Q4 2023 Crane Company Earnings Call

Greetings and welcome to the Crane Company fourth quarter 2023 earnings call. At this time, all participants are in a listen only mode.

<unk> and answer session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Please note. This conference is being recorded I would now.

Now I'll turn the conference over to Jason Feldman, Vice President of Treasury and Investor Relations. Thank you you may begin.

Thank you operator, and good day, everyone welcome to our fourth quarter 2023 earnings release Conference call I'm, Jason Feldman, Vice President of Treasury and Investor Relations on our call. This morning, we have Max Mitchell, our President and Chief Executive Officer, and Rich Maue, Our executive Vice President and Chief Financial Officer, We will start off our call with a few prepared remarks, after which we will.

To respond to questions. Just a reminder, the comments we make on this call may include some forward looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report 10-K and subsequent filings pertaining to forward looking statements also during the call we'll be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers and tables at the end of our press release and accompanying.

The slide presentation, both of which are available on our website at www Dot <unk> dot com in the Investor Relations section now, let me turn the call over to Max. Thank you, Jason and good morning, everyone. Thanks for joining the call today.

Well, we delivered another impressive quarter with results again outperforming expectations with adjusted EPS of 90 cents in the fourth quarter finish.

Max Homer Mitchell: Finishing and historic and very successful 2023.

Max Homer Mitchell: And after a truly outstanding year, we started off 24 on a positive note with another acquisition announced January 3rd this time in aerospace and electronics.

Founded in 1968 and based in Auburn, California via is a global designer and manufacturer of multi stage lubrication pumps and lubrication system components technology for critical aerospace and defense applications with sole sourced and proprietary content on the highest volume commercial.

Max Homer Mitchell: And military aircraft platforms through August 2023, we estimate that <unk> had trailing 12 month sales of approximately $33 million.

Max Homer Mitchell: And adjusted EBITDA of approximately $8 million with a solid order backlog the purchase price was $103 million, which is approximately 13 times trailing EBITDA.

Max Homer Mitchell: <unk> is highly complementary to the fluid solution in our aerospace <unk> electronics segment significantly expanding our portfolio of mission critical aerospace flow control products.

Max Homer Mitchell: <unk> has strong positions on the most attractive commercial and military aircraft platforms today with significant content on the F 35, and the 787 <unk> hundred 20 families of aircraft.

Max Homer Mitchell: Combined with our existing fluid and thermal management capabilities.

<unk> further strengthens our positioning for future content opportunities.

Max Homer Mitchell: <unk> Repower units.

Gearboxes and engines.

Max Homer Mitchell: We expect this acquisition to achieve 10% ROIC with approximately 20 cents of EPS accretion, excluding intangible amortization by year five.

But as with most of our acquisitions. There are also several opportunities we see to deliver in excess of that return.

Max Homer Mitchell: Case volume that will include broadening their marketing efforts to additional customers, where crane has had long term relationships for decades, we also see opportunities to leverage <unk> highly sophisticated machining capabilities to in source components. We currently acquire externally across the broader aerospace business.

Max Homer Mitchell: My personal thanks to Chris and Elizabeth volume and the rest of the <unk> family Entrust and Crane as the stewards of this outstanding second generation family business to our care and the outstanding Finance team that is now part of Crane.

Max Homer Mitchell: We continue to progress on our existing M&A funnel, where we expect additional opportunities to become actionable over the next several quarters, primarily smaller and mid sized transactions.

Max Homer Mitchell: Continuing to execute just as we committed to in terms of seeing accelerated M&A and our strategy as we move forward.

Operator: Greetings. Welcome to the Crane Company fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode.

Max Homer Mitchell: To repeat a few highlights from our full year performance.

In 2003 remember we started the year with the April separation, which was completed on schedule executed flawlessly and based on investor interest levels in our stocks performance clearly a transaction that was well received by our shareholders.

Operator: The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jason Feldman, Vice President of Treasury and Investor Relations. Thank you.

Max Homer Mitchell: Overall, 7% core sales growth drove a 28% increase in adjusted operating profit from continuing operations, reflecting very strong operating leverage and disciplined pricing.

Jason D. Feldman: Thank you, Operator, and good day, everyone. Welcome to our fourth quarter 2023 earnings release conference call. I'm Jason Feldman, Vice President of Treasury and Investor Relations. On our call this morning, we have Max Mitchell, our President and Chief Executive Officer, and Rich Maue, our Executive Vice President and Chief Financial Officer. We'll start off our call with a few prepared remarks, after which we will respond to questions. As a reminder, the comments we make on this call may include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K, and subsequent filings pertaining to forward-looking statements. Also, during the call, we'll be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, both of which are available on our website at www.craneco.com in the Now, let me turn the call over to Max. Thank you, Jason, and good morning, everyone.

Max Homer Mitchell: At Aerospace electronics, we delivered 18% core sales growth and even after that increase in sales we closed the year with an all time record backlog, reflecting how well positioned we are to drive continued growth through the rest of this decade and beyond.

Max Homer Mitchell: And the process flow technologies adjusted segment margins reached a record 19, 9% more than 350 basis points better than our prior year record.

Max Homer Mitchell: Rich <unk> 50 basis points.

Max Homer Mitchell: And a great new base for our margin growth from here as the business continues to structurally shift to higher growth and higher margin end markets and products.

Max Homer Mitchell: And we have made significant progress with capital deployment, demonstrating we can complete high returns and attractive acquisitions in both aerospace and electronics as well as process flow technologies to strengthen our businesses and further accelerate growth.

Max Homer Mitchell: Thanks for joining the call today. Well, we delivered another impressive quarter with results, again, outperforming expectations with adjusted EPS of 90 cents in the fourth quarter. Finishing an historic and very successful 2023, and after a truly outstanding year, we started off 24 on a positive note with another acquisition announced on January 3rd, this time in aerospace and electronics. Founded in 1968 and based in Auburn, California, Vian is a global designer and manufacturer of multi-stage lubrication pumps and lubrication system components technology for critical aerospace and defense applications with sole sourced and proprietary content on the highest volume commercial and military aircraft platforms.

Max Homer Mitchell: Building off that strong 23 performance, we are introducing adjusted EPS guidance for 'twenty four in a range of $4 55 to $4 85, reflecting 10% EPS growth at the midpoint.

Max Homer Mitchell: That growth is driven by expectations of another strong year at aerospace <unk> electronics tempered by known understood and previously communicated and market conditions that process flow technologies, along with a slightly higher tax rate and interest expense.

Max Homer Mitchell: I remember that M&A accretion is also limited in year, one for both transactions based on current interest rates.

This is a high confidence guidance that we have direct line of sight to delivery.

Max Homer Mitchell: Our 2024 guidance assumes muted industrial activity with slowing in certain industrial markets and continued gradual improvement in the aerospace and electronics supply chain.

Max Homer Mitchell: Through August 2023, we estimate that the buy-in had trailing 12-month sales of approximately $33 million and an adjusted EBITDA of approximately $8 million with a solid order backlog. The purchase price was $103 million, which is approximately 13 times trailing EBITDA.

Max Homer Mitchell: While this is our best thinking today, we believe there may be upside as the year progresses, if those two assumptions assumptions prove conservative and.

Max Homer Mitchell: Vian is highly complementary to the fluid solutions in our aerospace and electronics segment, significantly expanding our portfolio of mission-critical aerospace flow control products. Vian has strong positions on the most attractive commercial and military aircraft platforms today, with significant content on the F-35, the 737, and the A320 families of aircraft. Combined with our existing fluid and thermal management capabilities, Vian further strengthens our positioning for future content opportunities on auxiliary power units, gearboxes, and engines. We expect this acquisition to achieve 10% ROIC with approximately 20 cents of EPS accretion, excluding intangible amortization, by year five. But, as with most of our acquisitions, there are also several opportunities we see to deliver in excess of that return. In the case of Vyan, that will include broadening its marketing efforts to additional customers where Crane has had long-term relationships for decades.

Max Homer Mitchell: And we are structured to meet any unexpected changes in demand.

Max Homer Mitchell: There is also potential upside to guidance from capital deployment. If we are successful with M&A in the quarters ahead as we expect.

Max Homer Mitchell: As a reminder.

Max Homer Mitchell: We have an extremely strong unconstrained balance sheet, providing us significant acquisition capacity.

We have a proven track record of successfully integrating acquisitions and over delivering on synergies we operate in markets with numerous potential small and mid sized targets as well as smaller a smaller number of large potential acquisitions.

Max Homer Mitchell: And in our current structure, we are entirely focused on our two global strategic growth platforms aerospace electronics and process flow technologies.

Max Homer Mitchell: And reflecting our confidence in both our near term and long term outlooks yesterday, we announced that we are raising our dividend by 14% to <unk> 82 per share annually.

Max Homer Mitchell: I'd like to also share a few success stories in the quarter as well on core growth and share gains within our segments.

Max Homer Mitchell: In aerospace <unk> electronics.

Max Homer Mitchell: Our fluid solution was awarded the fuel cell coolant pump for a hydrogen electric zero emission powertrain.

Max Homer Mitchell: We also see opportunities to leverage Vyan's highly sophisticated machining capabilities to in-source components we currently acquire externally across the broader aerospace business. My personal thanks to Chris and Elizabeth Vaillant and the rest of the Vaillant family for trusting Crane as the stewards of this outstanding second-generation family business into our care and the outstanding Vaillant team that is now part of Crane.

Max Homer Mitchell: While the initial application is intended to be for smaller regional turboprop aircraft. Our customer is also working on solutions for larger regional jets.

Max Homer Mitchell: This is another example of how our focus on next generation technologies over the last decade has positioned us as one of the providers of choice for emerging applications.

