Woodward, Inc. (NASDAQ:WWD) Q4 2019 Earnings Conference Call - Final Transcript

Nov 18, 2019 • 04:30 pm ET

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Woodward, Inc. (NASDAQ:WWD) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Pete Skibitski

gas or something else?

Executive
Thomas A. Gendron

Yeah, well, we definitely saw oil and gas drop. We did see some -- and we highlighted headwinds and China, both from trade, but also from the pre-buy China-5 or China-6 natural gas engines and then we had the Senvion issues in renewables and then we had the warranty. So that combined headwind did hit us in the fourth quarter. Going forward, we see China picking back up. The trade war is so uncertain in our minds, but the China-6 sales are growing nicely right now. We think we got the renewables under control. And as Jack already said, the warranty was a one-time thing that we won't see again in 2020. So that gives us confidence to get back on that 14% earnings on our path to 16%.

Analyst
Pete Skibitski

Okay. Just one follow-up, just given the importance of wind right now, can you level set us what was wind revenue in fiscal '19? And are you expect to get down again in fiscal '20?

Executive
Thomas A. Gendron

No, we're actually expecting wind sales to move up in 2019 -- I mean, 2020. 2019, we had a loss and we're basically going to be breakeven in that business in 2020.

Analyst
Pete Skibitski

Okay. Thank you.

Executive
Thomas A. Gendron

It's a drag on the overall Industrial.

Analyst
Pete Skibitski

Got it. Thanks guys.

Operator
Operator

Thank you. And our next question comes from Chris Howe from Barrington Research. Please state your question.

Analyst
Chris Howe

Good afternoon, Tom, Jack, Bod and Don.

Executive
Thomas A. Gendron

Hey, Chris.

Analyst
Chris Howe

Just a few questions going off of some of your comments, in regard to these strong defense aftermarket that you're seeing the strong growth there, as we think about the delay or the push and the timing of the initial provisioning revenues related to the 737 MAX, how should we look at the mix of aftermarket as we move into 2020? And do you anticipate recapturing all of the initial provisioning in 2020 or will some push to the following year?

Executive
Thomas A. Gendron

Yeah, well, I'll address that last one first is none of the initial provisioning in our view is lost. It's delayed and how fast we gain that will really depend on how fast the aircraft are turned back into service in which operators, in which order. So it's little uncertain, but I would say, through 2020 and early 2021, we should gain back that initial provisioning. So we have to wait and see how Boeing returns the aircraft to get it firmer handle on that. The remaining what we call legacy commercial aircraft is actually very robust. Shop visits are high. The MRO activity is strong. And all the market dynamics point to continued strength in that market. So that's like getting in. And in defense as we highlighted, the defense budgets and the need to get aircraft back into service, we're seeing strong orders and our order book this year is healthy already. And we look at that continuing through 2020 and into 2021. That's our line of visibility at this moment.

Analyst
Chris Howe

That's very helpful. And I have