Q4 2024 Crane Co Earnings Call
reconcile the comparable gap 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 investor relations section. Now, let me turn the call over to Max. Thank you, Allison. Thanks, everyone, for joining the call today.
And as executive Vice President managing all of our post separation segments and regional teams.
His appointment as COO gives me further capacity to focus my attention on accelerating cranes growth through strategy deployment and strategic acquisitions.
Congratulations Alex and thank you for all you do and being Crane and driving results with the team.
Alex Crane: Thank you Max Thanks for the kind comments, it's been really fun and I'm, so proud of our team.
Alex Crane: I look forward to continued Investor Communications.
Alex Crane: Also a reminder that on January 2nd we announced the completion of the divestiture of our engineered materials segment.
Alex Crane: This divestiture reflects yet another important step forward following the numerous actions we have taken over the last few years to simplify and strengthen our portfolio focusing resources on our two strategic growth platforms, aerospace and electronics and process flow technologies.
Alex Crane: With this divestiture now behind us.
Alex Crane: We are focused on driving accelerated inorganic growth through capital deployment.
Alex Crane: With our very strong balance sheet.
Alex Crane: As well as accelerating organic profitable growth through our disciplined cadence and execution.
Alex Crane: Following that divestiture the results we speak to today treat engineered materials as discontinued operations for all of 2024.
Alex Crane: Now onto the quarter.
Alex Crane: Adjusted EPS of $1 26 was driven by an impressive 8% core sales growth, reflecting strength across both aerospace and electronics and process flow technologies.
Alex Crane: Core orders were also solid up 8% in the quarter.
Alex Crane: We continue to drive outstanding results, despite some unique and temporary challenges in the quarter. We previously discussed which included the impact of Hurricane Helene on our Marion North Carolina facility.
Alex Crane: I am extremely pleased to report that the site is recovering ahead of schedule, but it's getting close to normal full production rates as I highlighted last quarter, a key tenant and strength of the crane business system that we have proven time after time over the years is the flexibility and speed to react to issues out.
Alex Crane: <unk> our control.
Alex Crane: Our performance in 2024 is another Great example of our consistently differentiated performance.
Alex Crane: In the face of adversity.
Alex Crane: Full year adjusted EPS was $4 88.
Alex Crane: Up 28% over 2023.
Alex Crane: Sales for 2024 increased 14% driven by 8% core growth and 6% contribution from acquisitions.
Alex Crane: Adjusted operating profit of $383 million for the full year increased 29% compared to the prior year.
Speaker Change: Coming off a record performance in 2024, and turning to 2025 I remain highly confident in the strength and resilience of Craig's team and portfolio.
Alex Crane: And that confidence is also reflected in the dividend increase announced last night of 12%.
Speaker Change: In addition, Idaho.
Speaker Change: Thanks.
Thank you.
Speaker Change: Scott.
Speaker Change: Alright, 60 solid 12% adjusted EPS growth at the midpoint.
Speaker Change: In setting our initial view for the year, we assume that the macro backdrop remains largely unchanged with strong demand trends at aerospace <unk> electronics and.
Speaker Change: And continued market outperformance and process flow technologies, even as industrial demand signals remain mixed.
Speaker Change: Further our balance sheet is well positioned to capitalize on M&A opportunities and with continued progress on our existing M&A funnel, we expect additional opportunities to become actionable in 2025 across both aerospace and electronics and process flow technologies. Our funnel is strong there's a lot of activity.
Speaker Change: Yeah.
Speaker Change: I personally visited two potential targets with the team. This month alone one in the Midwest one in Europe and indications are that quite a few assets. We've targeted for years will become actionable over the course of 2025.
Speaker Change: Before turning the call over to Alex just a quick reminder, that we will be hosting an investor meeting at our aerospace electronics site in Fort.
Speaker Change: Walton Beach, Florida on March six 2025 this.
Speaker Change: This location is the production site for our defense power business, which houses manufacturing of our wide range of power conversion products used in applications, such as Nextgen military radars.
Speaker Change: As an example, with growing capability in ultra high power for emerging ground vehicles and other solutions.
Speaker Change: I look forward to seeing many of you there.
Speaker Change: Please reach out to Alison if you need further information.
Speaker Change: Now, let me pass it over to our Chief operating officer, Mr. Alex color to highlight some of the key wins and successes in the quarter.
