Crane Company Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Performance: Adjusted EPS was $1.49, driven by 6.5% core sales growth across Aerospace & Electronics and Process Flow Technologies. Core orders were up nearly 20% in the quarter.
• Acquisition: Excited about acquiring Druck, Panametrics, and Reuter-Stokes from Baker Hughes. Druck ($150M revenue) to be in Aerospace & Electronics, Panametrics ($150M revenue) in Process Flow Technologies, Reuter-Stokes ($90M revenue) in Nuclear. Acquisition expected to close Jan 1, 2026.
• Segment Updates:
  • Aerospace & Electronics: Strong demand in commercial and defense markets. Core sales growth expected high single digits to low double digits for full year, leveraging 35%-40%.
  • Process Flow Technologies: End markets not inflected meaningfully, but well positioned to outgrow cycles. Cryogenics backlog at record high, secured key orders in space launch.
• Tariffs: Anticipated gross cost increase of ~$30M for the year, down from $60M prior, offset by price and productivity measures.

Segment Performance

• Aerospace & Electronics: Sales were $258 million, up 12% in the quarter. Record backlog exceeded $1 billion, up 29% year-over-year and 9% sequentially. Adjusted segment margin was 26.3%, a record high, up 250 basis points from the prior year. Core sales growth was strong, with core orders up nearly 20% driven primarily by the Aerospace & Electronics business.
• Process Flow Technologies: Generated sales of $319 million, up 7% in Q2. Core sales growth was 3%, with benefits from acquisitions and favorable foreign exchange. Core FX-neutral backlog decreased 4% year-over-year, but core FX-neutral orders were up 4%. Adjusted operating margin was 20.7%, expanded 20 basis points.

Guidance

• Raised full-year adjusted earnings outlook to $5.50 to $5.80 from prior $5.30 to $5.60.
• Aerospace & Electronics: Core sales growth expected high single digits to low double digits, leveraging 35%-40% for full year.
• Process Flow Technologies: Core growth expected low to middle single digits, leveraging 30%-35%.

Risks

• Macro backdrop remains unpredictable, which could impact sales and margins.
• Tariff impacts could change if rates shift.
• End market inflection in Process Flow Technologies slower than expected.

Question and Answer

• Q: Scott Deutschle with Deutsche Bank asked about A&E backlog and specific programs driving booking strength.

A: Rich Maue and Alex Alcala discussed broad-based strength in commercial and military, including air defense, C4ISR programs, and the C929 widebody aircraft program.

• Q: Matt Summerville with D.A. Davidson asked about PFT orders and end market trends.

A: Alex Alcala talked about PFT orders stable, softness in chemical market, bright spots in cryogenics and biopharma.

• Q: Jordan Lyonnais with Bank of America asked about impact of Big Beautiful Bill and R&D tax changes.

A: Rich Maue said modest improvement in free cash flow expected, less than 5% of total.

• Q: Damian Karas with UBS asked about PSI integration and synergies.

A: Alex Alcala discussed segment reorganization to facilitate integration and expected margin improvement through Crane Business System execution.

• Q: Nathan Jones with Stifel asked about PSI margins and A&E order sustainability.

A: Alex Alcala and Rich Maue talked about margin expansion potential and orders phasing in over time.

• Q: Jeffrey Sprague with Vertical Research Partners asked about PSI in nuclear and PFT project slippage.

A: Alex Alcala discussed Reuter-Stokes' position in nuclear and PFT projects shifting right due to customer demand.

• Q: Justin Ages with CJS Securities asked about PSI in nuclear and PFT subsegments.

A: Alex Alcala talked about Reuter-Stokes' position in nuclear and bright spots in PFT subsegments like cryogenics.

• Q: Tony Bancroft with Gabelli Funds asked about PSI closing timeline.

A: Rich Maue confirmed closing expected end of December, January 1, 2026, tracking nicely.