Woodward, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Woodward Inc. fourth quarter and fiscal year 2025 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 are invited to participate in a question and answer session. Joining us today from the company are Chip Blankenship, Chairman and Chief Executive Officer, Bill Lacey, Chief Financial Officer, and Dan Provasnik, Director of Investor Relations. I would now like to turn the call over to Dan Provasnik.

Thank you, Operator. We would like to welcome all of you to Woodward's fourth quarter fiscal year 2025 earnings call. In today's call, Chip will comment on our strategies and related markets. Bill will then 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 included some presentation materials to go along with today's call that are also accessible from the website. Please note that based on changes in market dynamics, the company has refined its industrial end market presentation to better align certain sales within power generation transportation, and oil and gas. Accordingly, sales for the quarters and years ended September 30, 2025, and 2024 have been reclassified for comparability. The reclassification had no impact on total industrial or the consolidated financial results. A webcast of this call will be available on our website for one year. All references to years in this call are references to the company's fiscal year unless otherwise stated. I would like to highlight our cautionary statement as shown on slide two of the presentation materials. As always, elements of this presentation are forward-looking, including our guidance, and are based on our current outlook and assumptions for the global economy and our businesses more specifically. Those elements can and do frequently change. Our forward-looking statements are subject to a number of risks and uncertainties surrounding those elements, including the risks we identify in our filings with the SEC. These statements are made as of today, and we do not intend to update them except as required by law. In addition, we are 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. We believe this additional financial information will help in understanding our results. And now I'll turn the call over to Chip.

Thank you, Dan. 2025 was another remarkable year for Woodward. Our team continues to make significant progress, motivated by our purpose to design and deliver energy control systems that our partners count on to power a clean future. Our members' dedication to serving our customers and meeting our commitments to all stakeholders drove record performance in a number of areas. Our annual revenue exceeded $3.5 billion for the first time, which was the result of strong performance in both business segments. Aerospace sales increased 14% to record levels with margin expansion of 290 basis points. Industrial delivered healthy sales growth of approximately 10%, excluding China OH, and core industrial margin expansion of 110 basis points. As a result, we delivered all-time high adjusted earnings per share, up nearly 13% compared to the prior year. We achieved these results through a keen focus on our strategy, guided by our values, including integrity, respect and accountability, and showing up as humble yet driven industry leaders as we continue to improve how Woodward serves customers. Next, I'd like to highlight some notable achievements that created value from last year, driven by our pillars of growth, operational excellence, and innovation. Starting with growth, our aerospace team delivered strong growth in defense OEM as predicted. and rose to the occasion to deliver on higher than expected commercial services demand. Commercial aircraft delivery rates were lower than originally planned, including impacts of destocking of some Woodward components and systems. In commercial services, our team successfully captured volume growth and pricing opportunities. We experienced more legacy engine MRO volume than planned, coupled with the expected increase in LEAP and GTF demand, which is rising to levels of significant contribution to overall commercial services revenue and earnings. We expect LEAP and GTF repair revenue to surpass legacy repair revenue in late calendar 2026 or early 2027. For this compare, I'm speaking specifically to the repair activity and excluding spare LRU sales associated with fleet spares provisioning. as these sales can be lumpy over short periods of time, but generally correlate with total aircraft delivered over the long term. For example, this past quarter we received more orders for spare end item than we anticipated, with trade and tariff uncertainty contributing to the order surge. Our industrial segment delivered double digit growth in oil and gas and power generation, and high single digit growth in marine transportation. Notably, our industrial services portfolio, ranging from component MRO to power pant controls upgrade projects, achieved substantial growth, contributing to top line sales and improved mix. Overall, our strong performance in the fourth quarter and full year 2025 reflects the strength of our strategy and our team's ability to execute. We have increased content on growing platforms and growing markets. We believe we are well positioned for future success. Over the past year, we achieved several key milestones supporting our long-term growth strategy. We completed a strategic transaction to add capability and pedigree to our electromechanical actuation business unit. The acquisition included state-of-the-art horizontal stabilizer trim actuator products on business jet, regional, and