Don Guzzardo - Director of IR & Treasury Thomas Gendron - Chairman, President & CEO Robert Weber - Vice Chairman, CFO & Treasurer.

John McCain - Credit Suisse Sheila Kahyaoglu - Jefferies Pete Skibitski - Drexel Hamilton Rudy Hokanson - Barrington Jim Foung - Gabelli & Company.

Thank you for standing by. Welcome to the Woodward Incorporated Fourth Quarter and Fiscal Year 2016 Earnings Call. At this time, I would like to inform you that this call is being recorded for rebroadcast and 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, Chief Financial Officer and Treasurer; and Mr. Don Guzzardo, Director of Investor Relations and Treasury. 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 fourth quarter and fiscal year 2016 earnings call. During today’s call, Tom will comment on our markets and related strategies, and then Bob will discuss our financial results. 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 November 28, 2016.

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, our markets 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 for the fourth quarter, net sales for fiscal 2016 fourth quarter were $591 million, an increase of 5% compared to $563 million in the fourth quarter of the prior year. Earnings per share were $0.99 for the fourth quarter of fiscal year 2016, a 29% increase compared to $0.77 for the fourth quarter of fiscal year 2015.

And for the full year, net sales for fiscal year 2016 were 2.02 billion, a decrease of 1% compare to 2.04 billion in fiscal year 2015. On a constant currency rate basis, sales would have been consistent with the prior year. Earnings per share were $2.85 for the fiscal year, an increase of 4% compared to $2.75 for the prior fiscal year.

Free cash flow was $260 million, compared to $9 million in fiscal 2015, excluding the after-tax proceeds fiscal the formation of the joint venture with GE, free cash flow was $105 million. Fiscal year 2016 capital expenditures were $176 million, $111 million lower than the prior year.

Now, I will turn the call over to Tom to comment further on our results, strategies, and markets..

Thank you, Don, and good afternoon to those joining us today. Overall, we delivered solid results in line with our expectations. Aerospace outperformed and the industrial markets were more challenging than expect that start of the year. With the narrow-body program now launching, we expect continues growth in Aerospace.

Form the industrial perspective, we feel that we are at the bottom of the cycle but uncertainty remains in the timing of the recovery. All three of our new facilities are up and running and lean-value stream designs are beginning to deliver the anticipated productivity improvements.

2016 marketed transition from our heavy investment cycle strong cash generation with the reduction of more than $100 million in capital expenditures, putting us on track to achieve our long-term free cash flow target.

Moving to our market segments in more detail, starting with our Aerospace segment, our investments in the R&D and capital are translated into meaningful sales growth and the expanding margins. The commercial market continues to be robust with the ordered backlog remaining at record levels.

Significant key new platforms have moved in the production and initial provisioning is underway. The A320neo powered by the PurePower engine continues to ramp up and the CFM LEAP engine for the A320neo entered service last quarter. Boeing 737 MAX also powered by the CFM LEAP is scheduled to under serve us in March 2017.

Commercial active market remains strong driven by higher utilization and growth in global passenger travel and cargo miles as well as initial provisioning for the new platforms being launched. Our defense business continues to be strong. OEM sales have been boosted by political U.S.

budgets and global under rest particularly on the Middle East, which has driven a significant increase in sales of smart weapons. Military aftermarket sales remain healthy fueled by heavy maintenance needs, upgrades and overhaul of various platforms.

We expect military aftermarket activities remain strong in 2017, but to moderate somewhat from the high volume in 2016. Rotorcraft and business jet markets remain weak, and we currently do not see any science of recovery.

Overall, the Aerospace market remains robust and our Aerospace segment share gains will continue to produce strong top line growth; and we are on track to achieve our long term segment margin targets. Turning now to our industrial segment.

Despite the challenging macroeconomic headwinds we've faced with the industrial segment, we remained confident that the long-term secular trend such as growing demand for electric power fueled by rise in global middle-class, greater use of the national gas and most stringent emission regulation will be key drivers to this business going forward.

The depressed CNG truck market in China. The impact of oil and gas pricing and reduced demand for commodities coupled with overall economic uncertainty have negatively impacted our industrial business.

