Woodward, Inc. (NASDAQ:WWD) Q1 2023 Earnings Call Transcript

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Chip Blankenship: Well, we are making some progress, Rob, in terms of the number of parts that we’re moving to better performing suppliers than the ones that we’re bringing in-house. And we’ve graduated over 30 suppliers from watchlist, the elevated watchlist and we still have more than 20 on it, but we’ve gotten 32 folks to improve and we’ve got some of our machining centers to improve. So I see us making progress, but having that make it all the way through the supply chain to affect the daily build rates of assembly and test and shipping to our customers is the piece of the puzzle that we’re working on this quarter. In terms of needing more help, we’re always on the hunt for talent. We’re — we brought some very talented folks on to the team like Randy Hobbs and whenever somebody new comes in, it looks at a business they’ll find things that we’re asking them to do a full detailed look and roll up in terms of capability of our operations, as well as how we’re running the business and E&I are partnering with the places that need more action and more attention.

So I’d say that we are seeing a little bit more in the industrial space attention needed, but most of those were things I thought needed attention three months ago. We’re just confirming it

Robert Spingarn: You are still in discovery mode, if I hear what you’re saying?

Chip Blankenship: I would say we’re in confirmation mode. I really had most of those thoughts on my mind already in terms of especially the product portfolio actions that we need to really scrub through from a product to good olfaction product lifecycle management approach. So we’re on it.

Robert Spingarn: Okay. Thanks so much.

Chip Blankenship: Sure.

Operator: Your next question comes from the line of Pete Skibitski with Alembic Global. Your line is now open.

Pete Skibitski: Hey, good afternoon, guys. Maybe Chip, kind of, a macro question for you. Obviously, industrial revenue this quarter was pretty solid. Can you give us a sense about order flow was through the quarter in industrial? Are you guys seeing any signs at all of, kind of, macro weakness out there, like some of the strategists or anything could happen?

Chip Blankenship: So we’re seeing those signs from our customer demand signal remains strong and increasing. We were under a lot of pressure at the end of Q4 from our major OEM customers to serve their increasing rates on their lines and preparations for taking their lines up in 2023. That was just a lot of pressure we were getting to prime the pump for them to increase their build rates in 2023 coming out of 2022 and as well from a service standpoint restocking dealer shelves with remanufactured or new parts. We don’t see any softening of demand at this point up to now.

Pete Skibitski: Okay. So your full-year outlook for industrial is flat to plus 5%, do you feel that’s on the conservative side perhaps?

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