wide-body commercial aircraft, including the Airbus A350. This represents our first direct supply contract to Airbus. Integration of the acquired people and products is progressing on plan to capture the full value of the transaction. We want a competitive selection to design and deliver A350 wing spoiler actuators, further increasing our Airbus business portfolio and A350 shipset content. This organic growth project proves our position on a very successful widebody program, as well as prepares us for the next single aisle opportunity by demonstrating our technology, design, and industrialization capabilities. This win, coupled with our recent acquisition of electromechanical actuation capability, including the A350 HSTA, will raise our total A350 ship set value to approximately $550,000 once we start shipping the wing spoiler actuators, currently scheduled for late calendar 2028. To that end, we broke ground on our Spartanburg, South Carolina facility construction project in November. This facility is intended to be another showcase advanced manufacturing site, building on our experience with our Rock Cut campus highly automated, and vertically integrated. We will produce the A350 spoiler plus additional aerospace products at this facility. Within industrial, our GLOT expansion is ahead of schedule and on track to become operational by mid-2026. This expansion will provide increased capacity to meet the growing demand for data center backup power with enhanced levels of automation, improved flow, and higher inventory turns. To support our growth, we're making increased strategic investments in our company with robust returns for projects that increase capacity and improve productivity with a specific focus on automation. Turning to operational excellence, we continue to make steady progress. We're focused on improving the fundamentals, and I expect our teams to pick up the pace to improve flow, and unlock more productivity in this coming year. Everything starts with safety at Woodward. We continue to roll out our human and organizational performance program to reduce injury risks and increase levels of protection. And we are on track to have HOP in place at all of our sites this calendar year. We're also investing in immersive training for our team leads and first level supervisors. We are starting to see the benefits as they apply what they've learned solving problems within cycle time, rebalancing work to optimize labor and create flow, and coaching their teams more effectively. I'm excited by our progress so far. We're also making strides in stabilizing our supply chain. Although we are still experiencing some supplier performance shortfalls, Woodward has made progress in optimizing our supplier network while helping our strategic suppliers improve their own quality and delivery when required. Industry-wide efforts to stabilize demand signals are benefiting our planning and delivery performance. I'm pleased to see our investments in automation paying off by reducing our demand for labor. We're also realizing the expected benefits in safety, quality, delivery, and cost as we refine our project execution and rebalance value streams. Our automation focus is on jobs with high turnover repetitive or ergonomically challenged tasks, and high applied force requirements. Our workforce is embracing these projects and understands the benefit in their daily work. We will continue to invest in automation in 2026 and beyond. Innovation is alive and well at Woodward and we made prudent investments in technology development for new military programs, the next single aisle, alternative fuels, automation, and services delivery. We continue partnering with our customers to shape how our technology solutions can elevate the value of their next generation products. As we look ahead, our priorities for 2026 are centered on strong execution, including capturing continued growth in our markets, driving operational excellence, and meeting our customers' evolving expectations. In aerospace, we were prepared for increased OEM orders as the aircraft manufacturers stabilize and increase production rates and as defense customers continue to signal strong demand. In commercial services, we were prepared for MRO growth as legacy aircraft continue to fly longer and more LEAP and GTF engines enter their maintenance cycles. We do expect somewhat muted top line growth in commercial services compared to 2025 which benefited from outsized demand for spare end items and some advanced buying. In industrial, we are ready to meet sustained demand across our core markets of transportation, power generation, and oil and gas, and continue to expand our capabilities and global presence in industrial regional repair, overhaul, and upgrade offerings. Our guidance for 2026 reflects our continued confidence in the growth trajectory across our segments, and our continued operational discipline. We are on track to deliver the three-year sales and earnings targets we set at December 2023 Investor Day. We do expect a modest adjustment to our cumulative free cash flow target as we make the strategic decision to allocate more capital toward organic, high-return growth investments, including automation at multiple sites and the Spartanburg facility. 2025 was a year of record performance and significant progress as we executed on our strategy and delivered on the commitments we've made to shareholders. We intend to build on the strong momentum in 2026 and beyond. And now I'll turn it over to Bill to share more detail around our financial performance in 2025 and our outlook for 2026. Ready, Bill?