Thank you for standing by. Welcome to the Woodward, Inc. Q1 fiscal year 2024 earnings call. At this time, I would like to inform you that this call is being recorded for broadcast and that all participants are in a listen-only mode. Following the presentation, you are invited to participate in a question-and-answer session. Joining us today from the company are Chip Blankenship, Chairman and Chief Executive Officer, Bill Lacey, Chief Financial Officer, and Dan Provaznik, Director of Investor Relations. I would now like to turn the call over to Dan Provaznik. Thank you, Operator. We'd like to welcome all of you to Woodward's Q1 fiscal year 2024 earnings call. In today's call, Chip will comment on our strategies in related markets. Bill will then discuss our financial result as outlined in our earnings release. At the end of the 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 our website through February 12, 2024. 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. I would like to refer to and highlight our cautionary statement as shown on slide 3. As always, elements of this presentation are forward-looking or based on our current outlook and assumptions for the global economy and our businesses more specifically. Those elements can and do frequently change. Our forward-looking statements are subject to a number of risks and uncertainties surrounding those elements, including the risks we identify in our filings. These statements are made as of today, and we do not intend to update them except as required by law. In addition, Woodward is providing certain non-U.S. GAAP financial measures. We direct your attention to the reconciliations of non-U.S. GAAP financial measures, which are included in today's slide presentation and our earnings release and related schedules. We believe this additional financial information will help in understanding our results. Now, I will turn the call over to Chip. Thank you, Dan, and good afternoon, everyone. We delivered significant sales growth and margin expansion in the Q1. The strong start to our fiscal year reflects our focus on operational excellence over the past 18 months, which enabled us to capitalize on continued strong end-market demand. We increased output due to improvements in our production planning, supplier performance, and internal execution. We also achieved our commercial objectives, securing key long-term agreements that were available in the quarter for both industrial and aerospace segments. We made good progress consolidating industrial catalogs, which allowed us to clarify pricing with global channel partners and certain end customers, resulting in better control and visibility for action. Notably, net sales grew sequentially, which reveals successful implementation of our production system principle of consistent performance. Achieving and maintaining flow of supplier materials, production of parts in-house, and feeding assembly test at the rate of customer demand is essential to hit customer and business targets. Quarter-end heroics are not welcome as they destroy flow and introduce inconsistency to every aspect of the production system. While we have not yet achieved the labor productivity we believe we're capable of, we are laying the foundation to achieve significant results. I want to thank all of the analysts and shareholders who attended our Investor Day last month. For those who participated, you will remember that we laid out our three interconnected value drivers: profitable growth, operational excellence, and innovation. Our Q1 results show how the relentless pursuit of operational excellence can deliver both growth and margin expansion. Woodward's profitable growth is fueled by robust demand in both aerospace and industrial end markets. We have made progress aligning price to the value of our products. We are still experiencing material cost inflation from our supply base, and we forecast this to continue through calendar year 2024. Our price actions, as well as our supplier simplification and insourcing efforts, represent a two-pronged approach to mitigate some of the impacts of inflation. We are gaining momentum from our value stream transformation efforts, and I'm very pleased with the progress we've made so far. We are increasing the number of value streams under transformation, engaging more of the team in the process. Notably, a significant percentage of the Kaizen events associated with the transformations are being led by hourly members, which results in powerful and lasting talent development. We are expanding our automation project funnel with goals to improve quality and reduce future labor demand. We are putting our plans into action, and you can see this in our guide for capital expenditures. We look forward to sharing more with you in the coming quarters. Our purpose is to design and deliver energy control solutions our partners count on to power a clean future. In both segments, we're working closely with our customers to develop new technologies that reduce fuel consumption and emissions and enable multiple paths for a cleaner