Woodward, Inc.

Standing by, welcome to the Woodward, Inc. Second Quarter Fiscal Year 2021 Earnings Call. At this time, I would like to inform you that this call is being recorded, fully broadcast, and that all participants are in the 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. 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 would now like to turn the call over to Mr. Guzzardo.

Thank you, Operator. We would like to welcome all of you to Woodward's second quarter fiscal year 2021 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 May 17th, 2021. 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 three. 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 ongoing COVID-19 pandemic. 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 information will help in understanding our results. Now turning to our results for the second quarter. Net sales for the second quarter of fiscal 2021 were $581 million. compared to $720 million for the prior year quarter. Net earnings and adjusted net earnings for the second quarter of 2021 were both $68 million, or $1.04 per share. For the second quarter of 2020, net earnings were $91 million, or $1.41 per share, and adjusted net earnings were $104 million, or $1.61 per share. Net sales and net earnings were up 8% and 64% respectively when compared to the first quarter of 2021. Net cash provided by operating activities was $219 million for the first half of 2021 compared to $52 million for the same period of the prior year. Free cash flow and adjusted free cash flow for the first half of 2021 were both $206 million. For the first half of 2020, free cash flow was $23 million, and adjusted free cash flow was $55 million. 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. The second quarter of fiscal year 21 showed improved results from our first quarter. and we believe our markets will continue to improve for the remainder of the year and into 2022. The aggressive actions we have taken to address this unprecedented crisis continue to drive strong cash flow, improve our liquidity and overall financial position, enable ongoing investments and opportunity for growth. While COVID-19 vaccinations gain momentum, increases in cases persist across the globe, continuing to drive uncertainty with respect to the pace of economic recovery. Moving to our markets, aerospace continues to feel pressure, although it is encouraging to again see the sequential improvement from the prior quarter. The sustained depression of global passenger traffic resulting from the pandemic continues to impact commercial aerospace markets. However, we are seeing positive indicators such as improving passenger traffic increasing aircraft build rates and utilization, and the return to service of the Boeing 737 MAX. Importantly, production rates of the MAX, on which we have significant content, are expected to increase during the year. We're encouraged by these trends and expect the continued vaccine rollout to have a positive impact on commercial aerospace. Defense spending remains strong with respect to both OEM and aftermarket activity. We see continued strength in guided weapons through the remainder of this year, with moderation expected next year. Turning to our industrial markets, in power generation, demand for gas turbines remains steady at historically low levels, although we anticipate a recovery in 2022. Aftermarket activity is starting to recover, largely driven by depleted inventories and resumption of maintenance projects. Global energy production continues the shift to natural gas and renewables, support initiatives to reduce emissions. In transportation, China's natural gas truck demand continues to be strong, driven by favorable pricing and increased regulations to improve emissions. Government initiatives supporting natural gas trucks are also emerging in several other countries. The global marine market is showing signs of improvement with increases in both demand for new vessels and global freight pricing. Repair and overhaul projects that were postponed due to the pandemic are also beginning to pick up. The oil and gas market remains challenging. However, global demand and increasing oil prices are beginning to drive investment in drilling, fracking, and natural gas compression. In summary, we delivered strong financial performance as our markets showed signs of economic recovery. We will continue to closely monitor this situation as we progress through the back half of the year. As the pandemic unfolded, we reacted quickly to navigate the uncertain market environment, reduce our cost structure, increase our focus on operational excellence, and prioritize diligent cash management. In addition, we continue to gain market share in both our aerospace and industrial segments, and we won new programs during the downturn. We believe Woodward is emerging from this unprecedented crisis an even stronger company. Now, before turning the call over, Bob Weber announced his intention to retire in January of 22. He will retire from his role as Chief Financial Officer, effective September 30th of this year, and will serve as a special advisor to me for an interim period. I want to thank Bob for his dedication and valuable contributions during his more than 15-year tenure at Woodward. Under Bob's leadership, the company has grown tremendously, and we have delivered exceptional value to our shareholders over his career. I truly appreciate the partnership and friendship we have built over the years, and I'm excited for him as he enters his next phase of his life. Bob, we wish Patty and you all the best. We also announced that Mark Hartman, who is currently our Senior Vice President, Finance and Corporate Controller, will be appointed as Chief Financial Officer effective October 1st. I look forward to working with Mark in his new role and leveraging his extensive experience to drive Woodward's continued growth and success. Now I'll turn the call over to Bob to discuss our financials in more detail.