Alex color: Thanks, Max and thanks again for the kind introduction.
Alex color: It's been an honor to be on this journey with you and the team as we've continued to transform crane and unlock value.
Alex color: Our teams are energized about our future and in many ways I feel we're just getting started.
Alex color: I look forward to seeing many of you in Fort Walton Beach in March.
Alex color: While we will go into a little bit more detail about this robust machine, we have built that claim that.
Alex color: To continue to drive sustainable profitable growth.
Alex color: Let me move on now to make some comments on the quarter.
Alex color: Within aerospace and electronics.
Alex color: <unk> remained strong across all categories of our defense and commercial business.
Alex color: I am proud to report we received the first F 16 brake control upgrade order further solidifying our confidence and a steep ramp up for this program.
Alex color: Starting at the very beginning of 2026.
Alex color: Total orders received for this project are now about $44 million, including some foreign military sales.
Alex color: As a reminder, this is a three year break modernization program for the U S. Air Force Fleet of F 16 fighter aircraft at about $30 million per year run rate.
Alex color: With total life of program of sales $150 million to $200 million, including foreign military sales.
Alex color: Most of which will follow the U S portion of the program.
Alex color: We also made continued progress on vehicle electrification demonstrated programs.
Alex color: And we are continuing strong proposal activity on additional Isa radars.
Alex color: Also other significant negotiations continue for additional unmanned collaborative combat aircraft programs.
Alex color: Within profit flow technologies, we continued to outperform with our results better than we expected in 2024.
Alex color: For 2025, we see little change today, and the demand environment with North America remain the greatest growth region for Crane.
Alex color: In the fourth quarter <unk> secured a sizable order for a large fertilizer project in the middle East.
Alex color: <unk> provides superior abrasive resistant.
Alex color: And we have a preferred manufacturing location align with Saudi vision 2030 that prioritizes localization.
Alex color: And this was a key enabler for this win.
Alex color: And in North America, where he received sizable orders related to the expansion our facility for a large chemical customer.
Alex color: Through the acquisitions of <unk> and <unk> Crane has penetrated the high growth market of space launch and semiconductor cryogenic equipment market.
Alex color: Adding approximately $55 million of revenue and consolidating our position as a top provider of cryogenic vacuum jacketed pipe in the U S, which we expect to expand further in 2025.
Alex color: Overall, another strong quarter for both aerospace and electronics and process flow technologies.
Both in reported results as well as on our activities supporting current and future growth.
Alex color: And long term as we reiterated during our 2020 for Investor day.
Alex color: We remain confident in our 4% to 6% long term core sales growth rate from resilient and durable businesses with solid aftermarket.
And substantial operating leverage on top of already solid margins today.
Alex color: That should lead to double digit average annual core profit growth.
Alex color: With potential upside from capital deployment.
Alex color: And with virtually no debt that capital deployment opportunity is significant.
Alex color: Now, let me turn it the call over to our CFO, Mr. Rich maue for more specifics on the quarter and for more details on our guidance.
Rich Maue: Thank you, Alex and my congratulations as well and welcome to our quarterly calls.
Speaker Change: Like John C. Reilly, playing the part of Dell and the Timeless movie Classic step brothers.
Rich Maue: To his stepbrother Brennan may.
Rich Maue: Maybe someday, we could become friends friends, who ride majestic translucent steeds shooting flaming arrows across the bridge of Hemdale.
Alex Crane: Alex as you well know in addition to driving results and hunting for acquisitions, we like to have fun here at Crane. So you may want to think about what you will bring to the calls here moving forward.
Rich Maue: Okay rich.
Rich Maue: That's a very low bar to get over.
Speaker Change: Do we think about it.
Rich Maue: Now, let's get back to the call.
Speaker Change: Okay. Good morning, everyone, starting with total company results, we drove 8% core sales growth in the quarter with strength across both segments.
Speaker Change: Adjusted operating profit increased 38% driven by strong volumes solid net price and productivity excellent operating leverage in the quarter.
Speaker Change: Leading indicators were also strong with core FX neutral backlog up 9% compared to last year, driven by outsized strength at aerospace and electronics and core orders were up 8% compared to last year as well.
Speaker Change: Another strong quarter, reflecting our focus on accelerating core growth along with our consistently differentiated execution.
