Thomas A. Gendron – Chairman and Chief Executive Officer Robert F. Weber Jr. – Vice Chairman, Chief Financial Officer and Treasurer.

Tyler Hojo – Sidoti & Co. Pete Skibitski – Drexel Hamilton, LLC William Bremer – Maxim Group, LLC J.B. Groh – D. A. Davidson & Co. Michael Ciarmoli – KeyBanc Capital Markets Inc. Sheila Kahyaoglu – Jefferies LLC Steve Levenson – Stifel Financial Corp.

Thank you for standing by. Welcome to the Woodward Inc. Fourth Quarter Fiscal 2014 Earnings Call. At this time, I would like to inform you that this call is being recorded for rebroadcast purpose 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; and Bob Weber, Vice Chairman, Chief Financial Officer and Treasurer. I would now like to turn the call over to Mr. Weber..

Thank you, operator. We would like to welcome all of you to Woodward’s fourth quarter fiscal year 2014 earnings call. In today’s call, Tom will comment on our markets and related strategies, and I will discuss our financial results as outlined in our earnings release. At the end of our presentation, we’ll 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 the website through November 24, 2014.

The phone number for the audio replay is on the press release announcing this call and will be repeated by the operator at the end of the call. Before we begin, 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 outlook and assumptions for the global economy and our businesses more specifically. Those elements can and do frequently change. Please consider our comments in light of the risks and uncertainties surrounding those elements.

We also direct your attention to the reconciliations of certain non-U.S. GAAP measures included in today’s slide presentation and our earnings release and related schedules. Management uses these non-U.S. GAAP measures in monitoring and evaluating the ongoing performance of Woodward and each business segment.

Turning to our results, we had a solid quarter, in line with a very strong fourth quarter of prior-year. Record net sales for fiscal year 2014 were $2 billion, compared with $1.9 billion in the prior-year. Earnings per share were $2.45 for the year compared to $2.10 for the prior-year, also a record.

Total EBIT for the year was $250 million compared to $226 million for the prior-year. Operating cash flow for the year was $268 million, an increase of approximately $45 million from the prior-year. Now I will turn the call over to Tom to comment further on our results, strategies and markets..

Thank you, Bob. Welcome to those joining us today. We delivered solid results for the fiscal year. While sales were up 3%, earnings per share were up 17% from the prior year. Our focus on cost control and operational execution continues to show in our improved earnings.

Many of our markets such as commercial aerospace and gas turbines showed improvement during the year over tempered by softness in military sales and natural gas bus and truck systems in China.

In the coming year, we anticipate the majority of our markets to continue improving although moderated by global economy that is still volatile and unpredictable. More specifically in aerospace, the overall aerospace market remains strong as air traffic continues to grow, major new programs are nearing launch and backlogs are at record levels.

We’ve seen a strong recovery in the regional jet market with new aircraft placed in an aging fleet. Sales of large cabin business jets continue to grow, while small cabin jets have been slower to recover. We expect growth in this market as a result of new aircraft launches.

The commercial rotorcraft market has been strong, mainly as a result of the oil and gas industry. However, this market is expected to soften as oil and gas companies moderate their capital expenditures. While defense remains challenging, we did see significant improvement in the quarter as a result of the previously mentioned contract awards.

In the next fiscal year, we expect moderate recovery in our defense sales predominantly in the aftermarket as pent-up repair demand is addressed. The A320neo flew with the Pratt & Whitney PurePower engine and the CFM LEAP engine took its first flight as well. These are strategically important programs for Woodward.

We’ve been investing in these programs for many years and they will represent significant growth in both revenue and earnings as they enter into service.

Our new aerospace facilities in Rockford and Niles, Illinois as well as our energy facility in Fort Collins, Colorado have been designed using lean principles, which will provide enhanced productivity and reduce ways as they become operational.