Max Homer Mitchell: We continue to progress on our existing M&A funnel, where we expect additional opportunities to become actionable over the next several quarters, primarily smaller and mid-sized transactions, continuing to execute just as we committed to in terms of seeing accelerated M&A and our strategy as we move forward. Let me repeat a few highlights from our full year performance. Remember, we started the year with the April separation, which was completed on schedule, executed flawlessly, and, based on investor interest levels and our stock's performance, clearly a transaction that was well-received by our shareholders.

Two quarters ago, we discussed our selection to provide high power bidirectional power conversion for both demonstrator platforms for the <unk> Bradley replacement vehicle.

Max Homer Mitchell: With those demonstrator program secured we are now seeing a substantial number of additional hybrid electric ground vehicle demonstrator opportunities and we are currently pursuing five additional programs, where we are optimistic about our prospects.

Max Homer Mitchell: We've also previously commented that we have been selected to provide content for a number of sixth generation fighter demonstrators and collaborative combat aircraft programs that activity is also accelerating we now have six platforms either secured or in various stages of rfps.

Max Homer Mitchell: Overall, 7% core sales growth drove a 28% increase in adjusted operating profit from continuing operations, reflecting very strong operating leverage and disciplined pricing. At Aerospace Electronics, we delivered 18% core sales growth, and even after that increase in sales, we closed the year with an all-time record backlog, reflecting how well-positioned we are to drive continued growth through the rest of this decade and beyond. And at Process Flow Technologies, adjusted segment margins reached a record 19.9 percent, more than 350 basis points better than our prior year record, whoo rich 350 back and a great new base for our margin growth from here as the business continues to structurally shift to higher growth and higher margins and markets and products.

Max Homer Mitchell: Our antiskid brake control system was selected by Deutsche aircrafts for their <unk> hundred 28, Eco regional turboprop platform another promising zero emission platform.

Max Homer Mitchell: And activity remains robust across our solutions with proposals in process are submitted for additional content on a number of other programs across a wide range of our solutions from power conversion and thermal management to proximity switches and anti skit brake control systems.

Max Homer Mitchell: Our process flow technologies, we also had a number of notable developments.

Max Homer Mitchell: In our pharmaceutical business, we secured a $5 million order for a new oncology therapy facility. Our first win with this particular customer in over a decade.

Max Homer Mitchell: And we have made significant progress with capital deployment, demonstrating we can complete high-return and attractive acquisitions in both aerospace and electronics, as well as process flow technology, to strengthen our businesses and further accelerate growth. Building off that strong 23% performance, we are introducing adjusted EPS guidance for 24 in a range of 455 to 485, reflecting 10% EPS growth at the midpoint. That growth is driven by expectations of another strong year at aerospace electronics tempered by known, understood, and previously communicated end market conditions at process flow technologies, along with a slightly higher tax rate and interest. Remember that M&A accretion is also limited in year one for both transactions based on current interest rates. This is high-confidence guidance that we have direct line of sight to delivering.

We won this order due to advances with our E X diaphragm technology that supports a higher temperature range and longer product life that the entrenched incumbent provider was unable to meet its a great sign as other pharmaceutical companies are continuing to develop processes with higher and higher temperatures.

Max Homer Mitchell: And our new hydrogen cryo flow business, where we've discussed for the last few quarters. We've delivered initial shipments of our Bellow seal globe valves in the quarter to two large cryogenic equipment Oems.

Further evidence that our strategy of this market is working.

Max Homer Mitchell: This business also began quoting on another newly launched product line in this space vacuum jacketed piping and we expect our first orders for this product during the first quarter.

Max Homer Mitchell: In our chemical business, we secured nearly $12 million in orders for our new significant project in China is large global chemical manufacturers continue to increase capacity in the region.

Max Homer Mitchell: Our 2024 guidance assumes muted industrial activity with slowing in certain industrial markets and continued gradual improvement in the aerospace and electronics supply chain. While this is our best thinking today, we believe there may be upside as the year progresses if those two assumptions prove conservative, and we are structured to meet any unexpected changes in demand. There's also potential upside to guidance from capital deployment if we are successful with M&A in the quarters ahead, as we expect. As a reminder, we have an extremely strong, unconstrained balance sheet providing us significant acquisition capacity. We have a proven track record of successfully integrating acquisitions and over-delivering on synergies. We operate in markets with numerous potential small and mid-sized targets as well as a smaller number of large potential acquisitions.

Max Homer Mitchell: We want a $4 5 million order for a new LNG facility in the United States you.

You may recall that we've talked about facility repositioning over the last few years and this win is a direct result of our actions to position our engineered check check valve business to become more competitive in this space with our new production capabilities in India.

Max Homer Mitchell: In our water and wastewater business, we had another excellent year driving mid teens sales growth with strong momentum heading into 2024 during the fourth quarter. We also introduced an extension to our successful raiser grinder pump platform focused on severe service explosion proof applications further expanding our addressable.

Max Homer Mitchell: Overall since we launched the razor product line in 2020, we have nearly doubled the sales of our grinder pump business.

Max Homer Mitchell: And in our current structure, we are entirely focused on our two global strategic growth platforms, aerospace and electronics, and process flow technology. And reflecting our confidence in both our near-term and long-term outlooks, yesterday we announced that we're raising our dividend by 14% to $0.82 per share annually. I'd also like to share a few success stories in the quarter as well as on core growth and share gains within our segment and Aerospace Electronics. Our fluid solution was awarded the Fuel Cell Coolant Pump of the Year Award for a hydrogen electric, zero-emission power generator.

My Thanks to our global teams for all of their hard work and success, both with our recent acquisitions as well as on daily execution, and our array of growth initiatives.

Max Homer Mitchell: Overall 2023 was a great year, and we remain confident in our ability to execute on the strategy and vision, we laid out at our March 2023, Investor day event.

Max Homer Mitchell: Namely, a 4% to 6% long term core sales growth rate from resilient and durable businesses that drive about 40% of strategic growth platform sales from the aftermarket with substantial operating leverage on top of already solid margins today that should lead to double digit average annual core profit growth with potential upside from capital deployment.

Max Homer Mitchell: While the initial application is intended to be for smaller regional turboprop aircraft, our customer is also working on solutions for larger regional jets. This is another example of how our focus on next-generation technologies over the last decade has positioned us as one of the providers of choice for emerging applications. Two quarters ago, we discussed our selection to provide high-power bidirectional power conversion for both demonstrator platforms for the M2 Bradley replacement vehicle.

Max Homer Mitchell: And with virtually no debt the capital deployment opportunity is significant and.

Max Homer Mitchell: In our five year vision to double revenues and get to a scale with $2 billion in sales at each of our strategic growth platforms with adjusted EBIT margins above 20%, giving us the opportunity for future strategic portfolio decisions.

Max Homer Mitchell: We certainly finished strong delivering on that vision in 2023, we're off to a great start looking forward to an equally exciting 2024.

Max Homer Mitchell: With those demonstrator programs secured, we are now seeing a substantial number of additional hybrid electric ground vehicle demonstrator opportunities. We are currently pursuing five additional programs where we are optimistic about our prospects. We've also previously commented that we have been selected to provide content for a number of sixth-generation fighter demonstrators and collaborative combat aircraft programs. That activity is also accelerating. We now have six platforms either secured or in various stages of RFP. Our Anti-Skid Brake Control System was selected by Deutsche Aircraft for their D328 Eco-Regional Turboprop Platform, another promising zero-emission platform.

Max Homer Mitchell: We will provide additional details on our 2024.

Max Homer Mitchell: And longer term outlook at our next Investor day event.

Max Homer Mitchell: Tentatively scheduled for May 14th 2024.

Max Homer Mitchell: Let me now turn the call over to rich for more specifics on the quarter and some more details on our guidance rich. Thank you Max and good morning, everyone.

Richard A. Maue: Another strong quarter with 5% core sales growth driving 14% adjusted operating profit growth.

Richard A. Maue: On a full year basis, 7% core sales growth drove a 28% increase in adjusted operating profit from continuing operations.

Richard A. Maue: Demonstrating accelerating core growth results and consistent operating leverage on higher sales continued excellent performance across all businesses and despite some persistent supply chain challenges that continue to impact the broader aerospace and defense industry.

Max Homer Mitchell: And activity remains robust across our solutions, with proposals in process or submitted for additional content on a number of other programs across a wide range of our solutions, from power conversion and thermal management to proximity switches and anti-skid brake control systems at Process Flow Technologies. We also had a number of notable developments. In our pharmaceutical business, we secured a $5 million order for a new oncology therapy facility, our first win with this particular customer in over a decade. We won this order due to advances with our E-X diaphragm technology that supports a higher temperature range and longer product life that the entrenched incumbent provider was unable to meet.

Speaker Change: Getting into the details I'll start off with segment comments that will compare the fourth quarter of 2023 to 2022, excluding special items as outlined in our press release and slide presentation, and then I'll comment on our 2020 for outlook for each segment and for our overall P&L.

Starting with aerospace and electronics no change in end market conditions, which remain very strong as reflected in both our growth rate in the quarter and for the full year 2023, as well as our backlog position.

Speaker Change: On the commercial side of the business aircraft retirements remained very low due to the high demand and limitations on aircraft deliveries.

Speaker Change: This results in an aging fleet that requires more aftermarket parts and service and demand for new aircraft continues to exceed what the Oems can deliver.