future. I recently spent a day in Zeeland, Michigan, at one of our aerospace sites. This visit was focused on both GTF fuel nozzle repair and overhaul rate readiness, as well as a deep dive into our ignition systems and combustion control product development process. Our ignition systems development is maturing in preparation for the next single-aisle aircraft, but it is ready now for applications that need the efficiency and reliability improvements it has to offer. This team has a great track record with automation, and it is a key driver to GTF fuel nozzle overhaul capacity expansion, which may be needed sooner than expected. While we did share our refreshed purpose and values on Investor Day, we recently rolled it out to our nearly 9,000 members around the world. It has been gratifying to see their reactions and the pride they have in Woodward. After all, their aligned efforts enabled the performance improvements we delivered this quarter. The excitement is tangible. Our purpose video is on our website, and I encourage you to take a look. It is an honor to lead the next chapter of Woodward, building on the legacy set before us. Our entire leadership team is excited about our future and prepared for the challenge. Moving to our markets. In aerospace, commercial airline domestic and international passenger traffic now exceeds 2019 levels, resulting in high aircraft utilization rates. Further increases in aircraft utilization are expected as international passenger traffic in Asia-Pacific still lags yet offers opportunity as it recovers. Transatlantic traffic remains strong. In defense, geopolitical developments and government spending proposals indicate potential increased procurement and R&D spend, signaling potential opportunities for Woodward. In industrial, demand for power generation remains strong, driven by growth in Asia and the Middle East. Global aftermarket activity remains high, as does demand for backup power. In transportation, the global marine market remains healthy, with elevated shipbuilding rates driving OEM engine demand and high utilization rates driving current and future aftermarket activity. Demand for alternative fuels across the marine industry continues to increase. We are encouraged by the additional OEM and aftermarket opportunities as multi-fuel engines contain greater Woodward content. Demand for natural gas heavy-duty trucks in China increased significantly compared to last year. This current demand is being driven by a number of factors, including a favorable LNG-to-diesel price spread, a steady supply of natural gas, and carbon reduction initiatives across China. This market remains volatile, and we continue to evaluate the durability of this demand. Last week, I would have said LNG infrastructure development continues to benefit from global investment, but some uncertainty has been injected into the investment equation with the recent U.S. government pause of further LNG export approvals. In summary, market signals indicate continued strong demand. The operational improvements we've made position us to capitalize on this demand. We remain focused on pursuing profitable growth, operational excellence, and innovating for the future to deliver on our purpose and drive enhanced shareholder value. I'll now turn it over to Bill to share our financial results. Thank you, Chip, and good afternoon to everyone. Net sales for the Q1 of fiscal 2024 were $787 million, an increase of 27%. Earnings per share and adjusted earnings per share for the Q1 of fiscal 2024 were $1.46 and $1.45, respectively. Compared to earnings per share and adjusted earnings per share of $0.49, aerospace segment sales for the Q1 of fiscal 2024 were $461 million compared to $396 million, an increase of 16%. Commercial OEM and aftermarket sales were up 23% and 9%, respectively, driven by higher OEM production rates, continued growth in both domestic and international passenger traffic, increasing aircraft utilization, and price realization. Defense OEM sales were up 4% in the quarter due to increases in ground vehicle components and guided weapons. Defense aftermarket sales were up 45%. Aerospace segment earnings for the Q1 of 2024 were $79 million, or 17.2% of segment sales, compared to $55 million, or 14% of segment sales. The increase in segment earnings was primarily a result of higher volume and price realization. Turning to industrial, our industrial segment had a record quarter for both sales and earnings. Industrial segment sales for the Q1 of fiscal 2024 were $326 million, compared to $223 million, an increase of 46%. We saw growth in all markets from a combination of higher volume and price realization, with an increase of 96% in transportation, 20% in power generation, and 2% in oil and gas. Sales for on-highway natural gas trucks in China totaled approximately $75 million in the Q1, driven by significantly higher demand compared to the prior year quarter. We do not expect this higher level of sales to continue in Q2, as demand signals indicate a return to previous peak levels of approximately $50 