Turning to our energy segment, the demand for emission-friendly natural gas is increasing while gas infrastructure development continues. The increase in availability in globalization natural gas and the increase in domestic oil production continue to drive growth in many of our markets.

Demand for new heavy frame gas turbines remain soft, however, the industrial gas turbine aftermarket continues to improve and has resulted at an increase sales for Woodward compared to the prior-year quarter.

The aero-derivative gas turbine and gas engine markets are strong as a result of demand from the oil and gas industry for power generation and compression. In addition, our focus on penetrating the compressor controls market is yielding new opportunities.

We continue to experience volatility related to the natural gas bus and truck market in China, as a result of government incentives, natural gas supplies and other factors. We believe this market has significant ongoing potential and Woodward has a strong market position. The wind turbine market continues to recover from the 2013 market class.

We expect moderate growth in the near-term. In summary, sales for the year were up slightly, but we delivered a significant increase in earnings as a result of our focus on implementation of lean principles, operational execution and cost control initiatives.

Looking to our next fiscal year, we expect improve sales and earnings growth as many of our markets continue improve.

The significant investments in technology and process innovation we have made over the last decade are yielding market share gains across many of our markets and have positioned us to future growth as new aerospace programs launched and natural gas globalization accelerates. Now let me turn it back to Bob for the financials..

Thank you, Tom. This year’s sales and earnings set new records and our fourth quarter was solid compared to a robust prior-year quarter. Similar to the third quarter and as we expected, variable compensation was a significant ad win in the quarter and fiscal year reflecting our improved full-year financial and operational performance.

Our variable compensation plan applies to substantially all members worldwide, and had a significant impact across our segments this quarter. In fiscal year 2015, we expect variable compensation expense to be comparable to 2014. In aerospace, commercial OEM and aftermarket sales continued to show steady growth compared to prior-year quarter.

Commercial aftermarket increased 7% for the full-year, and 3% for the quarter compared to a strong prior-year quarter. Defense sales showed significant improvement both sequentially and compared to a very strong prior-year quarter, although finishing down approximately 11% for the full-year.

Aerospace segment earnings for the quarter were strong at 17.9% of sales, improved manufacturing margins and higher sales were partially offset by higher research and development expenses.

We will continue to see variability in research and development expenses, as we deliver prototype hardware and execute on deliverables related to new program launches. Aerospace segment earnings, as a percent of net sales for the full-year 2014, was 14.7%.

In our energy segment this quarter, lower sales of fuel systems for natural gas buses and trucks in China, offset improved sales in many other markets. Earnings, as a percent of sales, were 14.2% for the quarter compared to 15.3% in the same quarter the prior-year.

Segment earnings for the quarter were unfavorably impacted by higher research and development expenses, partially offset by favorable foreign currency exchange and continued operational improvements. Energy segment earnings, as a percent of net sales for the full-year 2014, were significantly improved at 14.6%.

At the Woodward level, research and development expenses were $38 million for the fourth quarter of 2014 compared to $31 million for the fourth quarter of 2013, primarily reflecting higher quarterly spend. As a percentage of net sales, research and development was 6.7% in the fourth quarter of 2014 compared to 5.5% in the fourth quarter of 2013.

For fiscal year 2014, research and development was 6.9% of sales compared to 6.7% for the same period of 2013. For 2015, we expect our R&D expense as a percent of sales to be similar to 2014. We will continue to see quarterly variability, primarily due to the timing of achieving development milestones and related testing.

Selling, general and administrative expenses were $42 million or 7.5% of net sales for the fourth quarter of 2014, compared to $48 million or 8.5% of net sales in the fourth quarter of 2013, primarily due to cost control initiatives. The effective tax rate for the fourth quarter of 2014 was 31.2% compared to 30.2% for the fourth quarter 2013.

Our full-year effective tax rate was 27% consistent with the prior-year. For fiscal 2015, we expect effective tax rate to be consistent with the current year, including the anticipated reinstatement of the research and experimentation tax credit during fiscal year 2015 and the retroactive impacts.

