Don Guzzardo - Director, Investor Relations & Treasury Thomas Gendron - Chairman of the Board, Chief Executive Officer and President Robert Weber, Jr. - Vice Chairman, Chief Financial Officer and Treasurer.

Peter Skibitski - Drexel Hamilton Sheila Kahyaoglu - Jefferies & Company, Inc. Gautam Khanna - Cowen and Company Robert Spingarn - Credit Suisse Michael Ciarmoli - SunTrust Robinson Humphrey.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Woodward, Incorporated first quarter fiscal year 217 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 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 conference over to Mr. Guzzardo..

Thank you, operator. We would like to welcome all of you Woodward’s first quarter fiscal year 2017 earnings call. In today’s call, Tom will comment on our markets and related strategies and then Bob will discuss 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 February 6, 2017.

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. 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, based on our outlook and assumptions for the economy and our businesses more specifically. Those elements can and do frequently change. Please consider our comments in the light of the risks and uncertainties surrounding these elements including the risks we identify in our filings.

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

Turning to our results, net sales for the first quarter of fiscal year 2017 were $443 million compared to $445 million in the first quarter of 2016. Earnings per share were $0.73 for the first quarter of 2017 compared to $0.40 in the first quarter of 2016.

The prior-year first quarter included after-tax special charges totaling $10 million or $0.16 per share related primarily to strategic actions to consolidate facilities, reduce costs and address market conditions. EBIT for the first quarter of 2017 was $53 million compared to $34 million in the first quarter of 2016.

EBIT in the first quarter of 2016 includes special charges of $16 million. Free cash flow for the first quarter of 2017 was $31 million compared to $4 million in the prior-year period. Capital expenditures in the first quarter of 2017 were $21 million compared to $33 million in the first quarter of 2016.

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

Thank you, Don, and welcome to those joining us today. Our first quarter operating results came in largely as we anticipated for both segments. At the Woodward level, we improved earnings on essentially flat first quarter sales.

The actions we have been taken to rationalize our cost structure and the early impact of productivity improvements in our new facilities are beginning to materialize. Aerospace saw continuation of positive trends into the first quarter.

After-market activity remains strong, but, as anticipated, commercial after-market sales were lower than the prior year due to the timing of deliveries and the strong prior-year quarter. The industrial segment is beginning to show signs of stabilization with after-market sales supporting a flat OEM that we believe has reached the bottom of the cycle.

First quarter cash flow was strong and reflects our transition to the cash generation phase of our business cycle as capital investment declines from elevated levels in prior years.

Focusing on our market segments in more detail, within aerospace, current order backlogs remain at historically high-levels, which should support healthy production rates through the next decade.

Next generation platforms are beginning to ramp up including the Airbus A320neo and Bombardier C Series, while the Boeing 737 MAX is scheduled to go in production in the March timeframe.

Commercial after-market remains strong driven by higher utilization and growth in global passengers, travel and cargo miles as well as initial provisioning for new platforms being launched. The regional aircraft market is improving, driven by the launch of new programs while business jet and rotorcraft markets continue to struggle.

Defense sales continue to be bright spot. Heightened worldwide instability, rising international defense budgets and mounting global demand for smart weapons are driving increased OEM sales. Defense after-market is benefiting not only from aircraft service life extensions, but also from various upgrade programs.

Turning now to Industrial, long-term trends underlying our industrial business remain solid and we are well-positioned to benefit as end markets improve. Global industrial production metrics are improving and we are seeing signs of stabilization in a number of regions and markets.

Focusing on our three main industrial market segments, in power generation, while OEM sales continue to be soft, the installed base is being kept in service longer which has continued to drive healthy demand for aftermarket parts and services, particularly related to industrial turbines.

In transportation, the regulatory environment for the natural gas truck market in Asia remains positive and industry sales are improving, although we are reluctant to call this a trend at this early phase.

In oil and gas, with the recent stabilization of oil price above $50 per barrel, we’re seeing some improvement in upstream market, although Woodward has relatively minor exposure in this area.

In summary, as we look to the balance of fiscal year 2017, our first quarter performance was in line with our expectations and we are on track to achieve our full-year guidance. Now, let me turn it to Bob discuss our financials in more detail..