Speaker Change: For the full year, we generated $234 million of adjusted free cash flow from continuing operations.
Speaker Change: And well above the $165 million generated a year ago.
Speaker Change: Recall, our October free cash flow guidance was for full year free cash flow to be at the lower end of our $255 million to $275 million range.
That range included approximately $20 million that we expected from engineered materials.
Speaker Change: Excluding engineered materials that range would have been $235 million to $255 million. So results were in line with our expectations and in 2025, we are confident that we will deliver adjusted free cash flow conversion greater than 90% as the supply chain improves.
Speaker Change: Total debt at the end of 2024 was approximately $247 million with $307 million of cash on hand, net proceeds of $208 million from the divestiture of the engineered materials segment were received after the close of the year.
Speaker Change: We continue to have substantial financial flexibility with approximately $1 5 billion of debt capacity today for M&A.
As a reminder, 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.
Speaker Change: And returns to shareholders.
Speaker Change: And as Max noted our M&A pipeline remains very active and we are excited about our acquisition opportunities in 2025.
Speaker Change: Now turning to our 2025 guidance as we enter the year, we are initiating a full year view estimating adjusted EPS to be within a range of $5 30 to $5 60.
Speaker Change: Reflecting 12% year over year growth at the midpoint.
Speaker Change: Guidance assumes total core growth of 4% to 6% and approximately 12% growth in adjusted operating profit at the midpoint. We also expect a 1% to 2% sales benefits from acquisitions.
Speaker Change: In around a one point headwind from foreign exchange.
Speaker Change: Overall, we anticipate another very strong year in 2025.
Speaker Change: Now for more details on the segments, starting with aerospace and electronics no material change in end market conditions relative to our expectations. So a very strong demand environment.
Speaker Change: On the commercial side of the business aircraft retirements remained very low due to high demand and limitations on aircraft deliveries Reis.
Speaker Change: Resulting from an aging fleet that requires more aftermarket parts and service.
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 heightened global uncertainty today and.
Alex Crane: And as Alex highlighted we secured a substantial order for the F 16 brake control upgrade that we have been highlighting on recent calls.
Alex Crane: That strong demand was also reflected in our fourth quarter growth rates with sales of $237 million, increasing 11% compared to last year with 7% core growth and a 5% benefit from the <unk> acquisition.
Alex Crane: Even with the continued high level of sales growth our record backlog of $864 million increase even further up 2023% year over year.
Alex Crane: Including 16% core growth.
Alex Crane: And a 7% contribution from the <unk> acquisition.
Alex Crane: In the quarter total aftermarket sales increased 21% with commercial aftermarket sales up 15% and military aftermarket up 36%.
Alex Crane: And OEM sales increased 7% in the quarter with 10% growth in commercial and up 3% and military.
Alex Crane: Adjusted segment margin of 23, 1% increased 290 basis points from 22% last year.
Alex Crane: Primarily reflecting higher volumes.
Alex Crane: Price net of inflation and product and productivity.
Alex Crane: On a full year basis core sales growth of 13% exceeded our expectations for the year as well as our long term targeted range of 7% to 9%.
Alex Crane: Adjusted operating profit of $217 million increased 36% over the prior year with adjusted operating margin expanding 310 basis points.
Alex Crane: 23, 2%.
Alex Crane: Looking ahead to 2025, we anticipate core sales growth for the year to be up high single digits with that core growth leveraging at 35% to 40%.
Alex Crane: That guidance assumes continued strong sales, but with decelerating year over year.
Alex Crane: Growth rates as the comparisons become more challenging offset by the ramp in production at Boeing.
Alex Crane: While comparisons can create some noise on quarterly growth rates as we have outlined previously we expect 2020 fives core growth core sales growth rate to be followed by continued strong growth in 2026 and for the remainder of this decade.
Alex Crane: Very confident for yet another outstanding year in 2025.
Alex Crane: Our process flow technologies, we remain well positioned to continue outgrowing our markets.
Alex Crane: Our site in Maryland, North Carolina, as well on the path to be back to its full run rate by the end of the month.
Alex Crane: For the quarter. Our results included an approximate <unk> <unk> impact from production downtime in Q4, the higher end of our expected 5% to 10 headwind.
Alex Crane: Overall, the financial impact from the hurricane will be fully offset by insurance recoveries.