Looking at cash flows, we generated $268 million of cash flow from operations for fiscal 2014 compared to $223 million for the same period of the prior year, primarily the result of improved earnings and working capital management. Free cash flow for fiscal 2014 was $61 million compared to $81 million for the same period of the prior year.

Capital expenditures were $207 million for fiscal 2014 compared to $142 million for the same period of the prior year, reflecting growth in spending related to our capacity expansion projects. For fiscal 2015, we anticipate capital expenditures to be approximately $270 million, subject to the inherent variability of large-scale construction projects.

All facility projects are on schedule with Rockford and Niles, Illinois, expected to be completed by the end of this calendar year. Also in fiscal 2014, we repurchased $141 million of Woodward stock under our current $200 million share authorization.

We anticipate fiscal 2015 sales to be between $2.05 billion and $2.15 billion; earnings per share to be between $2.65 and $2.95 for fiscal 2015, assuming approximately 67 million fully diluted shares outstanding.

Overall, our markets continue to improve and we expect to increase sales, growth and earnings leverage to positively impact our fiscal year 2015 performance. We expect overall segment margins to improve by approximately 100 basis points.

I would like to point out that on December 12, Woodward will host an Investor and Analyst Day in New York City, as mentioned in the press release issued in October. Tom and I, as well as other members of the executive team, will review Woodward’s markets, strategies and financial performance as well as answer your questions.

We look forward to seeing many of you there. This concludes our comments on the business and results for the fourth quarter and full year of 2014 and our fiscal year 2015 outlook. Operator, we are now ready to open the call to questions..

Thank you. The question-and-answer session will begin at this time. [Operator Instructions] Our first question comes from Tyler Hojo from Sidoti & Co..

Yeah, hi. Good evening, everyone..

Yeah, hi. Good evening, everyone..

Hi, Hojo..

Hi, Tyler..

Hi. So, just firstly, I want to talk a little bit about kind of the energy segment revenue performance in the quarter. Looking back historically, I don’t think you’ve ever had a down sequential quarter in terms of revenue.

And I know you’re coming off a pretty strong Q3, but could you maybe just talk about kind of what some of the drivers for that were?.

Hi. So, just firstly, I want to talk a little bit about kind of the energy segment revenue performance in the quarter. Looking back historically, I don’t think you’ve ever had a down sequential quarter in terms of revenue.

And I know you’re coming off a pretty strong Q3, but could you maybe just talk about kind of what some of the drivers for that were?.

Sure, Tyler. And I’m not positive about historical down sequential, but I think we’ve always talked about quarterly variability. And this quarter really was no difference to that. We’ve had strong quarters. We’ve had the wind kind of being a lot of variability. We’ve had China CNG systems been a lot of variability.

So those two things are the predominant reason why we have the sequential drop this time, but we anticipate that sales will continue to show this relatively slow moderate growth, but we’ll continue to experience quarterly variability for those two main reasons..

Okay. But predominantly if you look at Q4 over Q3, the biggest drop-offs were China bus and wind.

Is that correct?.

Okay. But predominantly if you look at Q4 over Q3, the biggest drop-offs were China bus and wind.

Is that correct?.

Yes..

Okay. And just – can you remind us, how big of a business is China bus today? I know we’ve talked about it a lot in the past..

Okay. And just – can you remind us, how big of a business is China bus today? I know we’ve talked about it a lot in the past..

Yeah. I wouldn’t want to – one thing I think we’ve said is, our predominant customer there is a company called Weichai, and they have been right up there as one of our largest customers in our energy business. So it’s a substantial business..

Okay. Got it. And just when we talk about the fiscal 2015 guidance, you gave a couple of puts and takes. I guess military you’re expecting to be up modestly next year.

Could you maybe talk about some of the other end market drivers, maybe IGT? Or within the response you could talk about kind of segment growth rates and margins that are baked into your guidance?.

