Crane Company Q3 FY2025 earnings call

Max Mitchell highlighted strong Q3 results with adjusted EPS $1.64, 5.6% core sales growth. Pending acquisition of Precision Sensors & Instrumentation from Baker Hughes on track to close year-end. Balance sheet strong with robust M&A pipeline. Alex Alcala discussed segment performance: Aerospace & Electronics has strong backlog and pipeline, Process Flow Technologies stable end markets with ability to react to demand changes. Rich Maue provided total company results: 5.6% core sales growth, adjusted operating profit up 19%, balance sheet details including financing for PSI acquisition, and tariff impact offset plans.

Aerospace & Electronics: Sales of $270 million in Q3, up 13% with nearly all organic growth. Record backlog over $1 billion, up 27% YOY. Adjusted segment margin 25.1%, expanding 160 basis points. Process Flow Technologies: Sales of $319 million in Q3, up 3% with flat core performance, 1.6% benefit from Technifab acquisition and 1.5 points from favorable FX. Adjusted operating margin 22.4%, expanding 60 basis points.

Full-year adjusted earnings outlook raised to $5.75 to $5.95 from prior $5.50 to $5.80. Core growth guidance range 4% to 6% with expectation to be in upper half. 2026 organic growth assumptions 4% to 6% leveraging 35% on average. Guidance to provide more detail on 2026 and PSI after acquisition closure.

Tariff impacts: gross cost increase expected to be ~$30 million for the year, with plans to offset through price and productivity. Potential seasonality and mix changes impacting margins in Q4.

Q: On PFT, talk about nonchemical vs chemical markets and margin drivers?

A: Alejandro Alcala discussed nonchemical markets like wastewater, cryogenics, pharma growing double digits, chemical market stable with Middle East and North America activity. Margin drivers include innovation, commercial excellence, operational excellence.

Q: Thoughts on PSI integration and margin improvements?

A: Alex Alcala confident PSI will be accretive to margin and growth, with CBS application expected to drive improvements.

Q: Margin expectation for Q4?

A: Rich Maue cited commercial aftermarket headwinds, seasonality, and lower production hours as factors for Q4 margin step down.

Q: U.S. government shutdown impact?

A: Richard Maue stated no current impact on Crane.

Q: PSI strategic outlook improvement?

A: Max Mitchell and Alex Alcala highlighted positive integration planning, talent, and strategic alignment.

Q: 2026 growth outlook?

A: Max Mitchell stated it's early days but investment thesis holds with plan meetings upcoming.

Q: Defense and aero opportunity with F/A-XX CCA?

A: Alex Alcala stated Crane is well-positioned on demonstrators and CCA activity.

Q: Automation view?

A: Max Mitchell and Alex Alcala discussed spot-based automation for specific tasks and skilled workforce gaps.