Alex Crane: Demand trends remain consistent with 2024 with moderate improvement expected in the first half.
Alex Crane: And with further strengthening in the second half.
Alex Crane: In the quarter itself, we delivered sales of $307 million up 13% driven by core sales growth of 9% in the quarter, along with a 4% benefit from the <unk> and TEQ the fab acquisitions.
Alex Crane: Compared to the prior year core FX neutral backlog decreased 4% based on the timing of projects and core FX neutral orders were up 3%.
Alex Crane: Adjusted operating margin of 23% expanded 330 basis points better than we expected with strong core operating leverage in the quarter driven by productivity strong net price and higher volumes.
Alex Crane: On a full year basis core growth of 5% exceed our exceeded our expectations for the year and it was at the high end of our long term targeted range of 3% to 5%.
Adjusted operating profit of $250 million increased 17% over the prior year with adjusted operating margin expanding 100 basis points to 29%.
Alex Crane: For context remember that in 2019, just before Covid margins were 13, 6% as we noted before this is a significant step function change in margins, which is reflective of our efforts to structurally shift the business to higher growth and higher margin end markets.
Alex Crane: We continue to see opportunity on this journey through contribution from accretive new product introductions pricing.
Alex Crane: Pricing that is both disciplined and appropriately assertive.
Alex Crane: Our continued investments in technology driven product differentiation.
Alex Crane: And continued productivity.
Alex Crane: Looking ahead to 2025, we anticipate core sales growth for the year to be up low to mid single digits with that growth leveraging above our normal targeted 30% to 35%.
Alex Crane: Given expected mix strong productivity and pricing benefits.
Alex Crane: Another fantastic year of performance at Crane in 2024, and strong confidence in continuing to deliver in.
Alex Crane: In 2025.
Alex Crane: Hey, we have a number of analysts with conflicting calls this morning, a very busy morning for earnings so the questions maybe a little light this morning.
Alex Crane: And at this point, we are ready to take our first question.
Alex Crane: Okay.
Alex Crane: The floor is now open for questions.
Alex Crane: At this time, if you have a question or comment please press star one on your telephone keypad.
Alex Crane: Is there any point. Your question is answered you may remove yourself from the queue by pressing star team.
Alex Crane: Again, we ask that you pick up your handset when posing your question.
Alex Crane: Provide optimal sound quality. Thank you.
Speaker Change: We will take our first question from.
Speaker Change: Nathan Jones with Stifel. Your line is open.
Nathan: Good morning, Nathan bonding everyone. Good.
Speaker Change: I'm wondering if he would choose another call when they get days results and the comedy show that goes along with it.
Nathan: Yes.
Speaker Change: We appreciate it thanks Nathan.
Speaker Change: I'll start off with some questions on <unk>.
Speaker Change: Strong growth.
Speaker Change: The fourth quarter, but you did burn off some backlog in the fourth quarter.
Speaker Change: We tried I think's been typical over the last few years, just if you could provide a little more color on the dynamics going on there.
Speaker Change: Yes sure.
Alex: This is Alex.
Alex: So on the backlog the way I think about our backlog grew in the first half really with some timing of project bookings and then we're able to ship.
Alex: Some of that with excellent execution that you've seen in our results. So it did reduce a little bit in the second half. However, during the last three quarters, our orders have been sequentially pretty consistent so the way I think about it as our backlog finished at a really strong position when you think about.
Alex: Comparing it to 2019.
Alex: We're up about 40%. So I think we're entering 2025 with a strong backlog and some expectations on some moderate improvements in demand pretty confident to hit our guidance of <unk>.
Alex: Low to mid single digit growth PSP.
Alex: Thanks for that one.
Alex: Maybe.
Alex: There's a bit of a longer term question over the last few years.
Alex: You commented I think it was breakeven and your comment about having moved to pay off pay portfolio to higher growth and higher margin businesses, which has obviously been evident.
Alex: The huge margin expansion you've seen over the last few years can you talk about how far you are through that process when we might see.
Alex: Something that approaches a bit more of an equilibrium level.
Alex: I know.
Alex: You'll still intend to outgrow the market and expand margins.
Alex: But Adam added more of a steady pace rather than <unk>.
Alex: That mix will expand huge margin expansion over the last few years.
Alex: Yes. This is Alex again, thank you for that question.
Alex: I think.