Okay. Got it. And just when we talk about the fiscal 2015 guidance, you gave a couple of puts and takes. I guess military you’re expecting to be up modestly next year.

Could you maybe talk about some of the other end market drivers, maybe IGT? Or within the response you could talk about kind of segment growth rates and margins that are baked into your guidance?.

Sure. Maybe I’ll start with energy, since that’s where we were focusing. We did mention IGT OEM side continues to remain not on the healthiest side, but our aftermarket has been quite strong. We anticipate that will continue. We anticipate our wind business will continue to show some growth.

We’re seeing some interesting growth in some areas of the market from our reciprocal engine business that we have not seeing significant growth in the past. So we kind of called out that many of our businesses seem to be strengthening on the energy side and we believe we’ll continue to see that.

There’s nothing that is showing the wild growth of the early wind days, but everything’s showing nice stable growth. On the aerospace side, we continue to see strong aftermarket overall. You saw the 7% for the year, but our 6% I think was for the full year.

And that’ll have some quarterly variability, but the commercial side, whether its large transport, regionals had been showing some nice growth and large cabin biz jets. You mentioned defense, yes, we expect that to be a modest improvement next year.

That, I’ll say, it kind of remains to be seen with respect to everything that’s currently going on as to what impact that may have for 2015. So that is an area of some uncertainty..

Got it. And how about margins? You said 100 basis points.

Was that a 100-basis-point improvement per segment?.

Got it. And how about margins? You said 100 basis points.

Was that a 100-basis-point improvement per segment?.

Yes..

Okay, got it. I’ll hop back in the queue. I appreciate it..

Okay, got it. I’ll hop back in the queue. I appreciate it..

Thanks, Tyler..

Thank you. We’ll take our next question, which comes from Pete Skibitski from Drexel Hamilton. Sir, please go ahead with your question..

Hi, guys. Nice quarter..

Hi, Pete. Thanks..

Just maybe to be a little picky on energy, back last time we talked to you when you were talking about your revenue range of 1.95 to 2.05, I think you’re expecting things to come in at the upper end. So I’m just wondering if you could give a sense what’s softened since then, or maybe something slid right..

I think it was just a little bit more of timing as the end of the quarter occurred. That if anything, as Bob highlighted earlier, we see the markets improving and as we go into 2015 here, we see the revenue growth overall in the company increasing. We’re still in this modest growth environment.

A little bit later as some of the new programs launch, we start seeing higher growth but there’s nothing special there. It’s just a little bit of a push out on some of the sales..

Okay. Hey, Tom, with the actions the U.S. is taking in the Middle East again ISIS, it seems like it’s kind of an air-driven activity and you guys it seems like air are on all the fighters that are operating over there.

Have you seen kind of maybe the demand isn’t coming through yet, but have you seen kind of increased pickup yet on the military aftermarket side as a result of that?.

We’re definitely seeing some increase pickup both on fleet readiness as well as on the smart weapon side of our business. So as Bob highlighted earlier, there is uncertainty there, but no doubt it’s a volatile world out there and if the campaigns continue to go, we would expect some increase in the defense sales..

Okay.

And then just my last question, on CapEx guidance for fiscal 2015, Bob, did I hear you right? Did you say $270 million for CapEx?.

I did..

Okay. And I thought 2014 was supposed to be the peak..

No. We really never went – I think we said 2014, 2015 would be similar, but just the timing of these major projects is causing that to be a little bit off from what we originally anticipated. But we have all three facilities kind of coming to a head here in 2015, so its a little steeper than 2014..

Okay. And how should we think about the drop-off when those three facilities complete? I imagine they’re going to actually complete in fiscal 2015..

No. Two will largely complete. So the aerospace facilities will be largely complete in 2015, but the energy facility will be pretty much most of that will be 2015, 2016 and completing until 2016. So we’ve still got ways to go, but we anticipate the – I’m not going to call it a drop off, but obviously a significant reduction starting in 2017.

