Woodward, Inc. (NASDAQ:WWD) Q4 2019 Earnings Conference Call - Final Transcript
Nov 18, 2019 • 04:30 pm ET
Thomas A. Gendron
a significant increase in free cash flow again delivering greater than 100% conversion rate. After a significant period of investment to support new program wins in Aerospace and Industrial, we are entering a period of lower capital expenditures and higher earnings growth, which positions Woodward to deliver significant free cash flow for the foreseeable future.
Now, before turning the call over, I want to thank Bob Weber who will be retiring in January for his dedication and valuable contributions during his more than 14-year tenure at Woodward. Bob has been a tremendous asset to our Company and has delivered exceptional value to our shareholders over his career. He has been a tremendous partner and friend to me. We are excited for him as he enters this next phase of his life. Bob, we wish you all the best.
I'd like to once again welcome Jack as our new CFO. And now, I'll turn the call over to him to discuss further financials.
Thank you, Tom. Aerospace segment net sales for the fourth quarter of fiscal 2019 were $506 million compared to $461 million for the fourth quarter a year ago, a 10% increase. Aerospace segment sales benefited from strength in defense OEM and aftermarket, as well as commercial OEM. Commercial aftermarket sales were up 9% in the fourth quarter of 2019 as compared to the prior year quarter. As anticipated, initial provisioning was softer in the quarter due to the grounding of the Boeing 737 MAX.
Defense sales growth in the quarter was primarily driven by smart weapons fixed-wing aircraft in aftermarket, which we anticipate will continue to benefit from increased military spending. Aerospace segment earnings for the fourth quarter of 2019 were $111 million or 22% of segment sales compared to $105 million or 22.7% of segment sales for the fourth quarter of 2018.
Segment earnings were positively impacted by higher sales volumes partially offset by increased capacity expansion costs. For fiscal year 2019, Aerospace segment net sales were $1.88 billion compared to $1.56 billion for the prior year, a 21% increase. In 2019, commercial OEM sales grew 15%; commercial aftermarket sales were up 18%; defense OEM sales increased 33%; and defense aftermarket sales grew 22%, all as compared to 2018.
Aerospace segment earnings for fiscal year 2019 were $389 million or 20.7% of segment sales compared to $309 million or 19.8% of segment sales for the prior year.
Turning to Industrial. Industrial segment net sales for the fourth quarter of fiscal 2019 were $231 million compared to $258 million in the prior-year period, a decrease of 11%. Industrial segment sales declined primarily due to the reduced demand for natural gas trucks in Asia, resulting from the large pre-buy in previous quarters of China-5 compliant trucks ahead of the implementation of China-6 emissions regulations as well as the impacts to sales of the Senvion bankruptcy.
Industrial segment earnings for the fourth quarter of 2019 were $11 million or 4.8% of segment sales compared to $8 million or 3.3% of