Alex: When you think about what we've talked about in the <unk>.
Alex: Baxter Conference where are we this has been a journey a long journey. When we have these what we call. These growth markets of chemical pharma wastewater and cryogenic 2017, our mix of the portfolio was around.
Alex: Around that 30% Mark.
Alex: And now we're north of 60, and we talked about in the midterm trying to reset 70% of our portfolio in these higher growth markets and that's not counting any improvements in our portfolio through acquisitions.
Alex: We also talked about line of sight.
Alex: Mid Twenty's and <unk>.
Alex: Operating profit so we still think there is.
Alex: Room to improve in the midterm.
Alex: And what's kind of get us areas, just continuing to execute our strategy driving this machine that we call out crane with starts with strategy.
Alex: Feeding into innovation driving commercial excellence, which includes value pricing.
Alex: <unk>.
Alex: Some of the simplification that is getting pricing as well.
Alex: All the way through operational excellence and building our team, which is really at the end of the key.
Speaker Change: And then I guess just one more question Max you talked about the industrial economy, putting out some mixed signals maybe you could.
Speaker Change: Unpack that a little bit on where the signals are a good way to signal as it may be not very good.
Speaker Change: Youre expecting.
Speaker Change: Just any any changes in the cadence of any of those market to any of those geographies just any any detail you can give us there.
Speaker Change: Well, thanks, Nathan I'll add a little bit in <unk>.
Speaker Change: Some additional color as well.
Speaker Change: <unk>.
Speaker Change: We're exiting the year.
Speaker Change: Some projects are just.
Speaker Change: As expected.
Speaker Change: Hum.
Speaker Change: Yes.
Speaker Change: Little lumpy or.
Speaker Change: Yes.
Speaker Change: Mixed timing so forth.
Speaker Change: From a leading indicator standpoint, though things continued to be fairly fair.
Speaker Change: Fairly strong and then of course, it's early in the New administration and so.
Speaker Change: The guidance that we've set which we have high high confidence on in terms of the range and then being able to deliver and execute on it.
Speaker Change: I think as.
Speaker Change: I'm, probably a little bit more bullish than that.
Speaker Change: They're not actually just in terms of where we are overall U S continues to be generally a little stronger Europe still still stagnant China.
Speaker Change: Same.
Alex: Alex if you could offer a little bit more about the mixed commentary body by segment.
Alex: Yes, so I think we're not really seeing any particular market or region getting worse over the last three quarters things have been relatively stable. So if we follow the trends that would imply some improvement as we go into 2025.
Alex: So we expect to see that I think is Max commented in 2020 for Americas Middle East APAC.
Alex: We're growing in Europe, and China were deteriorating and but stable stabilized.
Alex: So we expect to see similar dynamic from a regional standpoint.
Alex: And our vertical market cryogenics, which is our new business continues to.
Alex: Strong demand.
Alex: We expect chemical were seeing projects on upgrades efficiency improvements capacity expansion moving through the funnel pharmaceutical.
Alex: As well so I think that is.
Alex: Similar similar type of activity by markets and regions, but some improvement expected in 'twenty five.
Speaker Change: Thanks, very much for taking my questions.
Nathan Jones: Thanks Nathan.
Speaker Change: Thank you we'll take our next question from Matt Summerville with D. A Davidson your line is open.
Speaker Change: Good morning, guys good morning, Matt.
Speaker Change: Maybe Max you mentioned in your prepared remarks that you've recently been on site doing some diligence on a couple of potential deals can you maybe comment a little bit around.
Speaker Change: The quality of the assets Youre looking at the types of assets the segments. The size and then also maybe kind of compare and contrast, what you've seen recently.
Speaker Change: This is what you see.
Speaker Change: Available to the market over the course of the year and then I have a couple of follow ups.
Speaker Change: Yes generally.
Speaker Change: 100, <unk> one in PMT.
Speaker Change: I would say the value enterprise value in the one hundreds.
Speaker Change: Millions of dollars range.
Speaker Change: Two.
Speaker Change: $100 million less so that sweet spot.
Speaker Change: C.
Speaker Change: High quality businesses without a doubt.
Speaker Change: I would almost say consistent with what we're seeing as we're moving forward. So generally pleased with the type of assets that we're looking at as well as those that we expect to come to fruition, some larger a little larger but still.
Speaker Change: Targeted sweet spot.