Thank you, Tom. With one quarter behind us, the year is starting off largely as anticipated. I'm sure you've noticed the favorable impact of a tax planning strategy, which was executed in the first quarter. I want to emphasize that this benefit was planned for and included in our expected full-year tax rate of 25%.

Future quarters’ tax rates will be significantly higher. In Aerospace overall, sales were largely consistent with the prior year. Strong performance in defense and some areas of our commercial OEM business were offset by continued weakness in business jets and rotorcraft sales.

As Tom mentioned, we expected commercial aftermarket sales to be down this quarter compared to the prior year, given the timing of deliveries and the relative strength of the prior-year quarter.

While commercial aftermarket activity remains strong, combined commercial aftermarket sales, which as we defined last quarter includes aftermarket sales made through the joint venture, were down 5% compared to the prior year. We still anticipate full-year aftermarket growth to be in the mid-single digits.

Aerospace segment earnings for the quarter were 17.6% of sales compared to 16.2% in the same period last year. The improvement was driven largely by lower R&D expense. Turning to Industrial, first-quarter industrial segment sales were flat compared to the first quarter of fiscal 2016.

First-quarter Industrial segment earnings were 10.2% of sales compared to 12.2% in the prior-year period. Segment earnings were negatively impacted by product mix. Additionally, increased facility costs related to the new industrial facility in Fort Collins were offset by cost savings related to strategic actions taken in prior quarters.

At the Woodward level, gross margin percentage for the first quarter of 2017 was 26% compared to 25% in the prior-year period. The prior-year first quarter included the impact of the special charges.

Research and development costs were 6% of sales compared to 7.1% of sales in the prior-year first-quarter, largely due to joint venture funding of large aircraft engine fuel system programs and normal variability in project spend.

Strong general and administrative expenses were $34 million this quarter compared to $41 million for the first quarter of last year, due to the timing of expenses and strategic cost reductions in the third quarter. The effective tax rate for the first quarter of 2017 was 1.1% compared to 7.6% for the first quarter of 2016.

The 2017 first-quarter tax rate is attributable to the favorable impact of repatriating certain foreign earnings. The first quarter of 2016 included the benefit from the retroactive reinstatement of the research and experimentation tax credit.

Our expected full-year tax rate of 25% anticipated the benefits of the repatriation and is therefore unchanged. Looking at cash flows, we generated $52 million of cash flow from operations for the first quarter of fiscal 2017 compared to $37 million in the prior year.

Free cash flow for the first quarter of 2017 was $31 million compared to $4 million in the same period of the prior year. Capital expenditures were $21 million for the first quarter of 2017 compared to $33 million for the prior-year quarter.

In the first quarter of fiscal 2017, we repurchased shares of our common stock for an aggregate purchase price of $24 million. Lastly, turning to our fiscal 2017 outlook, for 2017, our guidance is unchanged. We expect net sales to increase by approximately 4% to 6% over 2016 and earnings per share to be between $2.95 and $3.25.

As we mentioned, sales and earnings for both segments are anticipated to be in line with original guidance, with Aerospace sales up approximately 6% and segment margins flat to slightly up compared to a strong 2016. Industrial sales are expected to be flat to slightly up and segment margins to increase 100 to 200 basis points.

This concludes our comments on the business and results for the first quarter of fiscal year 2017. Operator, we are now ready to open the call to questions..

Thank you. [Operator Instructions] Our first question comes from Peter Skibitski from Drexel Hamilton. Your line is open..

Hey, good afternoon, guys. Nice margin performance..

Hi, Pete. Thank you. .

I guess one for Bob first. Hey, Bob, on the SG&A, I might have missed that. It was really low this quarter, I think lower than any quarter of fiscal 2016.

Could you give us some color as to what's going on there?.

Well, largely it was timing. So, first quarter was low for timing of certain items. The overall run rate for the year should be very consistent..

Okay. And then maybe for Tom. Tom, on the Industrial side, it looks like GE is guiding to flat gas turbine deliveries, OE deliveries, in 2017.