Max Homer Mitchell: It's a great sign as other pharmaceutical companies are continuing to develop processes with higher and higher temperatures. In our new hydrogen cryoflow business, which we've discussed for the last few quarters, we delivered initial shipments of our bellow-sealed globe valves in the quarter to two large cryogenic equipment OEMs, further evidence that our strategy in this market is working. This business also began quoting on another newly launched product line in this space, Vacuum Jacketed Piping, and we expect our first orders for this product during the first quarter. In our chemical business, we secured nearly $12 million in orders for a new significant project in China as large global chemical manufacturers continue to increase capacity in the region. We want a $4.5 million order for a new LNG facility in the United States.

And air traffic activity is also strong with global air traffic now basically at pre Covid 2019 levels.

Speaker Change: On the defense side, we continue to see solid procurement spending and a continued focus on reinforcing the broader defense industrial base given the heightened global uncertainty today across both commercial and defense, we are positioned extremely well with many of our technology seeing the most significant interest and highest rates of growth overall, just a solid.

Speaker Change: Demand environment with no signs of slowing anytime soon.

Speaker Change: That strong demand was reflected in our fourth quarter growth rates with sales of $213 million, increasing 17% compared to last year, even with this high level of sales growth backlog of $701 million increased 14% year over year with a 3% increase sequentially in.

Max Homer Mitchell: You may recall that we have talked about facility repositioning over the last few years, and this win is a direct result of our actions to position our engineered check valve business to become more competitive in the space with our new production capabilities in India. In our water and wastewater business, we had another excellent year driving mid-teens sales growth with strong momentum heading into 2024. During the fourth quarter, we also introduced an extension to our successful Razor grinder pump platform, focused on severe service explosion-proof applications, further expanding our addressable market.

Speaker Change: In the quarter total aftermarket sales increased 34% with commercial aftermarket up 44% and military aftermarket up 11%.

Speaker Change: OE sales increased 10% in the quarter with 14% growth in commercial and up.

Speaker Change: Up 6% and military.

While the demand environment remains very strong we continue to remain supply chain constraint with gradual improvement over the last few months.

Speaker Change: As we discussed last quarter. This is not just related to on time deliveries from suppliers, but the broader supply infrastructure spanning from raw materials components and labor not only in terms of availability, but also supply our employee turnover and employee experience levels.

Max Homer Mitchell: Overall, since we launched the Razor product line in 2020, we have nearly doubled the sales of our grinder pump business. My thanks to our global teams for all of their hard work and success, both with our recent acquisitions, as well as on daily execution and our array of growth in this. Overall, 2023 was a great year.

Speaker Change: Areas of specific shortages continue to shift and evolve although overall component availability has modestly improved consistent with our commentary last quarter, we have incurred some additional costs related to expediting shipments due to supply chain issues.

Max Homer Mitchell: And we remain confident in our ability to execute on the strategy and vision we laid out at our March 2023 Investor Day event. Namely, a 4% to 6% long-term core sales growth rate from resilient and durable businesses that drive about 40% of strategic growth platform sales from the aftermarket with substantial operating leverage on top of already solid margins today that should lead to double-digit average annual core profit growth with potential upside from capital deployment. And with virtually no debt, the capital deployment opportunity is significant, and a five-year vision to double revenues and get to a scale with $2 billion in sales at each of our strategic growth platforms with adjusted EBITDA margins above 20%, giving us the opportunity for future strategic portfolio decisions.

Speaker Change: As well as costs associated with qualifying new suppliers, and adding second sources, where it makes sense.

Speaker Change: Adjusted segment margins of 22% declined slightly from 26% last year, primarily reflecting slightly higher engineering expense and the supply chain related costs I mentioned.

Largely offset by benefits from higher volumes and productivity.

On a full year basis core sales growth of 18% exceeded our most recent guidance of 16% growth in adjusted operating profit of $159 million was above our most recent guidance of $157 million.

Speaker Change: Looking ahead to 2024, we expect sales growth of 14, 5% with 10% core sales growth and a four 5% benefit from the <unk> acquisition.

Max Homer Mitchell: We've certainly finished strong, delivering on that vision in 2023. We're off to a great start, looking forward to an equally exciting 2024. We will provide additional details on our 2024 and longer-term outlook at our next Investor Day event, tentatively scheduled for May 14th, 2024. Let me now turn the call over to Rich for more specifics on the quarter and some more details on our guidance.

Speaker Change: That 10% core sales growth is above our long term expected sales CAGR of 7% to 9% and it reflects what we have clear visibility to delivering based on the current state of the supply chain and it assumes our current unmet demand in the $50 million to $60 million range.

That it doesn't materially change over the course of the year.

Speaker Change: We expect margins to increase 140 basis points to 21, 5%, reflecting 35% leverage on core growth, while very solid at 35%. It is towards the lower end of our targeted 35% to 40% range consistent with our commentary last quarter and today regarding supply chain inefficiencies and costs.

Richard A. Maue: Thank you, Max, and good morning, everyone. Another strong quarter with 5% core sales growth driving 14% adjusted operating profit growth. On a full year basis, 7% core sales growth drove a 28% increase in adjusted operating profit from continuing operations, demonstrating accelerating core growth results and consistent operating leverage on higher sales. Continued excellent performance across all businesses and despite some persistent supply chain challenges that continue to impact the broader aerospace and defense industry. Getting into the details, I will start off with segment comments that compare the fourth quarter of 2023 to 2022, excluding special items as outlined in our press release and slide presentation.

Speaker Change: That will improve gradually.

Speaker Change: However, we are confident that the actions we are taking now being appropriately assertive on pricing, where we believe we still have significant opportunities as we move forward continuing to drive productivity expediting and adjusting staffing in our factories to manage the supply chain issues and continuing to make investments in new technology all.

Speaker Change: US very well for strong leverage and further margin expansion in the years ahead.

Richard A. Maue: Then I'll comment on our 2024 outlook for each segment and for our overall P&L. Starting with aerospace and electronics, there was no change in end market conditions, which remain very strong, as reflected in both our growth rate in the quarter and for the full year 2023, as well as our backlog position. On the commercial side of the business, aircraft retirements remain very low due to high demand and limitations on aircraft deliveries.

Speaker Change: Total leverage is slightly lower than the 35% due to the <unk> acquisition and Thats because acquired sales always only leverage mathematically at our operating profit margin level in the first year.

Speaker Change: From a cadence perspective sales should increase sequentially across the full year with margins likely strongest in the second and third quarters given expected mix.

Our process flow technologies, we are well positioned to continue to outgrow our markets, even though we continue to see signs of slowing demand as previously communicated and messaged for the last few quarters. The softness remains largely confined to European chemical nonresidential construction and general industrial markets as well as some project push outs in North America.

Richard A. Maue: This results in an aging fleet that requires more aftermarket parts and service, and demand for new aircraft continues to exceed what the OEMs can deliver. And air traffic activity is also strong, with global air traffic now basically at pre-COVID-19 levels. On the defense side, we continue to see solid procurement spending and a continued focus on reinforcing the broader defense industrial base given the heightened global uncertainty today. Across both commercial and defense, we are positioned extremely well, with many of our technologies seeing the most significant interest and highest rates of growth. Overall, just a solid demand environment with no signs of slowing any time soon. That strong demand was reflected in our fourth quarter growth rates, with sales of $213 million increasing 17% compared to last year. Even with this high level of sales growth, backlog of $701 million increased 14% year-over-year, with a 3% increase sequentially. In the quarter, total aftermarket sales increased 34%, with commercial aftermarket up 44%, and military aftermarket up 11%. OE sales increased 10% in the quarter with 14% growth in commercial and up 6% in military.

Speaker Change: But we did see some very nice project wins again in the quarter generally projects that remains significantly stronger than MRO activity as end users continue to focus on cost reduction and inventory levels.

Speaker Change: As a reminder, if you look at prior cycles, given our specific product exposures, we typically see slowing activity a few quarters before many others playing in the broader process markets, but as displayed in 2021 and previous cycles. We also tend to recover a few quarters earlier.

Speaker Change: We continue to focus on what's within our control, namely gaining share to outgrow our end markets.

Speaker Change: While our market outlook is unchanged orders in the fourth quarter were better than expected again as they were in the third quarter and again driven by our key project wins and share gains rather than a fundamental change to our market outlook.

Speaker Change: We still expect negative orders for the first few quarters of 2024 before we see a positive inflection likely later this year.

In the quarter itself, we delivered sales of $272 million up 8% with core growth of down slightly but more than offset by a 6% acquisition benefit.

Speaker Change: And a 2% benefit from favorable foreign exchange.

Richard A. Maue: While the demand environment remains very strong, we continue to remain supply chain constrained with gradual improvement over the last few months. As we discussed last quarter, this is not just related to on-time deliveries from suppliers but the broader supply infrastructure spanning raw materials, components, and labor, not only in terms of availability but also supplier-employee turnover and employee experience levels. Areas of specific shortages continue to shift and evolve, although overall component availability has modestly improved. Consistent with our commentary last quarter, we have incurred some additional costs related to expediting shipments due to supply chain issues, as well as costs associated with qualifying new suppliers and adding second sources where it makes sense. Adjusted segment margins of 20.2 percent declined slightly from 20.6 percent last year, primarily reflecting a slightly higher engineering expense and the supply chain-related costs I mentioned, largely offset by benefits from higher volumes and productivity.

Speaker Change: Adjusted operating margins of 17% increased 90 basis points from last year, primarily reflecting strong value pricing and productivity gains, partially offset by lower volumes and unfavorable mix.

Speaker Change: Compared to the prior year.

Speaker Change: Foreign exchange neutral backlog decreased 1% and core FX neutral orders increased 1%.

Speaker Change: Sequentially compared to the third quarter core FX neutral backlog increased 2% with core FX neutral orders down 2%.