And then we’ll see what maintenance is after that. We’ve targeted this $80 million number but we’ll see..

Okay. Okay. Thanks, guys..

Thank you, sir. So we’ll go with our next question coming from William Bremer from Maxim Group. So sir, please go ahead with your question..

Good evening, gentlemen..

Hi, Bill..

Hey, Bill..

Can we speak about initial provisioning in the aerospace side? Have you guys started shipping based upon the commentary? And can you give us some type of granularity of the magnitude of that in your numbers?.

Well, I’d say the larger initial provisioning that we’ve seen, it was in 2014 and I think it’ll carry over into 2015, it was tied around 787 and 747-8, those programs with their ramp ups. You’re starting – initial provision is really tied to new fleet operators and new routes.

And so those are still in the ramp-up and we think those will continue for several years. The newest programs, they haven’t launched yet so there’s no IP sales until you actually get launched, but today the main driver is, like I said, around 787..

Okay. And you’ve voiced 100 bps year-over-year on both segments.

Do you expect this to be more backend loaded? Or are we going to start to see the tangible benefits of this in the first half as well?.

Yeah, I think you’ll see a steady progress through the whole year..

Okay..

Remembering, of course that our first quarter is always our most challenging. So but coming after that, then we get more on the consistency..

Right. Hey, Bob, you mentioned that the China bus market is a substantial business for you guys.

How do you compare that to wind?.

Well, they’re pretty close. If you take all....

I’m trying, gentlemen. I’m trying..

Yeah. They’re pretty close in size when you take all of – not just the single customer Bob highlighted, but all the natural gas trucks and buses. They’re pretty similar..

Okay.

And can you give me a little color on the pipeline industry within energy?.

Yeah, we’re seeing demand, a lot of that when we highlighted aero-derivative gas turbines up and [recip] gas engines up, a lot of that is in the pipeline area..

Okay. Thank you..

Yep..

Thank you..

Thank you, sir. And we’ll take our next question coming from J.B. Groh from D.A. Davidson. Sir, please go ahead..

Thanks, guys. My question has been asked and answered..

Thanks, guys. My question has been asked and answered..

Okay, thanks..

Thank you. So we’ll take our next question coming from Michael Ciarmoli from KeyBanc Capital Markets..

Hey, good afternoon, guys. Thanks for taking my questions..

Sure..

Just maybe back into the CapEx question and expectations for free cash flow next year.

I mean, should we expect free cash flow to be down year-over-year?.

Yes..

Okay. And just again trying to think about, will we see a progression? I guess with the new aerospace facility maybe this dovetails into my next question, how should we think about as you go live in these new facilities, you start to spend, I guess, to progressively throughout the year on maybe machining and equipment.

How should we be thinking about the margins coming out of those facility? I mean you’re modeling for 100 basis points of improvement, so it sounds like you’ve got a pretty good comfort level of what any sort of either new product or legacy product would do on that new, call it, assembly line with a new lean footprint..

Well, we do think we have a good handle on it. The new facility – and maybe for clarity, and when we look at the total CapEx expenditure, the facility, the two facilities in Illinois, the buildings are done but we have a fair amount of time still to get the equipment in there and the lines up and running.

So as we break it, the facilities are there, we will still be optimizing those lines over the next 18 months as new programs get ready to launch. So we’ve modeled it. We’re going to see productivity out of those facilities.

And we’re also be managing the ramp-up and we believe the ramp-up and the depreciation expense will balance off against each other, and we expect to continue to expand our margins over the next couple years..

Okay, perfect. That’s helpful. And then maybe just staying with the margin theme, I think you said R&D as a percent of revenue should be similar next year.

How should we think about the kind of still ongoing bidding proposal activity for the 777X? Is that kind of incorporated into that assumption, or would that be some sort of incremental spend?.