So just to kind of connect that to your guidance, is it basically you're thinking gas turbine OEM is flattish year-over-year, and after-market – it's been running hot, so maybe after market is flat to up and that's kind of how you get to your guidance? Is that reasonable?.

Well, a little bit with the OEM side, Pete, just to kind of remind you, the new turbine sales, particularly H turbines, we have a lot more confident. So, though we’re guiding, I think, numbers flat, there is a little upside there. And you’re correct, the remainder is coming from aftermarket.

So, we see we have still a good aftermarket year in 2017 and some improvement on dollars, but maybe not on units..

Okay.

So, pretty positive turbine year, but maybe it's the reciprocating side that offsets?.

Well, I was really going to say, right now, we're still seeing on the receipt side, some softness. We still see some softness in our steam OEM sales. We do have indicators though of some positive things coming as we highlighted on natural gas trucks. We just have to see a few more months to see if that trend is going to hold.

So, we’re looking to – overall flat to slightly up. I do think, if you look over the last three quarters, we definitely have a bottoming, when you compare year-over-year, quarter sales in industrial. So, we’re real confident about that. The macroeconomic indicators are pointing in the right direction. We’re seeing some positive signs.

It’s just exactly timing of that materializing. So, that’s why we’re still holding it flat to slightly up on total sales, but it is balanced between those, as I was describing..

Okay, got it. Very helpful, thank you..

Thanks, Pete..

Thank you. Our next question or comment comes from the line of Sheila Kahyaoglu from Jefferies. The line is open. .

Hi. It's Sheila. Good afternoon..

Hi, Sheila..

Hi. I just wanted to touch base on, I think on the last call, you mentioned some orders slowing that you expected in Q1.

Was that in reference to the commercial after-market being down? If you could comment on that, and then just on the ramp of the new engines, how that's going for you and how you think about the complete ramp for 2017?.

I think in terms of the orders, when we’re looking at it, in our guidance, the last time, we’re going to have a little lower in the first quarter, a lot of that was timing of deliveries. And what I would say, if we’re looking at particularly the aerospace commercial, we are seeing the orders, we are seeing contracts for maintenance coming through.

So, we’re confident in the full year outlook for that. It was just – it happens once in a while, the variability from quarter to quarter, we knew we were going to have a little softness in there. Also, in the first quarter, we are expecting maybe a little softness on some of the gas turbine side, just again not a trend, just the timing of the order.

So, that was anticipated. Basically, we’re on plan. So, we’re feeling fine for the full year on that. Sheila, I forgot the second part of your question..

It was just about the ramp on the engines, and I was just wondering if it was like an initial provisioning timing issue within commercial after market?.

Well, that was some of it, both for – you have the initial provisioning for the new programs coming out for the narrow-bodies that we also still have some provisioning sale that we are planning for the year. They were – it was a soft first quarter for that. But we do orders flowing and that's why we are confident in the remainder of the year..

And in terms of the engine ramp, is there a quarter where you really see an inflection, or it's sort of steady throughout 2017 and we see a big pick-up in 2018?.

It starts to pick up sort of at the end of our year here and definitely 2018 is a big year. So, it’s – yeah..

And then just last one for Bob. I know you said the tax rate for the year, the 1% was anticipated and it's 25% for the full year. It implies 30% for the next three quarters.

Is that how we should be thinking about it?.

That’s exactly the way that will work. The timing of the earnings impacts that a bit, but it’s roughly 30% each quarter for the remainder of the year..

Okay, thank you..

Sure..

Thank you. Our next question or comment comes from the line of Gautam Khanna from Cowen and Company. Please state your question..

Yeah, thanks. Good afternoon, guys..

Hi, Gautam..

So just to follow up on the after-market observation, the down 5%, can you give us the numbers ex the JV? Was it much different, just the direct Woodward sales for the after-market?.

Yeah. The direct were 14% down and with – the combined was the 5% down. So, it’s roughly been about the same that we’ve been calling out as we’ve going forward here. .

Okay.

And your point is this was just a comp issue, but that orders have actually picked up, so that in fiscal Q2 you will see kind of a return to positive or what gives you confidence in the remainder of the year?.