Speaker Change: Remember that the year over year backlog decline reflects in part the natural impact of shortening lead times as the supply chain continues to improve.

Speaker Change: For 2024, consistent with our commentary last quarter, we expect approximately flat core sales with continued share gains and pricing offsetting a weaker market and the <unk> acquisition should add approximately four 5% to segment sales we.

Speaker Change: We expect margins to increase slightly to approximately 20% following our record year in 2023 with slight dilution from the <unk> acquisition offset by productivity and pricing.

Speaker Change: This is an outstanding result, considering the more challenging end market is expected in 2024.

Richard A. Maue: On a full year basis, core sales growth of 18% exceeded our most recent guidance of 16% growth, and adjusted operating profit of $159 million was above our most recent guidance of $157 million. Looking ahead to 2024, we expect sales growth of 14.5% with 10% core sales growth and a 4.5% benefit from the buy-in acquisition. That 10% core sales growth is above our long-term expected sales CAGR of 7% to 9%, and it reflects what we have clear visibility to delivering based on the current state of the supply chain, and it assumes our current unmet demand in the $50 million to $60 million range doesn't materially change over the course of the year. We expect margins to increase 140 basis points to 21.5%, reflecting 35% leverage on core growth.

Speaker Change: For context remember that in 2020 than in 2019, just before Covid margins were 13, 6%.

Speaker Change: The significant step function change in margins reflect structural shifts in the business to higher growth and higher margin end markets. The contribution from accretive new product introductions and pricing that is both disciplined and appropriately assertive given the inflationary environment and our product differentiation.

Speaker Change: From a cadence or timing perspective, we expect 2024 to be far more level loaded in 2023, we.

Speaker Change: We expect first quarter sales slightly above the fourth quarter exit rate with margins similar to full year 2000, 22024 guidance overall.

Speaker Change: And overall, the third quarter is likely to be the strongest for the year.

Speaker Change: Engineered materials sales of $49 million decreased 7% compared to last year as expected adjusted operating profit margins decreased 250 basis points to nine 3% on a lower volumes.

Speaker Change: On a full year basis core sales declined 13% driven by the RV cycle. However, adjusted margins increased 60 basis points to 14, 8% really impressive performance given the end market challenges last year.

Richard A. Maue: While very solid at 35%, it is toward the lower end of our targeted 35-40% range, consistent with our commentary last quarter and today regarding supply chain inefficiencies and costs that will improve gradually. However, we are confident that the actions we are taking now, being appropriately assertive on pricing where we believe we still have significant opportunities as we move forward, continuing to drive productivity, expediting and adjusting staffing in our factories to manage the supply chain issues, and continuing to make investments in new technology, all position us very well for strong leverage and further margin expansion in the years ahead. Total Leverage, slightly lower than the 35% due to the buy-in acquisition, and that's because acquired sales always only leverage mathematically at their operating profit margin level in the first year.

For 2024, we expect both sales and margins to be flat compared to 2023 as the RV market stabilizes with our normal quarterly cadence with fourth quarter seasonality.

Speaker Change: Seasonally the slowest.

Speaker Change: Moving on to total company results in.

Speaker Change: In the fourth quarter adjusted free cash flow was strong at $152 million remember that full year cash flow free cash flow is difficult to interpret given the accounting related to the separation. Following the first quarter. However, I would frame up performance is solid with some modest understandable headwinds due to some supply chain inefficiencies that everyone in the industry is dealing with.

Speaker Change: Those headwinds of course are only timing related and will reverse in the future.

Speaker Change: Total debt at the end of the fourth quarter was $249 million with $330 million of cash on hand at the beginning of January after the end of the fourth quarter, we drew $100 million on our revolving credit facility to fund the <unk> acquisition.

Speaker Change: We continue to have substantial financial flexibility with more than $1 billion in M&A capacity today, and reaching as much as $4 billion by 2028.

Richard A. Maue: From a cadence perspective, sales should increase sequentially across the full year, with margins likely strongest in the second and third quarters given expected mix. At Process Flow Technologies, we are well positioned to continue to outgrow our markets, even though we continue to see signs of slowing demand as previously communicated and messaged for the last few quarters. The softness remains largely confined to European chemical, non-residential construction, and general industrial markets, as well as some project pushouts in North America, but we did see some very nice project wins again in the quarter. Generally, projects have remained significantly stronger than MRO activity as end users continue to focus on cost reduction and inventory levels.

Speaker Change: While this is more financial flexibility than we have had historically our capital allocation strategy is unchanged, we will deploy our capital with the same strict financial and strategic discipline that we always have employed.

Speaker Change: Prioritizing internal investments for growth, followed by M&A and returns to shareholders.

Speaker Change: Now turning to our 2020 for guidance.

Speaker Change: As Max mentioned, our initial adjusted 2024 EPS guidance is in a range of $4 55 to 485, reflecting 10% EPS growth at the midpoint.

Speaker Change: Guidance assumes total core growth of 3% to 5% with a 4% benefit from acquisitions that 3% to 5% growth will drive a 11% growth in adjusted segment operating profit.

Speaker Change: Additional details of our guidance are included in our press release and the slide presentation on our website, but other key assumptions include Corp.

Speaker Change: Corporate expense of $75 million.

Speaker Change: Nonoperating expense, primarily net interest expense of approximately $20 million tax rate of 23, 5%.

Richard A. Maue: As a reminder, if you look at prior cycles, given our specific product exposures, we typically see slowing activity a few quarters before many others playing in the broader process markets. But, as displayed in 2021 and previous cycles, we also tend to recover a few quarters earlier. We continue to focus on what's within our control, namely gaining share to outgrow our end market. While our market outlook is unchanged, orders in the fourth quarter were better than expected again, as they were in the third quarter, and again driven by our key project wins and share gains rather than a fundamental change to our market outlook. We still expect negative orders for the first few quarters of 2024 before we see a positive inflection, likely later this year.

Diluted shares of $58 million and.

Speaker Change: And we expect free cash flow of $240 million to $265 million, reflecting over 90% of free cash conversion.

Speaker Change: Hey in my 16 years at Crane. It has never felt better a lot of momentum across the board and looking forward to a continued incredible 2024.

Speaker Change: Operator, we are now ready to take our first question.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.

Richard A. Maue: In the quarter itself, we delivered sales of $272 million, up 8%, with core growth down slightly, but more than offset by a 6% acquisition benefit and a 2% benefit from favorable foreign exchange. Adjusted operating margins of 17 percent increased 90 basis points from last year, primarily reflecting strong value pricing and productivity gains, partially offset by lower volumes and unfavorable MACD. Compared to the prior year, core foreign exchange neutral backlog decreased 1%, and core FX neutral orders increased 1%.

Speaker Change: Our first questions come from the line of Damian Karas with UBS. Please proceed with your questions.

Damian Karas: Hey, good morning, guys congrats on the quarter. Thank.

Speaker Change: Thank you thank you Damian.

Damian Karas: You bet.

Damian Karas: Maybe we could start on the A&D margins.

Damian Karas: Youre, capturing a little bit less incrementals than we would expect just given the sales strength.

Damian Karas: Rich maybe you can just kind of help us bridge that there I know you mentioned.

Damian Karas: You are getting some additional costs related to expedited shipping or you're not.

Richard A. Maue: Compared to the third quarter, core FX neutral backlog increased 2%, with core FX neutral orders down 2%. However, remember that the year-over-year backlog decline reflects, in part, the natural impact of shortening lead times as the supply chain continues to improve. For 2024, consistent with our commentary last quarter, we expect approximately flat core sales with continued share gains and pricing offsetting a weaker market. And the BAUM acquisition should add approximately 4.5% to segment sales. We expect margins to increase slightly to approximately 20% following our record year in 2023, with slight dilution from the Baum acquisition offset by productivity and pricing. This is an outstanding result considering the more challenging end markets expected in 2024. For context, remember that in 2019, just before COVID, margins were 13.6%.

Damian Karas: Not presuming that some of those costs abate in 2024, and then how many supply chain conditions actually again, a little bit worse before they get better.

Richard A. Maue: Yes, I think.

Richard A. Maue: We do expect to see some of those headwinds abate as we move forward, it's a gradual improvement I would say.

Richard A. Maue: In the quarter itself.

Richard A. Maue: Margins, the leverage was a bit lower but not too far off what we expected when we issued our revised guidance last quarter. So continuing to see those headwinds from a supply chain perspective look overall, we leveraged at 31% on the full year, which is pretty impressive overall, considering the environment, we're in and those supply chain constraints, we're back to above.

Richard A. Maue: 20% op.

Richard A. Maue: We are guiding to some pretty.

Richard A. Maue: Impressive.

Leverage performance next year at 35, 35% and we have that confidence Damian so we see that path.

Richard A. Maue: Again, a little bit of improvement.

Richard A. Maue: Gradual as it relates to the supply chain constraints that we've seen in those costs that have.

Richard A. Maue: The significant step function change in margins reflects structural shifts in the business to higher growth and higher margin end markets, contribution from creative new product introductions, and pricing that is both disciplined and appropriately assertive given the inflationary environment and our product differentiation. From a cadence or timing perspective, we expect 2024 to be far more level-loaded than 2023. We expect first-quarter sales slightly above the fourth-quarter exit rate, with margins similar to full-year 2024 guidance overall. And overall, the third quarter is likely to be the strongest for the year. At Engineer Materials, sales of $49 million decreased 7% compared to last year.

Richard A. Maue: Have impacted us here in the second half.

Richard A. Maue: Throughout all of 2023.

Got it thanks.

And then maybe switching over to <unk>.

Richard A. Maue: S T.

Richard A. Maue: You've only seen orders down really one quarter, but the last few quarters actually are selling.