million. Industrial segment earnings for the Q1 of 2024 were $67 million, or 20.5% of segment sales, compared to $11 million, or 5.1% of segment sales. The sharp increase in industrial earnings was a result of operational improvements, including increased output and efficiency gains, favorable product mix, and significantly increased demand for on-highway natural gas trucks in China. Excluding the impact of the China on-highway natural gas truck business, industrial segment margin increased approximately 900 basis points, compared to the prior year. We do not expect the overall Q1 industrial margin levels to continue in the remainder of the year. Moving forward, we expect margin pressure for the China on-highway natural gas truck business due to lower volume leverage and higher material costs, including spot buys and expedited freight. Outside of the on-highway natural gas truck business, we also expect margin pressure in the remainder of the year due to an anticipated shift in mix and cost increases. Non-segment expenses were $26 million for the Q1 of 2024, compared to $24 million. Adjusted non-segment expenses for fiscal year 2024 were $27 million. At the Woodward level, R&D for the Q1 of 2024 was $31 million, or 3.9% of sales, compared to $29 million, or 4.6% of sales. SG&A for the Q1 of 2024 was $75 million, compared to $63 million. Adjusted SG&A for the Q1 of 2024 was $70 million. The increase is primarily due to higher annual incentive compensation. The effective tax rate was 17.9% for the Q1 of 2024, compared to 6.7%. The adjusted effective tax rate was 17.7% for the Q1 of 2024. Looking at cash flows, net cash provided by operating activities for fiscal 2024 was $47 million, compared to $5 million. Capital expenditures were $42 million for fiscal 2024, compared to $24 million. Free cash flow was $5 million for fiscal 2024, compared to -$19 million. Adjusted free cash flow for fiscal 2024 was $3 million. The increase in free cash flow and adjusted free cash flow was primarily due to increased earnings, partially offset by the above-target payout for fiscal year 2023 annual incentive compensation, as well as higher capital expenditures. During the quarter, we repaid $75 million of long-term debt. Leverage was 1.3x EBITDA at the end of the Q1, compared to 2.3x EBITDA. $13 million was returned to stockholders in the form of dividends in the Q1 of fiscal 2024. Lastly, turning to our fiscal 2024 guidance. Based on our strong Q1 performance and visibility into the Q2 demand for the China on-highway natural gas truck business, we are updating certain components of our fiscal 2024 guidance. Total net sales for fiscal 2024 are now expected to be $3.15-$3.3 billion. Our aerospace segment guidance is unchanged. For fiscal 2024, aerospace sales growth is still expected to be 10%-14%, and segment earnings are still expected to be 18%-19% of sales. Our industrial segment guidance includes broad-based market strength and improving operational performance. Our guidance now assumes approximately $50 million for our China on-highway natural gas truck business in the Q2. However, given the volatility and limited visibility into this market, our guidance continues to assume minimal activity in the second half of fiscal 2024. As a result, for fiscal 2024, we now expect industrial sales growth to be 8%-10%, and segment earnings to be 14%-15% of segment sales. At the Woodward level, the adjusted effective tax rate is still expected to be approximately 21%. We now expect free cash flow to be between $300 and $350 million. Capital expenditures are still expected to be approximately $100 million. Adjusted earnings per share is now expected to be between $5 and $5.40, based on approximately 62 million fully diluted weighted average shares outstanding. This concludes our comments on the business and results for the Q1 2024. Operator, we are now ready to open the call to questions. Thank you. The question and answer session will begin at this time. If you are using a speakerphone, please pick up the handset before pressing any numbers. Should you have a question, please press star 1 on your push-button phone. Should you wish to withdraw your question, again, press star 1. Your question will be taken in the order it is received. Please stand by for your first question, sir. Our first question comes from the line of Robert Spingarn from Melius Research. Please state your question. Hi, good afternoon. Good afternoon, Rob. Some nice numbers. I wanted to talk a little bit about aerospace sales growth. Your commercial OEM sales were up 23% year-over-year and up quarter-over-quarter despite lower working days in the quarter. And at a more granular level, Chip, did you see significantly higher growth on wide-body programs than on narrow-body? And then I want to ask a follow-up on the 737. You know, the growth wide-body and narrow-body, they each grew according to their own kind. We saw growth in both, but at slightly different levels. I can't make it more granular for you than that. Okay. I was trying to get some insight into because the cycles are not