Woodward, Inc.

for standing by. Welcome to the Woodward Inc. Third Quarter Fiscal Year 2021 Earnings Call. At this time, I would like to inform you that this call has been 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. Tom Gendron, Chairman and Chief Executive Officer, Mr. Bob Weber, Vice Chairman and Chief Financial Officer, Mr. Don Gazzardo, Vice President of Investor Relations and Treasurer, and Dan Povaznik, Director of Investor Relations. I would now like to turn the call over to Mr. Guzzardo. Thank you. Please go ahead, sir.

Thank you, Operator. We would like to welcome all of you to Woodward's third 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 August 16, 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'd 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 financial information will help in understanding our results. Now turning to our results for the third quarter. Net sales for the third quarter fiscal 2021 were $557 million compared to $524 million for the prior year quarter. Net earnings and adjusted net earnings for the third quarter of 2021 were both $49 million or 74 cents per share. For the third quarter of 2020, net earnings were $38 million or 61 cents per share and adjusted net earnings were $31 million, or 48 cents per share. Net cash provided by operating activities was $318 million for the first nine months of 2021, compared to $212 million for the same period of the prior year. Free cash flow and adjusted free cash flow for the first nine months of 2021 were both $297 million. For the first nine months of 2020, free cash flow was $173 million, and adjusted free cash flow was $169 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. In the third quarter of 2021, we were pleased to deliver significantly improved performance compared to the prior year period. As our markets progress down the path of recovery, we do anticipate pandemic-related volatility to continue. The ongoing global supply chain disruptions, unpredictable impacts of COVID variants, and the varying pace of regional economic improvement all contribute to future uncertainty. We continue to believe our markets will return to pre-pandemic levels in 2023, and we will see significant growth related to our market share gains and favorable fleet dynamics. Moving to our markets, commercial aerospace continues to recover as airlines begin to reactivate parked fleets, aircraft build rates continue to climb, and passenger traffic increases. U.S. domestic travel is returning to near pre-pandemic COVID levels, while international remains weak. Importantly, the commercial fleet now being utilized has significantly higher Woodward content, which we believe will lead to strong aftermarket sales growth. In defense, markets overall remain favorable. However, as anticipated, the demand for guided weapons is softening. Defense aftermarket activity remains solid due to aircraft utilization and upgrade programs. Turning to our industrial markets, in power generation, demand for gas turbines is increasing. We expect further improvement in 2022, driven predominantly by growth in Asia and the continuing replacement of coal-powered plants. Aftermarket activity is beginning to increase, with volume anticipated to come back to pre-COVID levels in 2022. Backup power for data centers continues to be strong. In transportation, demand for China natural gas trucks softened significantly in the quarter as a result of the anticipated implementation of China 6 diesel emission regulations, which drove short-term demand for China 5 diesel trucks. The natural gas truck market remained strong and has grown to approximately 15% of the total truck market. However, we do expect quarterly volatility to continue. The global marine market is seeing improving ship utilization from the pandemic-related lows, which will drive aftermarket activity. The oil and gas market's leading indicators have improved as crude prices and energy demand have increased. In summary, we are seeing improvements in our markets year over year, and we delivered a solid quarter. However, the pace of global economic recovery and our financial results are being impacted by global supply chain disruptions COVID-related impacts and regional market fluctuations. As has been our priority throughout this pandemic, we continue to generate robust cash flow by leveraging our operational structure and optimizing working capital, allowing us to continue investing in growth opportunities. We remain steadfast in our commitment to developing innovative products designed to enhance emissions performance, reliability, and fuel efficiency, which have meaningfully contributed to a cleaner global environment. As global demand for cleaner energy, renewable fuels, and greater efficiency accelerates, we will continue to invest in these opportunities in both our aerospace and industrial segments. Before giving the reins over to Bob for his final earnings call as Chief Financial Officer, I would like to thank Bob one more time for his tremendous contributions to the Woodward team. Over his 16 years at Woodward, he was truly an unrivaled counselor, partner, and friend. And for that, we all wish him the best of luck in this next phase of his life. During our next call, I look forward to being joined by Mark Hartman. I'll now turn the call over to Bob.