Rich Maue: That we expect to come to market as well, that's how I'd frame. It up you had anything different rich.
Speaker Change: No I think Thats I think thats right I think.
Fitting nicely with our strategy on the two in particular that we're looking at that we're looking at.
Speaker Change: And as well for the ones coming up when you think about the targeted end markets that we're focused on.
Speaker Change: Higher growth the margin potential being their cash flow accretion being there and so forth.
Speaker Change: Got it.
Speaker Change: With respect to A&D in the high single digit organic you're sort of projecting this year can you maybe help parse out a little bit.
Speaker Change: Compare and contrast, maybe what the assumptions are for commercial between OE and aftermarket and then similarly military between OEM aftermarket and ultimately.
Speaker Change: How how youre thinking about the Max restart and how you've kind of incorporated that into your commercial OE view.
Speaker Change: So I'll give you the pieces.
Speaker Change: <unk> here in terms of how we're thinking about next year.
For commercial OE right now we are at low double digit.
Speaker Change: As our current view military OE is mid single digit.
Speaker Change: Commercial aftermarket mid to high single digit.
Speaker Change: And military aftermarket the same mid to high single digit that's what we've.
Speaker Change: We've included in our.
Speaker Change: And our guidance range for you guys. This morning.
Speaker Change: So I think in terms of the Max startup.
Speaker Change: <unk> recovery.
Speaker Change: We based our.
Speaker Change: Guidance on <unk>.
Speaker Change: Previously communicated.
Speaker Change: Ramp rates that let's see.
Speaker Change: Fairly.
Speaker Change: Achievable conservative so we understand that.
Speaker Change: Boeing is signaling some some accelerated potential there which is great news and if so then we will be prepared to benefit from that as well.
Speaker Change: Hum.
Speaker Change: Maybe last question when you kind of pulled together, what you've said in the prepared remarks and Q&A rich can you maybe help a little bit with how we should be thinking about the overall quarterly earnings cadence as we move through the year in 'twenty five or for Crane overall.
Speaker Change: Sure So I mean on.
Speaker Change: Unbalanced, it's roughly 50, 51st half second half the first quarter will be seasonally I would say the lowest.
Matt: If that helps you Matt I think I think you should be able to square that off.
Speaker Change: With your mom and how does.
Speaker Change: Yes, So I guess, just one quick follow up to that the business interruption insurance recovery.
Speaker Change: How much in total do you expect on a per share basis is that fully baked in the guide and where should we be thinking about.
Speaker Change: Having that in numbers so to speak.
Speaker Change: We expect the recovery should be something similar to the income that was lost in the second half of last year from a timing perspective, we would expect to receive that probably in the second quarter. This year potentially the third.
Speaker Change: And yes, it's included in that.
Speaker Change: Okay perfect. Thank you very.
Speaker Change: Thanks, guys.
Speaker Change: Thanks, Matt Thank you.
Speaker Change: Thank you.
Speaker Change: And we'll take our next question from Jordan <unk> with Bank of America.
Speaker Change: Line is open.
Speaker Change: Good morning, Jordan and good morning.
Speaker Change: Further the margins for 2025 could you give us details on how youre thinking about mix of pricing versus volume and overhead absorption.
Speaker Change: Yes, So look our overall guide has got some it's a pretty healthy overall leverage rate as you probably calculated.
Speaker Change: North of I think on average what we would expect given our algorithm that we've previously communicated.
Speaker Change: Look the way to think about price in our guide we're going to we're going to more than offset inflation as a baseline I think that goes without saying.
Speaker Change: And then we're going to continue to do all the <unk>.
Speaker Change: Continue the all the right work, we have been with respect to value pricing and other initiatives in that regard as we move forward.
Speaker Change: In terms of absorption in the facilities those volumes will come in and they will leverage at each respective businesses leverage rate and that is baked into that 40%.
I think it's a little bit north of 40% on the on the guide.
Speaker Change: Okay.
Speaker Change: Got it and then also too.
Speaker Change: Sure.
Speaker Change: Are you guys concerned at all.
Speaker Change: Or any of the exposure you guys have in China for PFC and those programs are ramping.
Speaker Change: If the new administration does go through with aggressive tariffs potential retaliation from the China side.
Speaker Change: Im very little concern.
Speaker Change: I think our position in China.
Speaker Change: From.