Richard A. Maue: Stability are modestly up.

Richard A. Maue: <unk> order rate so.

Richard A. Maue: Could you just help us to understand like the short cycle versus some of your comments on the long cycle I'm presuming that.

Richard A. Maue: The orders are still up on the project base.

Richard A. Maue: But maybe if you could just give us a sense for like how much the short cycle volumes haven't backed kind of come off the peak and it sounds like going forward Youre thinking that maybe short cycles kind of stable.

Richard A. Maue: As expected, adjusted operating profit margins decreased 250 basis points to 9.3% on the lower volumes. On a full-year basis, core sales declined 13%, driven by the RV cycle. However, adjusted margins increased 60 basis points to 14.8%, a really impressive performance given the end market challenges last year. For 2024, we expect both sales and margins to be flat compared to 2023 as the RV market stabilizes with a normal quarterly cadence with fourth quarter seasonality, seasonally the slowest. Moving on to total company results, In the fourth quarter, adjusted free cash flow was strong at $152 million.

Richard A. Maue: Longer cycles down next couple of quarters, but then start to improve is that is that how you are.

Richard A. Maue: Thinking about it.

Yeah look we see it we saw maxed had outlined a number of projects that we won in the quarter again and yes.

Richard A. Maue: They have offset some of the underlying trends that we've been communicating in terms of weaker demand on the short cycle MRO portion of the business, where most of the chemical companies that were servicing our focused on cost reduction right now still and we see that happening as we move through the first nine months of.

2024, so that trend is continuing.

Richard A. Maue: So there was declines in MRO, mainly.

Richard A. Maue: Remember that full-year free cash flow is difficult to interpret given the accounting related to the separation following the first quarter. However, I would frame up performance as solid with some modest, understandable headwinds due to some supply chain inefficiencies that everyone in the industry is dealing with. Those headwinds, of course, are only timing-related and will reverse in the future. Total debt at the end of the fourth quarter was $249 million, with $330 million of cash on hand.

Richard A. Maue: Mainly in Europe, but also a bit in the U S.

Richard A. Maue: But the projects have really been what we're seeing and what youre seeing as the uplift offsetting that that underlying demand shortfall. So.

Richard A. Maue: The new LNG facility the projects in China, and so forth account the pharmaceutical project win. So these are these are great great wins, and very strategic but they are offsetting what we're seeing is a fundamental underlying demand shortfall as we move through the first nine months still very consistent Damien with the trend that we're seeing with just as we said in <unk>.

Richard A. Maue: At the beginning of January, after the end of the fourth quarter, we drew $100 million on our revolving credit facility to fund the buy-in acquisition. We continue to have substantial financial flexibility with more than a billion dollars in M&A capacity today and reaching as much as $4 billion by 2028. While this is more financial flexibility than we have had historically, our capital allocation strategy is unchanged. We will deploy our capital with the same strict financial and strategic discipline that we always have employed.

Richard A. Maue: Quarter.

Richard A. Maue: It Hasnt declined quite the rate that we had thought going into 'twenty three we still see the clear trend the trough.

Richard A. Maue: <unk>.

Richard A. Maue: Being reached in <unk>.

Richard A. Maue: Inflection point by Q3 Q4 of 24, so all the underlying data still still supports our.

Richard A. Maue: Forecast here in our guidance.

Richard A. Maue: Okay, but any ballpark number on kind of how much the short cycle volumes are down from the peak earlier last year.

Richard A. Maue: Prioritizing Internal Investments for Growth, followed by M&A and Returns to Shareholders. Now, turning to our 2024 guidance. As Max mentioned, our initial adjusted 2024 EPS guidance is in a range of 455 to 485, reflecting 10% EPS growth at the midpoint. Guidance assumes total core growth of 3% to 5% with a 4% benefit from acquisitions. That 3% to 5% growth will drive 11% growth in adjusted segment operating profit. Additional details of our guidance are included in a press release and a slide presentation on our website, but other key assumptions include corporate expense of $75 million, non-operating expense, primarily net interest expense of approximately $20 million, tax rate of 23.5%, and diluted shares of 58 million, and we expect free cash flow of $240 to $265 million, reflecting over 90% of Hey, in my 16 years at Crane, it has never felt better.

Speaker Change: Thanks, Kevin.

Speaker Change: I mean, the short cycle piece doing the breakout of that off hand, its probably.

Kevin: <unk> low it'll be low double digit probably in total just on that portion something like that Damian.

Speaker Change: Okay cool.

Speaker Change: Thanks, a lot I appreciate it guys I'll pass it along thanks, David Thank you.

Speaker Change: Thank you. Our next question is come from the line of Scott <unk> with Deutsche Bank. Please proceed with your questions.

Scott: Hey, good morning.

Scott: Good morning, Rich sorry, if I missed this but how did the aftermarket growth at <unk> in the fourth quarter decompose between commercial aftermarket and defense aftermarket.

Scott: Yes, commercial aftermarket was up.

About 44% and defense was up <unk>.

Scott: 11.

Scott: Yes.

Scott: Wow, Okay, and then rich for the 10% core growth at <unk> in 2024.

Can you say, how that outlook bifurcate between commercial Aero and defense or any kind of split between the different end markets. There for 'twenty four in that 10%.

Speaker Change: Sure Scott will definitely provide a lot more detail at our Investor day, but just to give you some maybe high level high level numbers.

Operator: A lot of momentum across the board, and I am looking forward to an incredible 2024. Operator, we are now ready to take our first question. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: Commercial commercial OE is going to be up in the call it mid teens area.

Scott: Military will be maybe low single digit.

Speaker Change: Flattish something like that.

Speaker Change: Just given the momentum that we saw there all year.

Speaker Change: And then on the commercial aftermarket side, we're looking at low double digit military will be in the double digit.

Speaker Change: I would say firmly in the double digit.

Speaker Change: Area, if that helps okay, yes.

Speaker Change: And then switching to PMT.

Speaker Change: No I appreciate the conservatism on the margin outlook, there, but can you go into a bit more detail as to why the margins not only expand 10 basis points in 'twenty four or.

Or maybe to ask it a different way what scenario are you protecting yourself from with that yes.

Operator: One moment, please, while we poll for your questions. Our first questions come from the line of Damian Karas with UBS. Please proceed with your question. Hey, good morning guys.

Speaker Change: Remember, it's on it's on flat organic growth.

Damian Karas: Congratulations on the quarter. Thank you. You bet. Maybe we could start on the A&E margins. You know, you're capturing a little bit less incremental than we'd expect, just given the sales strength. You know, Rich, maybe you can just kind of help us bridge that there.

Speaker Change: We've got an acquisition that initially is going to be slightly dilutive to margins longer term it wont be but <unk>.

Speaker Change: Next year.

We'll be.

Speaker Change: And the mix right. If you think about the commentary in terms of what's been softest for us over the past couple of quarters and what we expect to be softest into 24, it's chemical right which is.

Richard A. Maue: I know you mentioned you're getting some additional costs related to expedited shipping. But are you not presuming that some of those costs will abate in 2024 and that some of these supply chain conditions will actually get a little bit worse before they get better? Yeah, I think we do expect to see some of those headwinds abate as we move forward. It's a gradual improvement, I would say. In the quarter itself, you know, margins, and leverage were a bit lower, but not too far off what we expected when we issued our revised guidance last quarter.

Speaker Change: Good margin business for us, so theres going to be likely unfavorable mix.

Speaker Change: Yes, I would just supplement with the pricing associated with next year as well. So we are doing a continued at the teams are doing a fantastic job continuing to drive price.

Speaker Change: That would offset what you obviously expect in the way of continued inflation right. So that's all taken together.

Speaker Change: Drives that that flat margin performance.

Which given the given the volumes.

Speaker Change: In our view, a pretty a pretty good a pretty good print for us.

Richard A. Maue: So continuing to see those headwinds from a supply chain perspective, look, overall, we leveraged at 31 percent for the full year, which is pretty impressive overall, considering the environment we're in and those supply chain constraints. You know, we're back to above 20 percent OP, and we are guiding to some pretty impressive leverage performance next year at 35 percent, and we have that confidence, Damien. So we see that path, and again, a little bit of gradual improvement as it relates to the supply chain constraints that we've seen and those costs that have impacted us here in the second half, or really throughout all of 2023. Got it, thanks. And then maybe switch over to PST.

Speaker Change: Right. Okay, and then last question just a rich anything on cadence for PMT margins for the year. Thanks.

Yes, it'll be fairly.

Speaker Change: Fairly level loaded through the year.

Speaker Change: There might be a little bit of strength in Q3, but right now as we're looking at it it's going to be fairly level loaded maybe a little a little bit shy.

Speaker Change: Or lower in Q1.

Speaker Change: Thank you.

Speaker Change: Thanks, Scott Thanks, Scott.

Speaker Change: Thank you. Our next question is coming from the line of Justin <unk> with CJS Securities. Please proceed with your questions.

Justin: Hey, good morning, Thanks for taking the questions.

Justin: Good morning, good morning.

Justin: First one just on hydrogen I know you mentioned some shipments that were going out can you just give us an update on when thats going to reach critical mass when we can expect.

Damian Karas: You've only seen orders down really one quarter, but the last few quarters, you know, actually are showing stability or modestly higher organic order rates. You know, could you just help us to understand, like, the short cycle versus some of your comments on the long cycle? I'm presuming that the, you know, orders are still up on the project base. But maybe if you could just give us a sense for how much the short cycle volumes have, in fact, kind of come off the peak, and it sounds like going forward, you're thinking that, you know, maybe short cycles kind of stable, longer cycles down the next couple quarters, but then start to improve. Is that how you're kind of thinking about it?