exactly lined up. Narrow-body at least was a little bit ahead of wide-body, but wide-body seems to be smoother based on what's going out there. And that leads to this follow-up question, which is when we think about the 737, how would you characterize your OEM? What kind of rates you're targeting given what's going on in Seattle? And then is there a difference in how you're shipping to the engine OEM versus how you're shipping to Boeing in terms of rates? So yeah, there are differences there. It's hard to say because we go through a number of different folks in addition to straight to Boeing. We do some to Spirit, some to Boeing, and some to the CFM. The fact of the matter is we can't see the rates very clearly in our demand from our customers for various reasons on inventory and things of that nature. But you're pointing out probably the biggest volume risk that we're looking at as a company on the aerospace side. It's an insightful question because we're in a position where we're making sure we have the capability to get to the advertised rates in terms of what we think the PO demand growth will be from each of those different customers associated with the 737. But we're also looking at what the financial impacts would be if they don't get where they've advertised they're going to go. And we believe we can manage that risk. And we've looked very carefully at what we need to do to optimize if there are some signals that the rate's not going to go up as much as we thought it would. We've already seen some inventory maneuvers go on with other people's Q4, last quarter. So we don't take those signals yet as the signals slow down, but we're watching it carefully, and we have internal plans to adjust. Chip, just to clarify on that, does that mean that the lower end of your aerospace guide contemplates this idea of a freeze at Boeing that we heard about last week? I know you've only had a week to think about this, if that. Yeah, it's been a long week as far as thinking about that. But yeah, we do believe our guide we can operate inside our guide with that freeze to continue. Okay. Thanks so much. You bet. Your next question comes from the line of Scott Deuschle from Deutsche Bank. Please go ahead with your question. Hey, good afternoon. Hey, good afternoon. Good afternoon, Scott. Hey, Scott. Hey, Chip, can you say what the price realizations were this quarter at Industrial? Go ahead, Bill. Yeah. Overall, Scott, our price realization was $50 million. And the Industrial represented a significant piece of that 20. I'm sorry, of the 50. So Aero and Industrial both contributed to that overall $50 million realization at the Woodward level. Okay. Then Bill, just sticking with you, I'm sorry if I missed this, but what drove the 8% increase to the free cash guidance at the midpoint? Yeah. So as we see the increase in OH and the earnings that flow through, we felt that and what we sort of saw in the second half of our business, we felt that it was appropriate to raise our cash flow guidance. Okay. And then Chip, could this closure of the Red Sea create any discernible benefit for marine aftermarket just due to the longer transit times and utilization rates for marine vessels? It's hard to say exactly how that's going to impact utilization, but the way I think about it is that longer routes, fewer transits, and shorter routes, more transits. I think that there's enough demand out there to keep those ships moving. So we're not forecasting any steeper increase in utilization, but we're comfortable with what we see. Okay. Last quick question, Chip, the grounding on the V-22 fleet, does that create any opportunity for defense aftermarket? I think your shipset content there was pretty high. Thank you. Yeah. The V-22 is a significant repair and overhaul program for us. And as you can see, the defense aftermarket, as we talked about, was significantly up. Some of that represents our ability to execute better at the facility that does the repair and overhaul on the V-22 and some of the other defense programs. So there's plenty of demand. Our execution had been historically getting in the way of some of that realization of that demand. So we're working as hard as we can with defense logistics and other customers to support them. Thanks, guys. Incredible quarter. Yep. Thanks. Thank you. Your next question comes from the line of Matt Akers from Wells Fargo. Please state your question. Hey, guys. Good afternoon. Thanks for the question. Afternoon, Matt. Bill, you made a comment in the opening remarks about I think it was kind of pressure on margins from kind of mix of costs versus price increases the rest of the year. Could you just elaborate on that a little bit and maybe the timing? And I think in prior years, you've gotten kind of a January 1st pricing step up. Is that kind of still the right way to think about it for this year? Yeah. I believe the discussion, Matt, that I was having was as it relates to our Q1 margin delivery of 20.5% in Industrial. And in the pressure against the Q1, it's really on the ongoing standpoint, it's in line with what