Yeah, we’ve been spending already on that. It’s already in the last half of 2014 and you see probably efforts – well, our efforts on 777X will be through most of 2015 because we’re starting to see the first awards coming and they’ll be spread over the next year. So a major initiative for us but it’s all built into our numbers..

Got it, perfect.

And last one for me and this might – maybe it’s a little more challenging to pinpoint, but as we watch sort of the global energy markets, how should we be thinking about the sensitivity to your energy portfolio if oil prices continue to fall here? Again, I would think there’d be parts of your business aftermarket might be a little bit more insulated but have you guys tried internally to size up some of that that volatility or sensitivity with the movement in oil prices?.

We have a little bit. I think if you – there’s a couple key areas. If we see oil, a lot of times the question has been asked to me and Bob, what would throw off the aerospace backlog? And that would be if you had sustained, my opinion is, sustained oil prices below $60 a barrel.

They could dip, but sustain below could have an effect on our aircraft orders. And the reason for that is older aircraft become more economical to fly. So we watch for that. We don’t really believe any outlook I see that we’re going to have sustained oil prices that low.

So as such, I don’t think we’re going to see – the bigger concern for me there would be the aircraft business. Otherwise, we’re talking to customers and the like and we really believe in dropping down below $70 a barrel and the like, you’re going to still see the production occurring.

As you see lower natural gas prices, I think that’s positive for the use of gas turbines and natural gas engines so that helps our aftermarket because you see higher utilization.

So we have a natural balancing effect that if you see a drop-off in exploration or drilling, you would correspondingly see an increase in utilization and that’s a positive for us. So, right now, we don’t have any real high concerns about the commodity prices..

Okay, perfect. Thanks a lot, guys. I’ll jump back in the queue here..

Thank you..

Thank you. [Operator Instructions] So our next question comes from Sheila Kahyaoglu from Jefferies. Ma’am, please go ahead..

Thank you. Great quarter, guys..

Thanks, Sheila..

Just a follow-up on this energy theme, you mentioned both on the rotorcraft side and the aero-derivative side, CapEx expectations may come down for next year.

Have any of your customers come back to you over the quarter and kind of held off? Or is that an assumption you’re making?.

It’s more of an assumption that could happen. We’re actually seeing the whole portfolio sales increasing so it’s just little bits in various niches where we see some movements really as the whole infrastructure gets developed out. And so it’s kind of an expectation as we’ve been doing our planning.

But overall, we still see positive sales growth in the oil gas market..

Okay. And then maybe within the Power Gen portfolio within energy, I think you identified Power Gen as 60% to 65% of sales.

What portion of that is aero-derivative versus IGT?.

We usually just kind of lump them together, Sheila, on that one in terms of the industrial gas turbines we take as a whole. And it’s the aero-derivatives are used more in distributed power, whereas the IGTs are more base load. Some of those could still be self-distributed but that’s primarily the split.

So sometimes we track and see what parts of the world are some of the new power going into and is it 50 megawatts or below or 50 megawatts or above? And in total when we look at it, we just kind of lump them together. So, on Power Gen, they’re both doing well in terms of utilization.

And we do anticipate over the next couple of years you see the large gas turbines increasing in OE sales. They’ve been slightly down and flattish, but the order book is starting to pick up and as we move into 2016, 2017, we expect those orders to start increasing..

Got it.

And then in terms of organic growth progression throughout the year for both aerospace and energy, should do we expect weakness within energy to continue as incentives play out for Weichai, and aerospace kind of progress out of 5% or 6% organic growth rate? How do we think about that?.

Yeah. First, I would take exception to weakness in energy. I think there was a little bit of a timing issue. We actually think energy is fine, strong. It’s just a quarter-to-quarter kind of variability. We expect – we are expecting a good year in natural gas trucks and buses, so we don’t see weakness there.

And the rest of energy business is increasing in sales growth solid single-digits. So I actually think it’s progressing well. We still have this volatile global economy.