Justin: To turn inflect basically.

Speaker Change: So that's a good question as we think about it fluctuate we are building this business up.

Speaker Change: This was.

Speaker Change: We have looked at an acquisition years ago in the hydrogen space.

Speaker Change: We're not successful we clearly set our sights on the market. This is this is right in our sweet spot. So we have the core capability.

Speaker Change: Balanced piping and we set on this journey.

Speaker Change: Building. This business. We're also looking at some M&A as we move forward, but right now on core.

Speaker Change: We see this as a.

Speaker Change: Easily by 2030, we're using some very large numbers internally that we are.

Richard A. Maue: Yeah, you know, look, we saw Max outlined a number of projects that we've won in the quarter again. And yes, they've offset some of the underlying trends that we've been communicating in terms of weaker demand on the short cycle MRO portion of the business, where most of the chemical companies that we're servicing are still focused on cost reduction right now. And we see that happening as we move through the first nine months of 2024.

Speaker Change: Pushing towards.

Speaker Change: <unk> thought about the inflection point of critical mass, but clearly by 'twenty five I think we're seeing some sales agreement.

Yep.

Speaker Change: More color at the Investor day to Joseph <unk>.

Speaker Change: Perfect that's helpful.

Speaker Change: And then just on the acquisition.

Speaker Change: It's been nice to see volume, it's been nice to see.

Speaker Change: And I think you mentioned in the prepared remarks about focusing on mid size can you give us an update are you currently involved in any processes or your clothes and are those in.

Richard A. Maue: So that trend is continuing. So there were declines in MRO, mainly in Europe but also a bit in the US. But the projects have really been what we're seeing and what you're seeing as the uplift offsetting that underlying demand shortfall. So the new LNG facility, the projects in China, and so forth. The pharmaceutical project win.

Our PFT.

Speaker Change: I'd say, there's a lot of activity in both.

Speaker Change: Which is normal.

Speaker Change: So our funnel full so there's a lot of activity.

Speaker Change: It bodes well for the first couple of quarters here potentially.

Speaker Change: We'll see.

Richard A. Maue: So these are great, great wins and very strategic, but they are offsetting what we're seeing as a fundamental underlying demand shortfall as we move through the first nine months. Still very consistent, Damien, with the trend that we're seeing. We just, as we said last quarter, it hasn't declined quite the rate that we had thought going into 23. We still see the clear trend, the trough being reached, and an inflection point by Q3, Q4 of 24. So all the underlying data still supports our forecast here in our guidance. Okay, but any ballpark number on kind of how much the short cycle volumes are down from, you know, the peak earlier last year? I mean, the short cycle piece. Do we know the breakout of that offhand?

Speaker Change: Very solid activity.

Speaker Change: Alright, I appreciate the update thanks for taking the questions.

Speaker Change: Thanks, Justin.

Speaker Change: Thank you. Our next question is coming from the line of Mariana Perez Mora with Bank of America. Please proceed with your questions.

Speaker Change: Good morning, everyone.

Speaker Change: Good morning.

Speaker Change: So my question is on RF space on Electronics, and then follow up for Scott on the end markets could you. Please describe how much is like wide body versus narrow body in driving these like mid teens growth for commercial OE.

Speaker Change: As a follow up to that how you're thinking about these like phrase in the sensory set of Max production.

Scott: So overall I think the way I would think about our revenue profile and we have an excellent mix of content on most major platforms, whether it's narrow body wide body et cetera. So.

Damian Karas: It's probably, you know, low, low. It'll probably be a low double digit in total, just on that portion. Something like that, Damian? Okay, cool. Thanks a lot. Appreciate it, guys. I'll pass it along.

Scott: Narrow bodies certainly as the engine that's driving the industry, but we do have significant content on wide body aircraft as well. So there isn't a unique aspect to our guidance or our business that would suggest the importance of one versus another we're just going we've got content on again, most and we're following the build.

Damian Karas: Thanks, Damian. Thank you. Thank you. Our next questions come from the line of Scott Deutschle with Deutsche Bank. Please proceed with your question. Hey, good morning.

Scott: Rates.

Scott: On the 707, I would say that first of all.

Scott Deutschle: Rich, sorry if I missed this, but how did the aftermarket growth at A&E in the fourth quarter decompose between the commercial aftermarket and then the defense aftermarket? Yeah, the commercial aftermarket was up about 44%, and defense was up, Eleven. Wow, okay. And then Rich for the 10% core growth at A&E in 2024. Can you say how that outlook bifurcates between commercial aero and defense, or any kind of split just between the different end markets there for 24 and not 10%? Sure, Scott.

Scott: No.

Scott: It's not good news for the industry.

Scott: I wouldn't add anything that we're not reading all publicly as this continues to be.

Uncovered.

Scott: Difficult times here.

Scott: Boeing.

Speaker Change: We share the concern and look forward to assisting in any way, we can as we move forward as it relates to.

Speaker Change: The freeze rates impact I would say that our current guide.

No risk.

Speaker Change: Hey, we are thinking about this and have planned for the current environment. So from a crane standpoint, I would just reiterate our guidance and have high confidence.

Richard A. Maue: We'll definitely provide a lot more detail at our Investor Day, but just to give you some maybe high-level numbers. Commercial OE is going to be up in the call it mid-teens area. Military will be maybe below single digit to, you know, flat-ish, something like that, just given the momentum that we saw there all year.

Speaker Change: And is there any way.

Speaker Change: Sure Oh, sorry go ahead.

I was going to say the one thing I would add.

Speaker Change: Next year, we also do expect given our specific mix in the market a pretty big uplift in regional.

Speaker Change: Which is contributing to that growth rate nicely as well.

Scott Deutschle: And then on the commercial aftermarket side, we're looking at low double digits. Military will be in the double digits, you know. I would say firmly in the double digit area, if that helps. Okay. Yeah, then switch to PFT. Now, I appreciate the conservatism on the margin outlook there, but can you go in a bit more detail as to why the margins would only expand 10 basis points in 24, or maybe ask it a different way: you know, what scenario are you protecting yourself from with that? Yeah, I mean, remember, it's on flat organic growth.

Speaker Change: And particularly on the Max could you. Please share like I don't know ship set content or any metric for us to be able to measure how much of an impact that could have.

Speaker Change: Yes.

Speaker Change: We don't provide ship set content, but what I'd say and obviously it depends on what's going on in the rest of the business and specific ship.

Speaker Change: Shipment rates for 737, the 737 generally 2023 next year 2024, and in most years is somewhere in the vicinity of 5% to 10% of sales on the OE side.

Speaker Change: Probably.

Speaker Change: A little bit below the middle of that range.

Speaker Change: And last one from me is on their money where are you seeing in terms of pricing and help them positive are the deals that you are foreseeing.

Richard A. Maue: We've got an acquisition that is initially going to be slightly dilutive to margins; longer term, it won't be, but next year, it will be. And the mix, right, if you think about the commentary in terms of what's been softest for us over the past couple of quarters and what we expect to be softest into 24, it's chemicals, right, which is a good margin business for us. So there's going to be a likely unfavorable mix.

Speaker Change: Yes, it's still it's still a very competitive environment, we haven't seen too much.

Speaker Change: Easing in pricing I would say no real big changes that we've seen over the last six months in that regard.

Great. Thanks, so much thank.

Speaker Change: Thank you. Thank you. Thank you.

Thank you our next questions come from the line of Matt Summerville with D. A Davidson. Please proceed with your questions.

Richard A. Maue: Yeah, I would just supplement with the pricing associated with next year as well. So we are doing a continued, the teams are doing a fantastic job continuing to drive prices that would offset what you'd obviously expect in the way of continued inflation, right? So that all taken together drives that flat margin performance, which, given the volumes, is, you know, in our view, a pretty good print for us. Right, okay.

Good morning, Matt.

Speaker Change: Thanks.

Matt J. Summerville: Just a couple of follow ups on <unk>.

Matt J. Summerville: When you look at the business in 'twenty three almost got back to a topline equivalent to where it was pre COVID-19 yet margins are still comfortably below can you help kind of bridge the gap.

Matt J. Summerville: You need business circa 2019 to where it is in 'twenty three and do you have a longer term line of sight to those pre code to that pre COVID-19 level of profitability and then I have a follow up thank you.

Richard A. Maue: And then last question, just Rich, anything on the cadence for PFT margins for the year? Thanks. Yeah, it'll be fairly level-loaded through the year.

Scott Deutschle: You know, there might be a little bit of strength in Q3. But right now, as we're looking at it, it's going to be fairly level-loaded, maybe a little, little bit shy or lower in Q1. Thank you. Thank you. Our next questions come from the line of Justin Ages with CJS Securities. Please proceed with your questions.

Speaker Change: Yes, we absolutely see that ability to get back to those margin levels without it without a doubt.

Speaker Change: In terms of what a comparison from this year to 2019 I would also say that the volumes, while we're seeing a lot of demand aren't yet fully back in terms of volumes.

Justin Ages: Thanks for taking the question. Good morning. Good morning.

Speaker Change: So a lot of what you've seen in our progress this year has been price to offset inflation.

Speaker Change: Not as accretive as we've seen in the process flow technologies business. So there's a little bit of a volume price mix that impacts the overall.

Justin Ages: First one, just on hydrogen. I know you mentioned some shipments that were going out. Can you just give us an update on when that's going to reach critical mass, when we can expect it to turn, inflect, basically? That's a good question.

Speaker Change: <unk> profile, so when those volumes do come back we will see that leverage at that.

Speaker Change: And of that 35% to 40% range and that will yield a margin profile thats back to those levels.