Throughout 2016, we took definitive actions to align the business with current market condition and strategically positioned the business for future growth and profitability. Power generation related markets continue to see strong aftermarket sale with softness in the OEM side of the business.

As anticipated, our OEM sales did pick up in the fourth quarter. However, they’re still being impacted by the lack of investments in large capital projects resulting from continued economic uncertainty. Within transportation, allover national gas truck markets remain soft.

We have seen initial signs that there may be improvement as incentive starts to take hold. Within oil and gas, new investments and prices remain weak. However, the current utilization is supporting aftermarket sales activity.

In summary, as we look out fiscal 2017, we expect ongoing positive momentum in Aerospace and expect the Industrial segment to stabilize, if not show slight improvement.

We’ve taken decisive action to bring our cost structure more in line with current demand and will continue to manage our cost aggressively while maintaining the flexibility to respond when end markets improve.

We remain confident in our long-term strategy and believe Woodward is well positioned to deliver significant value to our customers and investors in the years ahead. Now, let me turn it over to Bob to discuss the financials in more detail..

Thank you, Tom. As Tom mentioned, our results for the fiscal fourth quarter and full year 2016 reflected solid growth in the Aerospace segment and ongoing weakness in the Industrial segment, largely due to the challenging global macroeconomic environment.

We finish strong with each exceeding quarter of the year showing improved earnings before tax, leading up to a record fourth quarter. In Aerospace, sales increased 9% this quarter, fueled by strong performance in commercial aftermarket and defense OEM and aftermarket.

Aerospace segment margins expand to 22% in the fourth quarter and were up 260 basis points to 18.8% for the full year. The improvement was largely driven by the higher sales and aftermarket volume.

Related to our aftermarket volume, I’d like to clarify the impact of our joint venture with GE, which is formally named Convergence Fuel Systems in light of some confusion regarding our total aftermarket sales volume.

As we have indicated in the past, the JV currently procures all fuel system products related to GE large aircraft engines from Woodward including aftermarket products and service. These aftermarket products are then sold through the JV to various customers.

For comparability purposes, we will refer to combined commercial aftermarket sales as those aftermarket sales made directly by Woodward, which are reported in our results, combined with aftermarket products provided by Woodward and sold through the JV, which are not included in our reported sales.

We believe the combined aftermarket sales describes a more complete picture of the total aftermarket demand for products provided by Woodward, as compared to the commercial aftermarket growth rate for the industry as a whole. Based on this approach, combined commercial aftermarket sales were up 11% in the fourth quarter compared to the prior year.

Commercial aftermarket sales reported only in Woodward sales increased 1% in the fourth quarter, compared to last year which was prior to the formation of the JV. For the full fiscal year 2016, combined commercial aftermarket sales were up 16%, compared to the prior year.

Commercial aftermarket sales reported only in Woodward sales increased 6% for 2016 compared to the prior year.

Please see the commercial aftermarket growth table included on Slide 11 in the presentation materials provided for this call and referred to the with footnotes in related 8-K, quarterly 10-Q and annual 10-K for fiscal 2016 to be filled shortly from more details on the joint venture. Turning now to Industrial.

Sales for the quarter were comparable to the same period of the prior year. We continue to face an extremely challenging environment during the year; however, we did see sequential top line improvement over each of the last three quarters.

Fourth quarter industrial segment earnings as a percent of sales were 8.5% compared with 13% in the prior year period. Segment earnings were negatively impacted by expenses related to aligning with the business with the soft market conditions and cost that we anticipated for the new facility in Colorado.

At the Woodward level, gross margin percentage for the fourth quarter of 2016 was 28%, compared to 28.4% for the prior year period. Goss margin for fiscal 2016 was 27.1% compared to 28.7% for the prior fiscal year.

The reduced margin percentage for the full year was primarily the result of the 16 million special charge recorded in the first quarter and the higher cost associated with the new facilities. Research and development expenses for the fourth quarter of 2016 decreased to 5.6% of sales from 6.5% of sales in the prior year quarter.

For fiscal 2016, research and development expense was 6.2% of sales, compared to 6.6% for fiscal 2015. For fiscal 2017, we expect our R&D expense as a percent of sales to be approximately 6%. The effective tax rate for the fourth quarter of 2016 was 21.8%, compared to 27.2% for the fourth quarter of 2015.