Well, it’s definitely in the orders. The initial provisioning sales, we have orders coming in. And that’s through the next three quarters. But the order book has filled in very well to our forecast. So, it’s lighter in the first quarter. And we also have sometimes timing to the maintenance activities and the parts sales.

So, when we are looking at the order book prior to the first quarter when we kind of guided it down, we could see that order pattern and the delivery pattern. So, we do have confidence because the orders are flowing and we can look at the outlook and its filling in per our forecast.

So, that’s how we are confident going forward in the remainder of the year..

Okay.

And just to get an order of magnitude on this, when we talk about down 5%, is that on a base of approximate – what's the base of revenue in a given quarter to the after-market? Is it around $70 million to $80 million or the 5% is not a whole lot of dollars or could you remind us – can you calibrate us on the base?.

Yeah. That’s roughly – when you kind of look with our full year approximation of what the aftermarket is as a percentage and then kind of divide it by 4 – as we pointed out in prior quarters, there is a fair amount of volatility. And then as Tom mentioned, we called this out early on.

We said the first quarter we thought was going to be, even against historical norms, a little bit lower. And that was on the back of – as Tom mentioned, the order timing that we were aware of as well as last year first quarter was very strong. So, this was the reason why we said it was going to be a challenging first quarter comparable to last year..

But to your point, we're talking like $5 million either way swings the number dramatically. It's not absolute dollars..

That’s right..

Okay. And then the other thing – that's helpful. And I just wanted to make sure because it sounds worse than it probably is.

The R&D comment, could you quantify how much R&D was down at Aerospace in absolute dollars, year-to-year, in the first quarter?.

Yeah. I’d rather not break things down that finely. But most of it was in Aerospace. It was a combination of lower spend and lower customer funding which – excuse, higher customer funding, which also includes the joint venture. And you may recall the joint venture funds the GE9X and for that matter any GE MX development that is currently ongoing.

And so, that was up a bit in the quarter. And so, it’s a geography change. The joint venture funds it. It comes in in lower joint venture earnings, but it takes it out of R&D above the line for us..

Got it. So, that helps skew up the margin just because of that recognition. .

And overall, we’ve kind of – over the five-year period, we’ve also called that we do intend bringing that number down, so this is just kind of on that path, but not as much variability related to just that as it is to some special items. But they will be, I don’t want to call them, special items. They will be ongoing and they will have variability..

Understand.

May I just get your impressions of the whole tax code changes that might come about, border adjustment, what your net exposure is if any of this goes – have you had any view on that yet in terms of where you source from and what have you?.

I’m going to let Bob answer. Or maybe I’ll comment after that..

That's a good question on the where you source from. That’s probably – overall, we obviously have no feeling or inclination at this point in time as to what the impact could be. Most of what has been discussed in terms of the type of direction being taken should favor Woodward with a lot of foreign sales and not a lot of imports.

So, in general, we think that will be overall favorable to us. The question regarding sourcing is probably a good one, it kind of remains to be seen in terms of the details as they go forward. But too early, but it will be interesting..

And I'm sorry to monopolize. One last one. There have been some rate changes since the last call. Obviously, Boeing took down the 777.

Again, I just wondered if you could frame for us what the impact is and when you'll see it based on the new production rates on the 777?.

Yeah. The 777’s rate has already moved into our deliveries because of the lead times, so we’re already operating to that. It is factored into our full year outlook. As we've been working with Boeing and GE to understand the ramifications, that’s been factored in. So, we’re already seeing it..

Okay. All right. Thanks, guys..

Sure..

Thank you. [Operator Instructions] Our next question or comment comes from the line of Robert Spingarn from Credit Suisse. Your line is open..

Afternoon, everybody..

Hi, Rob..

I wanted to just go back to after-market growth for a minute, Bob.

So, understanding the 5% negative in Q1, and then you're going to be mid-positive – mid-single-digit positive for the year, how do we think about the cadence for the next three quarters? Do you have a double-digit quarter in there? What is the second quarter looking like? How do we think about this?.

We don’t have that much visibility on how – we mentioned this timing of orders. And so, we don't have that much visibility to each quarter, but there's no reason to believe it won’t be significantly up from what we saw in this quarter.