Max Homer Mitchell: As we think about inflection, I mean, we're building this business from the ground up, this was, You know, we had looked at an acquisition years ago in the hydrogen space, and we weren't successful. We clearly set our sights on the market. This is right; this is right in our sweet spot.

Speaker Change: As a follow up can you talk about sort of the timing looking out I realize it's probably not 24, all that significant to you guys. But can you talk about when you start to see some of the more material programmatic driven ramp on your military side of the business.

Max Homer Mitchell: So we have the core capability and balanced piping. And we said on this journey, we're building this business. We're also looking at some M&A as we move forward. But right now, on core, you know, we see this as easily achievable by 2030. We're using some very large numbers internally that we are pushing towards. You know, I hadn't thought about the inflection point, critical mass, but clearly, by 25, I think we're seeing some... Yeah, I would agree.

What part of the current.

<unk> 2000, Twenty's do you really start to see that begin to Rev for crane.

Speaker Change: Yes 25.

Speaker Change: Without a doubt, yes, and then just ramping into 'twenty six.

See it a little bit at the end of 'twenty, four, but it'll be sort of low rate.

Speaker Change: Low rate initial production, but mainly 'twenty five 'twenty six.

Max Homer Mitchell: Yep. Okay. We're trying to provide more color at Investor Day too, Trustee. Perfect. No, that's helpful.

Speaker Change: Those are the Asa radars those of the F 16 brake control upgrade I mean, theres some pretty.

Speaker Change: Sizable.

Speaker Change: Wins that should start to ship in 'twenty five.

Justin Ages: And then just on acquisitions, you know, Baum has been nice to see, Vine's been nice to see, and I think you mentioned in the prepared remarks about, you know, focusing on mid-size. Can you give us an update? Are you currently involved in any processes? Are you closed?

Speaker Change: Understood. Thanks rich.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you our next questions come from the line of Nathan Jones with Stifel. Please proceed with your questions.

Max Homer Mitchell: And are those in A&E or PFT? I'd say there's a lot of activity in both, which is normal. So our funnel's full. There's a lot of activity. It bodes well for the first couple quarters here, potentially.

Nathan Hardie Jones: Good morning, everyone.

Nathan Hardie Jones: Good morning.

Maybe just following up on that question is there.

Any quantitative measures you can give us on those 25 and 26 defense platforms.

Max Homer Mitchell: We'll see. But very solid activity. Alright, I appreciate the update. Thanks for taking the question. Thank you.

Nathan Hardie Jones: The ramp ups, and how big that might be and how much impact that might have to revenue.

Justin Ages: Thank you. Our next question has come from the line of Mariana Perez Mora with Bank of America. Please proceed with your, Good morning, everyone. Good morning.

Well, we've talked in the past to be consistent on defense power.

Nathan Hardie Jones: As we've described we've got this incredible platform of.

Mariana Perez Mora: So my question is on aerospace and electronics and a follow-up to Scott's on the end markets. Could you describe how much is wide-body versus narrow-body in driving this like mid-teens growth for commercial OE? And as a follow-up to that, how are you thinking about this, like, Fraze in the Century 7 Max product? So overall, the way I would think about our revenue profile, we have an excellent mix of content on most major platforms, whether it's narrow body, wide body, et cetera. So narrow body certainly is the engine that's driving the industry, but we do have significant content on wide body aircraft as well. So there isn't a unique aspect to our guidance or our business that would suggest the importance of one versus another.

Nathan Hardie Jones: Existing.

Nathan Hardie Jones: The wins that we have that we're delivering on today commercial and defense, we're winning new business defense power in particular visa radar <unk> <unk> <unk> <unk> all in the $10 million a.

Nathan Hardie Jones: A year range.

Landing the F $16 $30 million over a course of three years with further upside $25 26, with foreign military opportunities as well.

But that sizing.

A little bit of those that are.

Nathan Hardie Jones: <unk>.

Speaker Change: Yes, maybe you could remind us maybe.

Speaker Change: Maybe a $100 million plus from those kinds of platform stepping up in 2025.

Not all in 'twenty, five and that's probably a little that's a little on the high side.

Max Homer Mitchell: We're just going, we've got content on, again, most of them, and we're following the build rate. On the 737, I would say that, first of all, you know... It's not good news for the industry. I wouldn't add anything that we're not reading publicly as this continues to be uncovered. Difficult times here for Boeing, and we share the concern and look forward to assisting in any way we can as we move forward. As it relates to the freeze rates impact, I would say that our current guide has no risk in the way we are thinking about this and have planned for the current environment. So from a crane standpoint, I would just reiterate our guidance and have high confidence. And is there any way or any measures that you could share?

Speaker Change: Okay. So we will work towards that will work towards that goal I.

Speaker Change: I think the exciting thing about those programs is that their duration as well right. So these are multi year and that number that you. Just mentioned is the way to think about the size of each of those programs on average some are actually larger than that.

Starting in that $25 26 timeframe and extending out and just to just to reiterate for everybody's knowledge. These are all programs that aren't replacing anything else. We have so they are all incremental that's the exciting thing about about the programs 10, one and then of course when you look.

Speaker Change: On towards 2030. This is why we still excited also about all the demonstrators that were on winning winning that content. That's the picture we painted in the script as well.

Mariana Perez Mora: Oh, sorry. Go ahead. No, I was just going to say the one thing I'd add is that next year we also do expect, given our specific mix in the market, a pretty big uplift in regional, you know, which is contributing to that growth rate nicely as well. And particularly on the Max, could you please share, like, I don't know, ship set content or any metric for us to be able to measure how much of an impact that could have? Yeah, we don't provide ship set content.

Speaker Change: Thanks for that one.

At the analyst day last year on <unk> margins, you guys had targeted 380 basis points of margin expansion over the next few years and I think Max you suddenly mentioned that you've got 370 basis points of that in 2023.

Speaker Change: Can you talk about the major factors that led to you recognizing that.

Margin improvement a lot earlier than planned and then because I work on Wall Street and Thats. What have you done for me lately, what the path forward.

Richard A. Maue: But what I'd say, and obviously, it depends on what's going on in the rest of the business and specific, you know, shipment rates for 737. But 737, generally 2023, next year 2024. And in most years, it's somewhere in the vicinity of 5 to 10% of sales on the OE side only. Probably, you know, a little bit below the middle of that range.

Speaker Change: Craving those margins for me.

Speaker Change: Okay.

So the major elements are going to be.

Speaker Change: Our price cost discipline without without question is going to be a major factor there.

Speaker Change: Launching new products that have.

Speaker Change: Higher margin than predecessor products in particular in areas that are higher growing end markets for us. So combination of just the pure margin profile of those products plus the associated mix in those areas that.

Mariana Perez Mora: And the last one from me is on M&A, where are you seeing in terms of pricing and how competitive the deals that you're... Yeah, it's still a very competitive environment. We haven't seen too much easing in pricing. I would say no real big changes that we've seen over the last six months in that regard. Hey, thanks so much.

That carries that margin profile. We also you might recall, we executed on our repositioning initiative several years ago, a few years ago and those benefits also reading through.

Speaker Change: So and then just to reiterate when you think about things moving forward, we should continue to see that.

Mariana Perez Mora: Thank you, Mary. Thank you, thank you. Our next questions come from the line of Matt Summerville with DA Davidson. Please proceed with your, morning, Matt.

Speaker Change: Margin expansion.

Speaker Change: Associated with the higher end growth markets that we're pursuing again with that new product development and with continued disciplined pricing, but to answer your question historically those would've been the components as we think about moving forward data.

Matt J. Summerville: Thanks. Good morning. Just a couple of follow-ups on A&E. You know, when you look at the business in 23, it almost got back to a top line equivalent to where it was pre-COVID, yet margins are still comfortably below. Can you help kind of bridge the A&E business circa 2019 to where it was in 23? And do you have a longer-term line of sight to that pre-COVID level of profitability? And then I have a follow-up question.

Speaker Change: As opposed to just flat out margin improvement.

Speaker Change: Accelerating growth and.

Speaker Change: That's where this team is focusing here and leveraging on that growth in that 35% range as we have historically, while we continue to deploy capital.

Grow inorganically as well so that's going to be our key strategic focus as we move forward. The team is energized like never before I mean, the teams across crane are having so much fun right now not without.

Richard A. Maue: Yeah, we absolutely see the ability to get back to those margin levels without a doubt. In terms of a comparison from this year to 2019, I would also say that the volumes, while we're seeing a lot of demand, aren't yet fully back in terms of volumes. So, a lot of what you've seen in our progress this year has been priced to offset inflation, not as accretive as we've seen in the process flow technologies business. So, there's a little bit of a volume price mix that impacts the overall margin profile. So, when those volumes do come back, we will see that leverage at the higher end of that 35% to 40% range, and that will yield a margin profile that's back to those levels.

Speaker Change: Some of the supply chain challenges and so forth that we've mentioned before but just.

Speaker Change: The.

Speaker Change: Excitement that we have post separation the new product development, where we're positioned we're just having a lot of funded I am so proud of our teams globally.

Speaker Change: Thanks very much.

Speaker Change: Thanks, Nathan Thanks Nathan.

Thank you. Our next question comes from the line of Jeffrey Sprague with vertical research partners.

Jeffrey Sprague: Is that your question.

Jeffrey Sprague: Thank you good morning, everyone.

Jeffrey Sprague: Morning.

Jeffrey Sprague: Okay.

Jeffrey Sprague: Quick one for me and I apologize I'm bouncing between a couple of calls this morning.

Jeffrey Sprague: Touch I know you touched on that.