For fiscal year 2016, the effective tax rate was 20.2%, compared to 24.7% for fiscal 2015. The reduction in tax rate was mainly due to the reinstatement of the R&D credit and accounting changes with respect to the tax treatment of stock compensation. For fiscal 2017, we expect our effective tax rate to be approximately 25%.

Looking at cash flows, operating cash flow was 435 million for fiscal 2016. Free cash flow for 2016 was 260 million. Excluding the after tax joint venture proceeds, free cash flow was 105 million for 2016, compared to 9 million for 2015. Capital expenditures were significantly reduced to $176 million for 2016, down from $287 million for 2015.

For 2017, we anticipate capital expenditure to be approximately 110 million and free cash flow to be approximately 200 million. In fiscal 2016, we returned 152 million to shareholders in the form of dividends and share repurchases. Lastly, turning to our fiscal 2017 outlook.

We anticipate continued strength in our Aerospace segment both commercial production volumes and after market should remain solid. We will benefit from the continuing ramp up of both the Airbus A320neo and the Boeing 737 MAX. We expect strong smart weapon demand to continue and defense overall to remain solid.

Therefore, we anticipate our Aerospace sales to be up approximately 6%. We saw significant margin expansion in 2016, and we believe we will maintain or improve those healthy margins in 2017.

In our Industrial segment, due to the significant uncertainty we previously mentioned, we are projecting industrial segment sales to be flat to slightly up and margins to be up 100 to 200 basis points, compared to fiscal 2016. As a result, at the Woodward level, we anticipate fiscal 2017 sales to be up approximately 4% to 6%, compared to 2016.

We anticipated diluted earnings per share to be in the range of $2.95 to $3.25. This assumes approximately 63 million fully diluted shares outstanding. The lower end of this range assumes further degradation in industrial sales as a result of continuing economic weakness. The upper end of the range assumes some industrial market improvement.

I’d like to remind everyone that historically our fiscal first quarter is sequentially lower due to normal business trends and fewer working days as a result of the holiday schedule and flat shutdowns. For 2017, we anticipate a somewhat more challenging first quarter than our historical pattern will suggest due to order volume timing.

This concludes our comments on the business and results for the fourth quarter and fiscal year 2016. Operator, we are now ready to open the call to questions..

Thank you. The question-and-answer session will now begin. [Operator Instructions] Our first question will be coming from Robert Spingarn of Credit Suisse. Your line is now open..

Hi. Good afternoon, this is John for Rob. Within the industrial end market, can you just talk a little bit about the flat to slightly up and the various puts and takes, and you mentioned the low-end of the guidance assumes some deterioration in the high-end, some improvement.

Where, within the industry where do you see things shaking out?.

Well, a little bit what we’re seeing right now as you could see from the sequential quarters is that we really do think we're at the bottom very close, if not fully at the bottom. We’re starting to see some indications of some improvement in the CNG truck market, some improvement in aftermarket utilization.

So, we’re starting to see the signs of things turning. But it’s very uncertain at what rate the recovery is going to take place. So, we see that we're on the recovery side, but it’s a little hard to tell with very good accuracy, what the regular recovery will be in year 2017.

So, that’s the reason we have a little wider range there but we are seeing signs improvement..

That’s helpful.

And if I could just follow up, is it -- do you have any sense certainly on from the outcome of the election? What impact that might have on the energy business whether as it results to both renewables and non-renewables? And the impact on your business or is it too early to tell?.

Well, it’s a little too early to tell that more what we call all of the above energy policy would probably be a positive to Woodward..

Thank you. And our next question will be coming from Sheila Kahyaoglu of Jefferies. Your line is now open..

Hi, I am just want and can you just elaborate a little bit about the order trends in terms of Q1 and what you're seeing there?.

On some of the order trends, we have got good confidence in the full year. We just happened to see some of the activities from various customer that little soft in first quarter. I don't want to overreact any of that.

It's just kind of normal activity, but we just wanted to call out that we expect to soft first quarter in our planning followed by a much stronger second to fourth quarter..

And I am assuming it's more on the Industrial side than it is on Aerospace?.

Yes, but there is some impact of the Aerospace as well..