And as Tom mentioned, it’s largely because we know exactly what would you have in-house for us to deliver as we go into the second quarter. So, I would say it would be fairly ratable over the second to fourth quarter..

Just to add to what Bob said, we definitely see good IP sales in the second quarter. And the more challenging part is the repair and overhaul activity that comes in and that doesn’t come in with as much lead time.

But as you go into the second and third quarter, you do see some seasonality where some maintenance is being done at that time period to prepare for the summer months. So, it does pick up as we move second and third quarter..

Okay. And then, Tom, while I've got you here, I wanted to go back to industrial and just clarify, in terms of the end markets, whether it's power gen or reciprocating or what have you, which are moving up, which are flat, and which are down? I know you went through some of this before, but we kind of moved around. .

If we look, certainly gas turbines OEMs, our outlook is fairly flat with aftermarket continuing to be healthy there. Steam turbines, which really are used in petrochemical plants as well as power generation, OEs still looking to be flat to slightly down, but the aftermarket is doing well. So, the install base continues to generate revenue.

Our diesel reset business is down, but we see signs of some orders, so we’re thinking that it’s flattish. The natural gas truck market, we’re seeing a pickup as we said in the prepared comments. We’re not really ready to call that a trend yet, but we are seeing some pickup in orders.

And the next quarter, we’ll be able to give a lot more color on that one. Wind turbines is down a little bit year-over-year in our outlook, probably be coming in down to flat. So, I think that’s kind of the bigger segments there. So, that’s when we take out altogether, flat to maybe slightly up depending on economics and trends here..

Okay. Okay, thank you. And then, Bob, back to you. Just CapEx for the year, you have come down a bit.

How do we think about that flowing? What's the cadence here as we continue through the year?.

Yeah. We should be fairly – no change in the annual outlook. We’re still at that 110-ish range. I’d make the same comment I probably do every year, which is that the timing of some of the bigger programs, we still – although the buildings are complete, we still have a fair amount of equipment capitalization that is going on.

And that can also cause some variability. But there shouldn’t be a lot of tremendous quarterly variability. It should be fairly flat as we go through the year. And then the big wildcard is kind of right at the year-end..

So, given that the first quarter was a little bit lighter, we should have a somewhat higher number for the next three quarters?.

Yeah, a little bit, but not tremendous because that – the 21, yeah. So, we usually do get heavier as we get closer to the end of the year and we do have some big equipment purchases that are scheduled kind of in second and fourth quarters kind of things..

Okay.

And then just on the R&D and the SG&A, you were asked this earlier, but just from a full-year perspective, as a percentage of sales, what should we be looking for?.

Yeah. I might have been a little bit too – on the SG&A side, we will see more cost savings throughout the year. So, the overall run rate from the prior year should come down a bit, but it won't be a tremendous impact. So, on both R&D – R&D for the full year will probably be slightly up from the first quarter, but again not significantly.

And SG&A should probably stay down, but not significantly off the prior-year run rate..

Okay. And then just the free cash flow in the quarter, was that largely driven – it's a bit unusual for you in the first quarter.

Was that just the low cash taxes, I assume?.

Not, not as much of a tax impact. But we did – if you recall, we had a very strong fourth quarter with a lot of receivables and the collection of a lot of those receivables in the first quarter contributed to a nice strong cash flow..

Okay. And then just….

And that’s same kind of traditional patterns..

Okay.

Last one, just if you could walk through, if you didn't mention it earlier, maybe I missed it, the favorable tax benefit due to the repatriation of certain foreign earnings?.

Yes. So, we've been planning for about three years towards this ability to repatriate earnings at a very favorable tax rate to us in 2017 and we were able to do. The quarterly flow is – I know unfortunate from a modeling standpoint, but it does have to go with the discrete item and that item is the dividending of those foreign earnings.

So, that took place in the first quarter and therefore you see the benefit in the first quarter. But, as I mentioned, we’ve known about this for a long time and we just – we executed in the first quarter and really didn’t talk much about when we were going to actually see it take place throughout the year..

I see. So, it's just the – it’s the one-time recognitions all in this first quarter. .

It is. Yes..

Okay, great. Thank you..

Thank you..

