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

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And so what we’re really looking at is continuing to stabilize the business here in Q2 make some improvements just based on some more working days. We don’t have the holiday periods that we had in our Q1. We don’t have the seasonality effect that we had in Q1 of our business, but really not at our full not even full, not really improving much as we move through Q2, but really into the second half of the year is where we’re going to start seeing some of that disruption impact subside.

David Strauss: All right. Thanks very much.

Mark Hartman: You’re welcome.

Operator: Your next question comes from the line of Sheila Kahyaoglu with Jefferies. Your line is now open.

Sheila Kahyaoglu: Thanks. Good afternoon, guys.

Chip Blankenship: Yes. Thank you.

Sheila Kahyaoglu: So maybe just to follow-up on slide 16 and the 5% price realization? Is that gross price or net price? And what did you see in Q1? And, can you talk to us about the timing of the contracts, whether it’s an Industrial or Aerospace? How it’s going to flow through?

Chip Blankenship: So that’s net price, Sheila.

Sheila Kahyaoglu: Okay.

Chip Blankenship: And as far as timing goes, our long-term agreements in both Industrial and Aerospace are come due when they come due. They’re not sort of in some cases annual. It’s just — it’s the month that expires. And so that plus catalogs are spread out through the year. The annual, sort of, long-term agreements with OEMs that are under contract like Life Program or things of that nature, do adjust on January 1. So there’s a bit of lumpiness on the January 1, and then the rest of them are kind of spread out and what we’re saying is that 5% is what we’ll see through the year.

Sheila Kahyaoglu: Okay. And then just maybe switching gears onto your commercial aftermarket. You know, I think it grew like double the peer average thus far given limited numbers. But what are you seeing in your aftermarket narrow body versus wide body initial provisioning. And you also mentioned China in your script. So how far below is your China business versus peak?

Chip Blankenship: Well, just to take a — maybe one at a time, but I’m not sure I can remember all of those points. So we have very strong inputs to all of our service shops right now and our team is doing a pretty good job of turning those units and getting them back out the door. We have had some initial provisioning for narrow body. Not extremely strong, but we’ve had some. China is pretty quiet for us. In most of the case, I can’t really think of much China business that we did in the last quarter or two, kind of, looking for that to take off for us in the coming years hopefully, but not predicting that. We’ve got a good demand from our Europe and the Americas and the Middle East right now.

Sheila Kahyaoglu: Great. Thank you so much.

Chip Blankenship: Yes.

Operator: Your next question comes from the line of Gautam Khanna with Cowen. Your line is now open.

Gautam Khanna: Hey, thank you. Good afternoon, guys.

Chip Blankenship: Good afternoon, Gautam.

Gautam Khanna: I just wanted to ask two questions. One, on the guidance, how much of the $95 million supply chain related delinquencies? Do you anticipate catching up in the fiscal year? And, then I have a follow-up.

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