Okay, and just terms of the Aerospace strengthened the quarter, the margins were really good.

Was that more driven by the military aftermarket? Or was that same of the commercial OE pick up the pickup, if you could talk about that? And just the outlook, the guidance is just moving pieces there?.

Yes, it was actually both. We did have strong military. We started to see some initial provision for the narrow-body programs. So, as anticipated, those would start to come in. So, we had good across-the-board activity and segments, minus the bizjet market.

The rest were all healthy and lot of the work we've been doing on our margin, margins have been coming through. So, it's a strong healthy quarter..

I guess just last one on the aftermarket, how should we think about the ramp up on the LEAP and the GTF and the impact to the aftermarket? Is it one-per-one or is it one-per-five for every airline that takes it?.

Yes, I think one of these ramps you're referring with initial provision, right. Yes, on the initial provisioning, the two more complex have just a ratio of how many aircraft are out there. The initial provision is usually tied to the number of new operators, the number of routes those operators are dealing, the location of the routes.

So, we have a good formula, we used to estimate initial provisioning sales and then we look at how it'll look at the airline customers.

So, there is a number of factors that go in, but definitely that they are starting and as they produce more per year, that's going to translate to more operators, more new roles; and there will be a positive for initial provisioning. As I said earlier, it's has started and as a move into '17 and '18 that will continue to growth..

Thank you. And our next question comes from Pete Skibitski of Drexel Hamilton. Your line is now open..

Nice Aerospace store, maybe Bob, can you qualify were there any onetime charges in the quarter in industrial because as your high revenue quarter for the year, but your low margin rates and I was wondering something surprised you there or something else?.

No surprises, I would not call them onetime charges, we kind of made the comment through the year, we were taking actions that where some of those in the quarter they learned significant enough to call out separately, but there was also costs related predominately, the costs were related to the start up associated with the new Fort Collins industrial facility.

So the combination of those two things, both were planned and so no surprises, but they did bring down the earnings a little more than you saw. If you'd put those back, we were pretty much on the full year rate..

Okay, I got it. And then, I guess maybe one for Tom.

Tom, I’m curious is to how the three kind of revenue areas within Industrial, how they perform in '16, the transportation power gen in oil gas and your expectation for ’17 in those various?.

Yes. Well, as we saw oil and gas was down very significantly, transportation which we lumped in with the CNG and you also have rail and marine was down again fairly substantially. Our renewable business was up flat and power jet -- if it's power gen..

No..

The power gen was also down, but was improving as we hit the fourth quarter..

Okay, understood..

Yes, as you saw overall, the last two years have been tough on the top line for Industrial segment..

And I want to ask also, is there any change to your relationship with the Westport YHA JV and another go through a merger there and while got there they hit pretty hard.

And I just wonder, if there is any change to your business arrangement?.

No. It really hasn’t impacted us..

[Operator Instructions] And our next question comes from Rudy Hokanson of Barrington. Your line is now open..

Thank you. My question has to do with your business in China. And I was just wondering, if you could tell us, if you’re seeing any kind of signs or pick-up there, if there is any kind of relief from regulation.

Some other numbers that are coming out from the larger growth in China, the last couple of months have been showing some positive trends and I was wondering, if you could maybe explain what you’re saying for Woodward right now?.

We’re seen some slight improvement in terms one of our larger activities in China, the CNG truck market. There has been a number of quarters of improvement and the spread between diesel and natural gas, it seems to be taking whole. We’re seeing some initial signs of some order volume going in the right direction.

We’re not sure how fast that ramp, that has, it looks like -- it looks promising that could be turning to corner. A lot of our other equipment sales are still fairly flat. We are seen some aftermarket so utilization is going on. So always look that, if equipment is being utilize after a period of time start buying new as well.

So, you’ve seen utilization aftermarket sales. So, we’re still not seeing improvements in the sales outlook at the same..

And then going back to an earlier question, I just wanted to know if I understand in the Aerospace market and the strong aftermarket sales that you're seeing, is there something unusual there as far as the proportion goes? Or would you just view this as a matter of timing on OEM sales may be lagging and therefore after market as a percentage of sales would appear higher?.

No, that wouldn't be that case. What I'd say, we try to highlight this for a while and hopefully you can see with the numbers that we put in the slide deck. We have very good fleet dynamics likely to demographic of our fleet is quite good.