Thank you. Our next question or comment comes from the line of Michael Ciarmoli from SunTrust. Your line is open..

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

Just to maybe go back to Gautam on the 777, just to be clear, you guys are seeing a five per month rate right now or are you at the seven per month rate?.

Really right now, with the lead times, we’re pretty close to that 5..

Okay..

Moving towards that. And again, you guys – everybody has this lead time. By the time we – for 777, and maybe I should clarify that a little bit. First, when I talk about, we’re first delivering to the engine and then that engine has to be delivered. So, there is a lead time stack that goes on that.

And then, that’s why we have a little – we see it early..

Got it. That's helpful. And then just in terms of the new facilities, maybe on the Aerospace side, can you give us a sense of where you are in terms of capacity? And it sounded like, clearly, you'll start to see more of that engine ramp in 2018.

But do we expect the capacity to improve throughout the year, and should we expect maybe even greater efficiencies as those facilities ramp up and you get better overhead absorption?.

There's no doubt about that. We had to put in the production line and we’re running with a tremendous amount of excess capacity at the moment as we’re preparing for the ramp up. So, we had to get the lines up, certified, quality approvals and we’re doing that.

So, the capacity is there, so we anticipate for 2017 – as Bob has highlighted, the timing of further equipment is really in support of 2018. So, we will have to bring on some equipment later this year as part of the ramp rate. So, it’s tracking well.

As you get into 2018 and we get really closer to full production, as we get towards to mid-2018, yeah, then we’ll have full efficiencies out of the facilities..

Got it. And then just last one for me and I'll jump off here. In terms of the new administration, any implications you're seeing regarding your renewable business in the industrial portfolio? Any implications that you're seeing now for wind or nat gas, either pluses or minuses? Thanks, guys..

Yeah. What I would say on the billable side and particularly for wind, the majority of our [indiscernible] customer base are European or in India. And so, actually, some of the effects in the US aren’t going to really impact our wind business as much it could with somebody who has a bigger US portfolio.

So, I don’t see dramatic change on that due to the administration. Now, obviously, with the natural gas and other energy resources, although we would say the policies look favorable, depending on how they’re finally implemented, they look favorable to us. So, that was positive.

On the defense side, some of the discussions and funding that’s going out there would also be favorable to us. So, we’re cautiously optimistic, I guess, is the way you would say it, in that what’s being discussed are primarily more beneficial than negative to us including the tax rate, as Bob highlighted.

But we just have to wait and see how that all comes out. But, overall, it does look a little more favorable to Woodward and our portfolio..

Thank you. Our next question or comment is a follow-up from Mr. Peter Skibitski from Drexel Hamilton. Your line is open..

Yeah. Just a couple quick follow-ups, guys.

Guys, with commercial after market down in the first quarter, if we exclude biz jets and rotary wing, was everything else basically up single digits or did some areas have an outstanding quarter?.

I don’t know we would say anything, I don’t know, standing quarter, but we did have some ups. Large transport, for example, was up. .

Defense was good..

Yeah, defense was good..

So, those were probably the two brightest spots, commercial transports and defense. Defense is a positive going forward, as I just highlighted. The outlook is pretty good. Depending on policy, it could be even better. Those are all bright spots..

Okay.

And then on the unfavorable mix and industrial in the quarter, what did that relate to?.

We don’t kind of breakout product line information. But things go for you and against you, just like after-market goes up and down and probability goes up and down with that too. So, this quarter, we just had a larger sales of lower margin product and not as much of higher margin stuff and up with the mix.

And sometimes it works in your favor and sometimes it doesn’t..

Okay.

Something within OE?.

Yeah. It’s primarily OE with some timing of after-market in there too..

Okay, got it. Thank you..

Thank you..

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

Okay. Well, I appreciate everybody joining us today and thank you for your questions and we look forward to seeing many of you over the next quarter and our next second quarter conference call. So, thank you..

Ladies and gentlemen, that concludes our conference call today. If you would like to listen to a rebroadcast of this conference call, it will be available today at 7:30 PM Eastern Standard Time by dialing 1-855-859-2056 for US call or 1-404-537-3406 for a non-US call and by entering the access code 42772801.

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..