Crane pany(US:CR)2025-10-28 15:02Financial Data and Key Metrics Changes - Adjusted EPS for the quarter was $1.64, reflecting a 5.6% core sales growth, primarily driven by Aerospace & Electronics and Process Flow Technologies [5][19] - Adjusted operating profit increased by 19%, supported by strong net pricing and productivity [19] - Core FX neutral backlog rose by 16% year-over-year, indicating continued strength in Aerospace & Electronics [19][22] Business Line Data and Key Metrics Changes - Aerospace & Electronics segment sales reached $270 million, up 13% year-over-year, with total aftermarket sales increasing by 20% [22][23] - Process Flow Technologies delivered sales of $319 million, a 3% increase, with flat core performance and a slight benefit from acquisitions and foreign exchange [23][24] - Adjusted segment margin for Aerospace & Electronics expanded to 25.1%, up 160 basis points from the previous year, while Process Flow Technologies saw a margin of 22.4%, up 60 basis points [23][24] Market Data and Key Metrics Changes - The backlog in Aerospace & Electronics exceeded $1 billion, up 27% year-over-year, indicating strong demand [22] - Core orders in Aerospace & Electronics increased by 5%, aligning with expectations, while Process Flow Technologies experienced a slight decline in core FX neutral orders [22][24] - The company anticipates low double-digit core sales growth for Aerospace & Electronics for the year, up from previous single-digit expectations [11][22] Company Strategy and Development Direction - The company is on track to close the acquisition of Precision Sensors & Instrumentation from Baker Hughes by year-end, with integration planning already underway [6][9] - The strategic outlook for the acquired business has improved, with expectations for it to be accretive to financial profiles in terms of margins and growth [9][45] - The company maintains a robust pipeline for further acquisitions, focusing on both Aerospace & Electronics and Process Flow Technologies [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate current market challenges, emphasizing operational discipline and adaptability [5][19] - The company expects to achieve adjusted EPS growth of 20% year-over-year at the midpoint for the full year, raising guidance to $5.75-$5.95 [7][25] - Management remains optimistic about the broader market outlook, anticipating stabilization and potential growth in the chemical sector next year [42][43] Other Important Information - The company has entered into a credit agreement for the acquisition financing, including a $900 million delayed draw term loan and a $900 million revolving credit facility [20][21] - Tariff impacts are expected to total approximately $30 million for the year, with plans to offset these through pricing and productivity measures [22] Q&A Session Summary Question: Can you discuss the organic growth expectations for Process Flow Technologies? - Management indicated that non-chemical markets like wastewater and cryogenics are experiencing double-digit growth, while chemical markets are stable but softer in Europe and China [30][32][33] Question: What are the key drivers of margin upside in Process Flow Technologies? - The margin improvements are attributed to innovation, new product launches, and effective management of tariff impacts through pricing and supply chain strategies [34][36] Question: How is the company positioned regarding the potential U.S. government shutdown? - Management stated that there are currently no impacts from the government shutdown, and they do not foresee any issues in the near term [57] Question: What is the outlook for the Aerospace & Electronics segment next year? - Management expects organic growth to accelerate, potentially reaching the high end of the long-term guidance range of 7%-9% [102] Question: How does the company view automation in its operations? - The company is focusing on specific automation projects to enhance productivity and address skilled labor shortages, rather than fully automating entire facilities [94][96]