In terms of the installed base and the maintenance cycles that are going on particularly around the A320, 777, and some of the other legacy products. Second part of that is I would say is our aircraft turbine system group and when you're on the engine, that's the very good aftermarket part of the market.

Meaning, it generates a lot more demand for maintenance. So, the good fleet dynamic, the high intellectual property proprietary products that we have on the turbine side and the shop visit rates that are going on.

That all activity we anticipated is strong and as we launched this new platforms including the small-wide bodies that are going out still in volume today as well as the narrow bodies both also the initial provisioning. Those dynamics were very good, and we see that continuing and we have a strong healthy aftermarket..

Thank you. And we have a follow-up question from Pete Skibitski of Drexel Hamilton. Your line is now open. If your phone is on mute, please unmute..

Sorry about that. On Aerospace margin guidance for '17 given that kind of flattish, is there -- you're talking about 6% growth, not given a lot of volume leverage it looks like.

Is there some sort of mix issue that's getting in the way of that leverage for '17?.

No, I think we said sometime that the 20% was our long-term target. We happened to achieve that here this year, and we had extremely strong fourth quarter. And so that takes normal volatility, and say what we did say is, we would either maintain those healthy margins or growth slightly. So, I don’t think there is anything new underlying any of that.

We continue to see very strong aftermarket, that will continue to grow and it's really nothing more than that..

Okay and couple of housekeeping.

I guess, Bob, on the first quarter you guys talked about, I think last year's first quarter adjusted with $0.56, are you thinking that fiscal first quarter '17 will be down form that just given some of the timing issues that you referenced?.

It could be, yes. That's what we are in terms of order volumes, you never know until you kind of get through the quarter, but they way I look at the moment we could be down a little bit..

Okay.

Did you have the '17 tax rate, I would love to give that?.

Yes, 25 on average..

25% okay great. Thanks again guys..

Thank you. And we do have a follow-up question from Sheila Kahyaoglu of Jefferies. Your line is now open..

Thank you, guys. Basically, I have few questions. I guess for Q1, it’s hard to see really deep down year-over-year, if you're still considering a very low tax rate in Q1 of ’16.

What would really change unlike, I guess I’m having hard time matching that out?.

And I think for the call, he was going back ’15 because perhaps of the charge that we had in ’16. So, it would not be lower than the reported amount, but when you look 66-year ago and ’15, it was $0.40 this quarter because the charge. And we have extremely low tax rate in the first quarter this year as well because of the R&D credit..

Got it.

And over the adjusted number with respect to '15, Q1 '16, how would it work off of that excess inventory charge?.

It’s too early to tell. I don’t believe it would be significantly lower than that. All the targeting is that current order volumes are showing a little bit different pattern than we saw last year at this time..

Sorry, I missed that. I thought it was off of Q1 '16.

And then just a quick one, can you update us on HA turbine and where you are with that?.

The HA is continuing to track the sales and orders that GE has announced, and we’re tracking with them. So, it’s progressing well..

Thank you. And our next question comes from Garo Norian from Palisade Capital Management. Your line is now open..

Just wondering a little bit of longer term look the next several years, look like in the past you guys are targeting growth kind of high single-digit maybe double-digit for the Aerospace business, and we’ve done kind of the 6% for the past couple of years and that’s the guide for 2017.

Is it right to still think or that's going to accelerate some point in the new years?.

Yes, we definitely see it moving up as these new narrow-body programs start to ramp. So, if you look at the Airbus and Boeing ramp rates, that starts as you get into fiscal year 2018 to 2019, you'll start seeing those ramp up and that’s start to help with the growth rate number..

Thank you. And our next question comes from Jim Foung of Gabelli & Company. Your line is now open..

Yes, just wondering with a potential $1 trillion infrastructure bill coming in 2017, how could that positive impact your industrial business?.

If the infrastructure investments take hold that would be a positive. If you go through where our control systems end up, they definitely are in construction equipment, mining, transportation, power, oil and gas. All of those have the potential to be markets that will benefit from the new administration policies.