we anticipated. So it's more versus that Q1 experience. And as we look in Industrial, we don't expect this year to have a 20.5% overall margin rate. And as I mentioned in our non-OH business, where we talked about it delivering about 900 basis points, that really was us having a very strong mixed quarter in Q1. And we don't expect that to continue. And secondly, we anticipate some costs coming into play in Q2 to Q4, which again will not allow us to repeat that 20.5%. Now, we are aspiring and working hard in our investments and all of our initiatives to get to that underlying non-OH margin rate. But again, that's going to be more out in the future and not here in fiscal year 2024. Got it. Thank you. That's helpful. Then I guess if I could do one more, just the timing you're thinking of this new repurchase authorization, is that kind of a two-year period like the last one was, or just how you're thinking about that? Yeah. So what we announced, Matt, was a three-year program, $600 million in total. And our philosophy on that is to manage dilution. And also, as we look at our cash flow and as we look for the highest returning opportunity, we will continue to consider further purchases. But that's right. The plan that we submitted was a three-year $600 million program. Great. Thank you. Welcome. Your next question comes from the line of Sheila Kahyaoglu from Jefferies. Please state your question. Thanks, guys. Good afternoon. I just wanted to follow up on Industrial and check in on long-term margins. You talked about mix pressures. And when you look at Q1 margins ex-CNG, it looks like 15% and then applies for the rest of the year 12%. So is the right way to think about your longer-term margins 10%-12% or 15% as your target state, just thinking about beyond 2024 into 2025? Is the 300 basis points all cost pressure? Yeah. Again, the original guidance that we gave on our business was 13%-14% for that industrial business and sort of the mid-15s. As we look longer-term, Sheila, we're still sort of in that mid-teens range for industrial. Okay. And then similarly, on aerospace, if we could talk about profitability there, just up nicely year-over-year, but work to do to get to the guide. So how do we think about that progressing through the year, especially in light of some of those OE comments, the productivity you guys have in place, and the price capture? Yeah. As you mentioned, Sheila, we saw a nice 300 basis points improvement versus Q1 a year ago. As we discussed at Investor Day, the margin rate increase that you'll see in Aero is mainly driven by volume in our OEM business. As we mentioned, the OEM growth outpacing the aftermarket growth will cause a mixed pressure at our CM level. But as that volume comes through, we'll get leverage and we'll see that increase. As Chip mentioned, we understand what we understand as it relates to the Boeing announcement. And based on what we understand right now, our confirmation of our 18%-19% Aero is still good. And we will keep monitoring it. And if something changes, we will communicate that. But really, that volume increase throughout the year being leveraged is what will get us to higher margin rates. Is the defense aftermarket accretive or dilutive to segment Aero margins? Yeah. Yeah. Our defense aftermarket is good margins. We'll take it all day. It's accretive, yes. Okay. Thank you. Welcome. Your next question comes from the line of Gavin Parsons from UBS. Please state your question. Thanks. Afternoon. Afternoon. Hey, Gavin. Guys, how much visibility do you have into the other industrial businesses besides OH in terms of revenue? So we have some really close long-term forecast work that we do with our customers and areas where we can freeze volumes and understand what the expectations are from customers, whether that is in the gas turbine arena or the reciprocating engine arena and across all three of our subsegments for that industrial segment. So pretty good visibility and pretty good stability. And we continue to burn down past dues as well internally. So we're getting closer to the customer demand directly affecting what we plan for our factories. Got it. Was industrial backlog up for the quarter? We don't really measure it that way. We talked about that on another conference call. We have a way of looking at that. Because we are building to a forecast as well as their actual orders, when the orders come in, sometimes that doesn't exactly represent what we've built. Makes sense. Then maybe if I just go back to the Investor Day slide showing the engine service value five times higher on this generation of engine, which is greater than your content gains, can you just remind us when the majority of your engine aftermarket occurs and kind of how that's spread over maybe regular service versus heavy checks? So we forecast the 2026 long-term view that we shared at Investor Day is that 2026 is before some of that really, I think, volume of the aftermarket shows up on the engine side. So the guide for aerospace margins and all of our cash flow and the like really is before the wave