Nothing is taking off in a robust, huge, as Bob highlighted earlier, nothing’s taking off in huge growth but it’s solid growth and on that solid growth we’re going to have margin expansion and good leverage on net sales..

Got it. And then just one last cleanup item, if you don’t mind, I don’t know if you mentioned it, but you said CapEx is $270 million next year.

Is it – what should we assume for 2016?.

Probably too early to call it out. It should come down from that level. I didn’t recall 2014 being called out as the highest, but I think clearly 2015 should be as all three facilities are going on now. So it’ll come down in 2016..

Okay, got it. Thank you..

Thank you, ma’am. We’ll take our next question from Steve Levenson from Stifel. So, Steve, please go ahead..

Thank you. Hi, Tom and Bob..

Hi..

Hi, Steve..

Just a question, there have been a number of new business jets announced recently.

Do you think some of your acquisitions are going to help you pick up content on the new ones, similar to what you picked up on some of the more recent redesigns, especially with the change in engine providers?.

Yeah. If you actually look, we’ve had to be quiet about the applications, but we’re on all the new jets. So when you’re looking at the new Bombardier Global Express, with the GE Passport, we’re on the engine as well as the aircraft. The new Dassault 5X, we’re on the engine as well as the aircraft.

And with the Gulfstream, the new launch with the Pratt 800, we’re on both the engine and the airframe. So, in terms of large-cabin business jets, we’re really well positioned, as we are on smaller ones but smaller ones haven’t recovered as much but the big jets we feel real good about our position and actually higher content.

And that also, as you’re asking for the acquisitions, we have more content also because of the acquisitions. So it’s all playing well together..

Got it. Thank you. Just one other.

Are you seeing any destocking among jet engine customers? Or do you think that’s pretty much done?.

Yeah. No, we’re not seeing that..

Thank you very much..

Thank you..

Thank you. And our next question is coming from Michael Ciarmoli from KeyBanc Capital Markets..

Hey. Thanks for taking the follow-up, guys. Just one more on the, maybe the free cash flow. How should we think about clearly the CapEx maybe being a bit above expectations, working capital has continued to climb as a percent of sales.

Should we think – I mean, is there any flexibility to start getting that number lower next year? Or with the new facilities coming online, is there going to have to be maybe incremental investments in inventory as you guys make these transitions? I’m just trying to understand if there could be some offset on improved working capital management next year..

That clearly is a focal point for us. In a period of growth, and obviously the growth numbers we’re putting out are not phenomenal but they’re nice solid, as Tom said, growth figures that are causing the AR side to pop up a little.

I think actually we’ve done a pretty good job on the inventory side during this past year and bringing it down a bit in the fourth quarter. We would continue to drive those, a clear focal point for us. And so continued working capital management would be a high point.

The other thing I’d point out is that, where we ended up on CapEx for 2014 is a little bit below where we anticipated being. So you can see a little bit of offset 2014 low, 2015 a little high. And it’s really just kind of – we mentioned there would be a lot of volatility on these programs..

Got it. Perfect. That’s helpful. Thanks, guys..

Thank you. Mr. Gendron, there are no further questions at this time. I will now turn the conference back to you..

Okay. Well, I do appreciate everybody joining us today. And I hope you’ll be able to make our investor conference in December, where we’ll be going into, as always, a lot more detail on the business, more detail on our applications and more detail on positive outlook for the company.

I hope you can join us in December, and thanks again for your questions today. We’ll see you soon..

Ladies and gentlemen, that concludes our conference call today. If you would like to listen to a rebroadcast of the conference call, it will be available today at 7:30 PM Eastern Daylight Time by dialing 1-888-266-2081 for a U.S. call or 1-703-925-2533 for a non-U.S. call, and by entering the access code 1646127.

A rebroadcast will also be available at the company’s website at www.woodward.com for 14 days. We thank you for your participation on today’s conference call and ask that you please disconnect your line..