drilling activity. The release of an effective vaccine or therapeutic could stimulate demand and lead to higher oil and gas prices and increased investment. Speaking to our industrial business overall, environmental concerns and related emission regulations continue to drive the move to natural gas and clean burning diesel engines, where we have significant content and market share. Additionally, our focus on controls technology presents growth opportunities integrating new fuel sources, hybrid drive systems, and advanced emission strategies. As the world searches for cleaner and more renewable fuel sources, we are partnering with our OEM customers to create the next generation of control solutions. In summary, we have faced continual headwinds since the onset of the pandemic, but many of our markets have started to stabilize. We are working closely with our customers and suppliers across the globe to ensure a lean operational structure, strong balance sheet, and diligent cash management throughout the down cycle. We continue to monitor the situation very closely and remain positioned to act quickly should the environment worsen or improve. With the current market fog generated by the pandemic, we anticipate continued headwinds in the near term. However, we believe that our proactive efforts to mitigate the impact on our business and enhance our financial strength and flexibility have positioned us well to weather this uncertainty. These efforts, coupled with our very favorable capital structure our ability to generate significant cash, our completed monetization investments have us poised to deliver on our long-term growth and margin targets. As we go forward and we see clarity in our markets, we intend to return to our pre-COVID capital deployment strategy. We will emerge stronger from this crisis and leaner than before. Now I'll turn the call over to Bob to discuss financials in detail.