of that engine aftermarket that we expect from the GTF and the LEAP engines on the 737 MAX and the A320neo. So there's a lot of goodness outside that forecast that we've already given. Thank you. Your next question comes from the line of Pete Skibitski from Alembic Global. Please state your question. Good afternoon, guys. Nice quarter. Good afternoon, Pete. Thank you. On the $75 million of China on-highway, I recall you guys were expecting closer to $50 million in the quarter. Could you maybe validate that? Then now you're expecting $50 million in the Q2. I just want to get maybe a little more fidelity on the back half of the year when you talk about minimal activity. Is that closer to zero, or is that closer to kind of a $25 -$50 million range? Just want to get a little more fidelity there. Yeah. Oh, sorry. So yes, you're exactly right. We were expecting more like 50 in the Q1. And the customer has plans to meet the demand in their country for what they believe is a demand for more natural gas trucks versus diesel. And so we responded as best we could to that increased demand. We did have some inventory available, but we did have to exercise our supply chain and assembly and test to get them that material. And it was an outperformance. The team did a fantastic job up and down the line to deliver on that customer demand. So as we sit here in Q2, we don't have any further information to share other than we really think it's going to be in the neighborhood of 50. And for the rest of the year, Bill, I don't know how you want to describe that. Yeah. Minimal amounts in the second half. Okay. And then just want to follow on the oil and gas up 2% in the quarter. Is the outlook there kind of slowing substantially? Is the rest of the year in industrial kind of depend on the power gen side? So I did sort of tongue-in-cheek say that a week ago, I'd have been telling you that natural gas and especially the natural gas side of oil and gas looks strong because I had met with a couple of our different engine OEMs, and they all said they were seeing strong investment, especially in the "oil patch" and fracking where natural gas was involved and companies were investing in additional new engines to get better output. But I just don't know if that's going to hold with this latest announcement from the administration that they're putting a pause and really how that makes people feel about further investments and whether they'll take all those engines they supposedly have on order. So I think it's still early to tell on that side. It's been steady for us, but not as high growth as the transportation and the power gen segments. We'll just have to see how this plays out. Understood. Understood. Thanks, guys. Yep. Yep. Thanks, Pete. Your next question comes from the line of Christopher Glynn from Oppenheimer. Please state your question. Thank you. Good afternoon. I was curious to hear the comment about guided weapons. Showed some growth in the quarter. Were you surprised by that? And do you expect a trend there? Yeah. Thanks for that question, Christopher. Not surprised by the growth. We have spoken that JDAM was going to get bottomed out. We have also said that we had seen growth in the other areas, but it was kind of overcome by the decline in JDAM. So we expected to start seeing that growth. We were happy to say that it came through. Okay. And is that looking fairly consistent, the dynamic there? Currently, yes. We continue to be in conversations with our customers to see if there's any new plans around guided weapons and JDAM. But to date, we sort of expect to see moderate growth in this area. Great. Yeah. And the conversations with the customers are ongoing, as Bill said. And we keep getting questions about our capacity and ability to respond. And we've worked with our suppliers as well to make sure they have capacity to respond. But there hasn't been any follow-up regards to anything firm in addition to that. Great. Thanks for the additional caller. I had a follow-up on industrial. Called out the backup power demand. Just curious, are you seeing more of a secular growth dynamic? Anything interesting by applications or regions, or is it very broad-based on the backup power side? It's fairly broad-based. But in North America, with the data centers as well as 5G and some of the large language model stuff coming through, we believe, as our customers believe, that that's an opportunity for further growth well into the future. And so we're prepared to respond to that. Thank you very much. Yep. You're welcome. Your next question comes from the line of Louis Raffetto from Wolfe Research. Please state your question. Hey. Good evening. Thank you very much. Maybe just a follow-up on Matt's earlier question. Given the stronger 1Q, does the updated guide and some of that margin pressure you talked about, Bill, is that taking into account higher variable comp now? Yes, it does. Okay. Thank you. And then also, Bill, just stick with you. The other income is $20 million this quarter versus $8 million. Is that mostly equity interest in the JV within