Jeffrey Sprague: The China demand, which is interesting we've heard that too before thinking reassuring as a U S thing, but for China seems to be happening in petrochemicals, we've heard that from others.

Richard A. Maue: And then as a follow-up, can you talk about sort of the timing looking out, I realize it's probably not 24 all that significant for you guys, but can you talk about when you start to see some of the more material programmatic driven ramp on your military side of business? What part of the current, you know, the 2020s, do you really start to see that begin to rev for current? Yeah, 25.

Speaker Change: But I'm just wondering if you could elaborate a little bit more on what youre seeing in China, and then maybe just more broadly and again I apologize if you've covered in detail, but if you just think about the other key verticals in PFG.

Speaker Change: Kind of the visibility on Capex and other trends.

Matt J. Summerville: Without a doubt. Yeah. And then and then just ramping into 26. We might see it a little bit at the end of 24.

Speaker Change: Through the year anything starting to percolate, there that you can shed a little more light on.

Speaker Change: Yes.

Max Homer Mitchell: But it'll be that, you know, sort of low rate, low rate initial production, but mainly 2526. Those are the AESA radars. Those are the F-16 brake control upgrade. I mean, there are some pretty sizable wind turbines that should start to ship in 2025. Okay. Thank you. Our next questions come from the line of Nathan Jones with Stiefel.

Maybe Jeff.

Jeff: Broader market comment and maybe.

Touch on China, a little bit as well, but.

Yes.

Jeff: Where most of the slowing that we're seeing clearly is in European European Chemical I think thats consistent with what we've said in the past.

Jeff: Project delays and push outs stoller occurring in both North America and China.

Jeff: Although they've held up better than expected so that while there are push outs, we are seeing some some wins.

Nathan Hardie Jones: Please proceed with your question. Good morning, everyone. Good morning.

Jeff: Strength is largely related to on our side right now pharmaceutical some in Asia and China in terms of chemical projects.

Nathan Hardie Jones: Maybe just following up on that question, are there any quantitative measures you can give us on those 25 and 26 defense platforms? The ramp-ups and how big they might be and how much impact they might have on revenue. Well, we've talked in the past to be consistent, you know, on defense power. As we've described, you know, we've got this incredible platform of existing wins that we have that we're delivering on today, commercial and defense. We're winning new business, defense power, in particular, the ESA radar, L-TAMS, TPY-4, Sentinel, F-110, all in the $10 million a year range That's sizing up a little bit of those that are... that maybe, maybe. Maybe a hundred million plus from those kinds of platforms will step up in 2025. Not all are 25, and that's probably a little on the high side.

Jeff: Related to localization China remains.

Jeff: As you know a net importer of chemicals, but trying to accelerate localization and so forth.

Jeff: MRO and process again like I mentioned in my prepared remarks remains pretty pretty weak, it's worsening modestly and I would say with Europe being the worst of that.

Jeff: More specifically on China, I wouldn't call anything out for us.

Not a major shift or trend I would say that China is generally is there is a little stronger I would say that our localization efforts are playing out as we anticipated.

No major shift or trend just kind of general solid growth.

Jeff: Growth for us in China, but nothing to call out for us from a credit standpoint.

Jeff: That helps.

Yes. Thank you I'll leave it there thanks, a lot alright. Thank you.

Max Homer Mitchell: Okay. So we'll work towards that. We'll work towards that goal. I think the exciting thing about those programs is their duration, right? So these are multi-year, and that number that you just mentioned is the way to think about the size of each of those programs on average. You know, some are actually larger than that, starting in that 25, 26 timeframe and extending out.

Jeff: Yeah.

Jeff: Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to Max Mitchell for any closing remarks.

Max Homer Mitchell: Super Thank you.

Max Homer Mitchell: Wow, what a fantastic year in 'twenty three executed on our strategic separation and driving core execution on growth across crane, while delivering on shareholder value another great quarter, and an exciting outlook for 2024 as I complete my 20th year with Crane and near 10 as CEO I'm incredibly proud of the portfolio.

Richard A. Maue: And just to reiterate for everybody's information, these are all programs that aren't replacing anything else we have. So they're all incremental. That's the exciting thing about the programs. And then, of course, when you look on towards 2030, this is why we're so excited about all the demonstrators that were winning that content. That's the picture we painted in the script as well.

<unk> R&D entire team has driven over decades higher growth higher returns and more predictable and now that we're past the separation, we are energized and delivering continued acceleration of organic growth and further margin expansion complemented by capital deployment on value, creating acquisitions as the late great Charlie Munger said.

Nathan Hardie Jones: Thanks for that one. At Analyst Day last year on PFT margins, you guys had targeted 380 basis points of margin expansion over the next few years. And I think, Max, you subtly mentioned that you got 370 basis points of that in 2023. Can you talk about the major factors that led to you recognizing that margin improvement a lot earlier than planned and then, because I work on Wall Street and it's what you have done for me lately, what the path is forward to improving those margins? Yeah, so the major elements are going to be our price cost discipline, which is, without question, going Launching new products that have higher margins than predecessor products, in particular in areas that are higher growing and more profitable markets for us. So, the combination of just the pure margin profile of those products plus the associated mix in those areas that carries that margin profile.

Our experience tends to confirm our long held notion that being prepared on a few occasions in our lifetime to act promptly in scale.

Max Homer Mitchell: In doing some simple and logical thing will often dramatically improve the financial results of that lifetime.

Max Homer Mitchell: We will continue to execute simply and logically as we move forward and as we continue to scale with our consistent focus on driving shareholder returns. Thank you all for your interest in Crane and your time and attention. This morning have a great day.

Speaker Change: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time.

Speaker Change: You for your participation and enjoy the rest of your day.

Okay.

Sure.

[music].

Richard A. Maue: We also, you might recall, we executed on a repositioning initiative several years ago or a few years ago, and those benefits are also reading through. So and then, you know, just to reiterate, when you think about things moving forward, we should continue to see that. Margin expansion associated with the higher-end growth markets that we're pursuing again with that new product development and with continued disciplined pricing. But to answer your question, historically, those would have been the components.

Yeah.

Speaker Change:

Speaker Change: [music].

Max Homer Mitchell: As we think about moving forward, Nathan, it's – as opposed to just flat-out margin improvement, it's accelerating growth. And that's where this team is focusing here, and leveraging on that growth in that 35 percent range as we have historically, while we continue to deploy capital and grow inorganically as well. So that's going to be our key strategic focus as we move forward. The team is energized like never before.

Speaker Change: Okay.

Nathan Hardie Jones: I mean, the teams across Crane are having so much fun right now, not without some of the supply chain challenges and so forth that we've mentioned before. But just the excitement that we have post-separation, the new product development, where we're positioned, we're just having a lot of fun, and I'm so proud of our teams globally. Thanks very much. Thanks, Nathan.

Jeffrey Todd Sprague: Thanks. Thank you. Our next question has come from the line of Jeffrey Sprague with Vertical Research Partners. Thank you. Good morning, everyone. Hey, good morning.

Jeffrey Todd Sprague: Just a quick one for me, and I apologize. I'm bouncing between a couple calls this morning. I know you touched on the China demand, which is interesting. We've heard that, too. People are thinking reshoring is a U.S. thing, but for China, it seems to be happening in petrochemicals. We've heard that from others.

Richard A. Maue: But I'm just wondering if you could elaborate a little bit more on what you're seeing in China, and then maybe just more broadly. And again, I apologize if you did cover it in detail, but if you just think about the other key verticals in PFT, you know, kind of the visibility on CapEx and other trends, you know, as we progress through the year, anything starting to percolate there that you can shed a little more light on? Yeah, I'll hit, maybe, Jeff, the broader market comments and maybe just, you know, touch on China a little bit as well, but, you know, where most of the slowing that we're seeing clearly is in European chemicals. I think that's consistent with what we've said in the past. Project delays and pushouts still are occurring in both North America and China, although they've held up better than expected, so while there are pushouts, we are seeing some wins. You know, strength is largely related to, on our side right now, pharmaceuticals, some in Asia and China, in terms of chemical projects related to localization.

Richard A. Maue: China remains, as you know, a net importer of chemicals but is trying to accelerate localization and so forth. MRO in the process, again, like I mentioned in my prepared remarks, remains pretty weak. It's worsening modestly, and I would say Europe is the worst of that. Well, specifically on China, I wouldn't call anything out. For us, it's not a major shift or trend. I would say that China is generally a little stronger.

Jeffrey Todd Sprague: I would say that our localization efforts are playing out as we anticipated. No major shift or trend, just kind of general solid growth for us in China, but nothing to call out for us from a grain standpoint. Hopefully, that helps. Great. Yeah, it does.

Jeffrey Todd Sprague: Thank you. I'll leave it there. Thanks a lot. All right. Yeah.

Max Homer Mitchell: Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Max Mitchell for any closing remarks. Super. Thank you.

Max Homer Mitchell: Wow, what a fantastic year in 23, executing on our strategic separation and driving core execution on growth across Crane while delivering on shareholder value. Another great quarter and an exciting outlook for 2024. As I complete my 20th year with Crane and year 10 as CEO, I am incredibly proud of the portfolio transformation our entire team has driven over decades. Higher growth, higher returns, and more predictable.

Max Homer Mitchell: And now that we are past the separation, we are energized and delivering continued acceleration of organic growth and further margin expansion, complemented by capital deployment on value-creating acquisitions. As the late, great Charlie Munger said, Our experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly and in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. We will continue to execute simply and logically as we move forward and as we continue to scale with our consistent focus on driving shareholder returns.

Operator: Thank you all for your interest in Crane and your time and attention this morning. Have a great day. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your day. NASA Jet Propulsion Laboratory California Institute of Technology