At this point, we haven’t taken a stance or an opinion on the growth rate associated with those, but there is no doubt that those are favorable to our Industrial segment. And we are going to wait and see the policies and then once we know that that, we may have a better idea the growth that could come from that..

So you don’t have any that factor in your 2017 guidance?.

No, none..

Okay, so it's could be a potential upside for you then right? And then may be just talk for about how the ramp on the LEAP engines coming long and I understand from other suppliers, there is a lot of pressure to ramp up quickly? And I was just wondering out there, are you seeing any issues ramping up or new supply chain to meet the production demand?.

Yes, I really can't comment on the reference supply chain. But that I don’t know, but for Woodward, we've had -- the narrow-body programs have an aggressive ramp rate. They had from the very beginning.

We've been working very closely with the engine customers as well as the aero framers, on ensuring that we're well position to deliver on those ramp rates. And I'd say this is the best I've seen in my carrier of our customer working on production readiness, ramp rates and making sure the supply chain is going to deliver.

So, I would give them kudos for that. We are attracting well and we are confident that we can meet all the production rates that they are asking for it. So, I think we're in a good shape. We just need all the supply chain to be good shape and then the great to attract..

Thank you. And our next question comes from the [Bill Ladlie] from Cowen and Company. Your line is now open..

I had a couple of quick question for you.

I was helping you could expand a little more on the underlying margins for JV and how the sales for JV compare to the margin that you reporting in Q4?.

From a standpoint of the JV itself, not really able to report much on joint venture. In terms of a structure, there are three programs; two of which are active; one is which is in development with GE90, the GEnx which powers the 778 and 747-8 and the GE9X which will be on the 777X, that ones in development.

So, the structure is such as those free true programs that are active flow thought the joint ventures. So, we sell to the joint venture, joint ventures sales to GE and to other aftermarket customers. And then, we shared development on the G9X engine and that flow through the joint venture as well.

So in the fourth quarter, you see the impact of largely the aftermarket sales offset by the development cost in that line and our reported results call be earnings from JV..

Okay. Thank you and that I had a follow-up to Sheila's questions on the HA turbine. For just trying to square couple of your comments, so Q4 industrial revenue was down about a 1% on a down 8% comp. And you're guiding Q1 down sequentially more than you see historically, but GE is talking a pretty aggressive ramp up of gas turbine shipments in Q4.

Just trying to get a sense of how I square this two items given on your few months lead time.

I guess why wasn’t power gen up more in fiscal ’16 given GE’s ramp on H class turbine which you have more content on?.

Right, well. The item is that you have to look at as we are on the HA machine, it's got good content for us and GE is ramping up. So that’s a positive to us. But we also play across entire industrial turbine machinery market and a lot of other suppliers and other parts of the market are soft. So, it’s an offsetting one.

So there is no misalignment between our sales and our outlook at GE, it just happens to be the rest of the market is soft. So when we talk about power gen, we’re talking not only about gas turbine about steam power generation as well as reciprocating engine power generation.

So, we go across the whole portfolio in total power was soft, but the H class is a bright sport in that market..

And so to that point, would you expect Q1 sales to be down year-over-year in industrial?.

Year-over-year would be, as you can look at our quarterly flow for this year, first quarter was down quite a bit. As we’ve indicated, we really don’t know how this recovery will pan out in terms of timing. So, it’s very difficult to tell whether it will be slightly down to flat to slightly up from the first quarter of this year..

Thank you. And we do have a follow-up question from Pete Skibitski of Drexel Hamilton. Your line is now open..

A quick clarification guys, on the 110 million CapEx guidance for fiscal 2017, previously, you've talked about 90 million kind of run rate for maintenance CapEx.

Is there just like 20 million in capital projects coming over from fiscal ’16 or is 110 more, so the new maintenance CapEx kind of run rate?.

No, we will continue to come down from that level as well. So, yes, there is still little hangover on capital projects related to all the new facilities and so forth. So, we will continue to decline in 2018 and beyond..

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

Okay. Well, thank you again for everybody join us today and many of you I know we will see at our investor conference here later in December, and I'll look forward to talking to you at that time. So, thanks for joining us today..

Ladies and gentlemen, that concludes our conference call for today. If you would like to listen to a rebroadcast of this 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 1675522.

A rebroadcast will also be available at the Company’s website, 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..