Aero? Is anything else going on in there that floated into the segments? Yeah. We're seeing some strong JV performance. Okay. And then just last one. I think Chip mentioned sort of the CapEx. Obviously, it spiked pretty high here in the quarter. Was there anything to really note of? And would you kind of settle down here the next three quarters, given the reiteration? No. We confirmed our $100 million guide. It was as we anticipated. And so no, it's as we expected. Okay. Thank you. Welcome. Your next question comes from the line of Gautam Khanna from TD Cowen. Please state your question. Hey. Good afternoon, guys. Afternoon, Gautam. Good afternoon. First, I have a question on the guidance. Just to be clear, is the entirety of the raise related to the CNG stuff? Yes. A simple answer. Like we said before, if that particular product line outperforms, that will flow through. And then we just passed that along from a very strong Q1 to the rest of the year, not signaling any other real pressure or problems. So it just flowed through. Gotcha. And then one of the things that was a bit confounding was truck production in China in calendar Q4 came down quite a bit. And the diesel natural gas spreads compressed. What do you think is actually driving kind of the strength in that business? And why might it not have a longer tail to it since it's been talking about the trend? Yeah. I wish I understood it better. I wish our team all everybody on the team wishes they understood it better. When we talk with our main customers there, the speech that we receive is really about the secular growth and opportunity of natural gas, cleaner burning, availability. Cost is good. Over the long term, this business should perform. But our experience is that it's lumpy and volatile. It just depends on how long of a term view you take on that growth curve and what can you count on. For us, we haven't been able to count on consistent, stable growth. That's why you hear us kind of say we think it's related to the natural gas, diesel cost spread. The availability is kind of a new factor that is positive. But it's hard to say. Some of it's government policy. I just leave it at that. Okay. I appreciate that. Then switching to Aero and maybe to just follow up on Rob's initial questions. Obviously, the FAA on the 737 is kind of restricting the rate hikes at Boeing for some period of time. We've seen some suppliers see destocking, whether it be Hexcel or some others. I'm just curious, are you seeing any evidence among your many customers of schedule changes, maybe asking for orders to be delivered later than was the case a couple of months ago? Any perturbations you've seen in your order book on the 737 in particular? I'd say over the last 18 months, we've seen orders be pushed out and pulled in kind of I won't say regularly, but periodically. We haven't seen an uptick in that as of recently. I'm giving you as of today information. I don't know what could happen tomorrow. We always see replanning and end-of-quarter, end-of-year decisions to push things out or pull things in based on our customers' supply chain activity and their desired inventory positions. We haven't seen anything that signals to us, "Gee, that's a big step change in rate across the board, across the customers." Nothing consistent like that. Okay. And last one. In the past, you guys have provided past dues or some sort of framework to think about those. Do you have an updated figure for that? I don't because I don't think it was really helpful to anyone because those past dues weren't going to flush through the system in any lumpy kind of way. Just because right now, what it is, is our capacity really limits our ability to ship at a certain rate to each customer based on the product line. And we've also seen some of those past dues evaporate due to folks overordering. When they don't have confidence in a supplier and a supply chain, they tend to put more orders in the system to try and get more priority. And we've seen some of those past dues evaporate. So we're not sure that that is really as helpful characterization of our ongoing business as it maybe once was early in the supply chain crisis. Appreciate it. Thank you very much. Yep. You're welcome. Your next question comes from the line of Michael Ciarmoli from Truist Securities. Please state your question. Hey. Good afternoon, guys. Real nice results. Good afternoon, Mike. Thanks. Thank you, Bill. Just back to these industrial margins. I mean, I guess for the remainder of the year, can you help us out with the cadence? I guess you get some on-highway strength here in the Q2, but then that'll fall off. Presumably, you'll have down margins year-over-year. I mean, I guess maybe a little bit surprising with all the good stuff you've got going on from operational excellence, pricing. Is there any just additional drag in those industrial margins, or is it just really carrying the overhead and kind of, as you guys said, not assuming any on-highway production in the second half? Well, if you remember, kind of I just want to take you all the way back to when industrial margins were single digits and sort of mid-single digits at times with low on-highway volume. The fact that we're signaling margins that are in the low to mid-teens here, I think represents quite a bit of goodness from both price and operational excellence in the other parts of the business. I don't feel like it's out of line, especially when you look at where we've been. It's easy to sort of say, "Oh, we did an 18, and now we do a 20. How come it is going to go back to 14 or 15?" It's because we've made a lot of progress from where we've been, but it's not the kind of progress that supports 20% margin on an ongoing basis. Does that make sense? Yeah. And I guess I'm just looking at the run rate for the rest of the year being just below 13%. I mean, you'll do that'll take you to the midpoint or guidance. So I'm looking at a 13% margin quarter kind of stepping still well above that high single digit, but obviously a step down. Yeah. If you take On-Highway down to really not contributing, let's say because in past times, we've seen On-Highway be negative when volume's really, really low. But if you take it down to not contributing to sort of a break-even, then you might believe the numbers that you're seeing. Okay. Okay. Yeah. No, that makes sense. Maybe just shifting gears, can you give us any more color on that 45% growth in defense aftermarket and anything? I think I heard you call out vehicles, but anything else and how to maybe think about the trajectory going forward there? I know in the slides, you kind of pointed to, I think, supply chain and some other items. Yeah. So it really is an execution story. We've had a lot of demand, and we've disappointed customers for quite a long time by very long turn times in our defense repair and overhaul portfolio. The really good news, well, good news is that our execution has improved substantially, and we've got flow going there. And we're planning repair and overhaul just like we plan OEM production with the rigorous process now. And we've got good focus on it. The even better news is that the growth is across literally all of the programs that we're involved in. So there's no one program outlier to lean on or be concerned about. And so as we continue to put an operational excellence focus on defense repair and overhaul, I believe that's a good growth lever for us and a margin improvement lever for us for that part of the business. I talked about our value stream transformation efforts, and that defense repair and overhaul value stream is on the list for 2024 to further enhance the performance there and serve those very important customers better. Got it. Helpful. Thanks, guys. Good. Your next question comes from the line of Sheila Kahyaoglu from Jefferies. Please state your question. Sheila, please state your question. Sorry about that. Chip, I wanted to follow up on your prepared remarks in terms of in your script, you mentioned you went to Zeeland last week, and you really focused on the GTF fuel nozzle and how it might come to market sooner than expected. I was wondering if you could just comment on what that means. Does this mean additional content? If you could elaborate. Yeah. So our assumption and working with the engine OEM on this was that the early shop business would be more like a clean, check, and repair activity, which is fairly low content for us and sort of supporting a quick-turn philosophy. But there's some indication that perhaps the build standard might want to focus on ensuring a longer next run of the engine, in which case we might see more scope and more overhaul-type procedures to ensure a longer second run. But a lot of that's going to be airline-specific and customer-specific and what they want for a work scope. We're just trying to make sure we stay ahead of that demand. And if that's the direction they want to go with their strategy, that we're ready to support it. Got it. Thank you. You're welcome. Your next question comes from the line of Louis Raffetto from Wolfe Research. Please state your question. Hi. Thanks for the follow-up. So Chip, I appreciate you, Bill, sort of the openness on China Natural Gas, given where things have been sort of in the past. Maybe just to sort of put a finer point on this, you said the full guidance increase is from China Natural Gas. So you're talking 40% margins on that business. If we assume there's $50 million of sales in Q2, I mean, it looks like the margins industrial in the back half of the year kind of stepped down to low double digits. Is that kind of what you were just referring to? Yes. That's what we were discussing. Yep. Okay. Thank you. Yeah. I know. I know. There are a lot of moving parts here. Appreciate your inquisitiveness. Thank you. Mr. Blankenship, there are no further questions at this time. I will now turn the conference back to you. Okay. Thank you all for joining us. Have a great day. Ladies and gentlemen, that concludes our conference call today. If you would like to listen to a replay of this conference call, it will be available today at 7:30 P.M. Eastern Time.