Speaker Change: Our local locals localization content is not so material or we understand the supply base.
Speaker Change: We've been very very effective in managing inflationary measures I think.
Speaker Change: We're not going to overreact I'm not that concerned.
Speaker Change: I'm not going to overreact, we're going to wait and see what happens and I think we're well prepared to.
Speaker Change: The address whatever.
Speaker Change: Measures get put in place, that's how I'm thinking about it Jordan.
Speaker Change: Got it awesome. Thank you guys so much.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you we'll take our next question from Justin <unk> with CJS Securities. Your line is now open.
Justin: Good morning, Joseph Thanks.
Speaker Change: Just a quick housekeeping one to start is there any transaction related expenses, we should be thinking about going forward or no given the Jan second close on engineered materials.
Justin: No.
Justin: Yes.
Justin: Nothing and if they were transaction expenses are usually treated as non-GAAP anyway, but nothing related to engineered materials, yes.
Justin: Yeah, and I would say that obviously most of the work was done prior to the end of the year.
Justin: Since we closed in early January so.
Justin: We have a modest TSA arrangement in place.
Justin: There will be a very fast separation.
Justin: Okay.
Speaker Change: And then on the prior couple of earnings calls you guys called out some work on.
Speaker Change: Nuclear site in the valves, just wondering if you're continuing to see.
Speaker Change: Good demand there or just wanted to get a sense of if that's changed since the election.
Speaker Change: Well, it's less it's less material for us overall, but it's still an important business what sort of percentage of total revenue.
Speaker Change: 77%.
Speaker Change: Just as a reminder to our investors we have a valve services that nuclear build services we provide.
Speaker Change: New plant construction, the AP 1000, we've supply balance as well as turnaround work when a nuclear power plant goes down for shutdown and gets repealed or there is regulatory requirements for going in and refurbishing and inspecting the balance we have a company that provides that service very very good good business.
Speaker Change: And certainly the resurgence and reopening of nuclear plants has been favorable for us for this business.
Speaker Change: In addition, any time that you see the most recent announcement also that there's interest in restarting plants, we benefit as well on the plant startup with helping to get it back up in order.
So we're seeing that initiative. We also the team is.
Speaker Change: Working with.
Speaker Change: Nextgen small modular reactor providers to help get specified.
Speaker Change: Cisco's out many many years of course from a long cycle standpoint, but to get specified into new plant construction from that standpoint as well so.
Speaker Change: Less material for us, but a great little business and benefiting for sure.
Speaker Change: The nuclear resurgence overall.
Speaker Change: Alright, Thats very helpful. Thank you.
Justin: Thanks, Justin.
Speaker Change: Thank you and once again, if you do have a question you May press star one on your telephone keypad at this time.
Speaker Change: We will take our next question from Tony Bancroft with Gabelli funds. Your line is open.
Tony Bancroft: Good morning, good morning.
Speaker Change: Okay. Congratulations.
Speaker Change: Alex on the promotion was very well deserved I'm sure your first task.
Speaker Change: Max will have you heading out to the Catalina wide wine mixer too.
Speaker Change: The next question.
Speaker Change: Checks.
Speaker Change: Richard Richard wanted to just wanted to start a new company called prestige worldwide.
Speaker Change: What a great wonderful wonder if.
Speaker Change: So now you are your $10 billion company you've grown.
Speaker Change: Ed.
Speaker Change: Extreme performance over the last few years.
Speaker Change: On your portfolio of cleaning.
Speaker Change: And I think.
Speaker Change: Are you sort of look out Hey, this is what's next for this company is there any and I know you've talked about sort of the longer term.
Speaker Change: Aero and PMT.
Speaker Change: That to the appropriate level, but.
Speaker Change: You have some competitors that are have similar businesses to you is there any any opportunity to do something larger and more transformational yeah would you ever think about that is that does that sort of get into your conversations that's sort of a large large scale planning just any thoughts of that back.
Speaker Change: Yes, no. Thanks for that Tony I really appreciate it for sure.
Speaker Change: Through a range of strategic planning on a regular basis that takes into consideration all permutations and scenarios.
Speaker Change: Yes.
Speaker Change: We certainly don't want to say that.
Speaker Change: Something that we have.
Speaker Change: Clear clearly set our sights on I don't want to in any way concerned investors whenever we do is going to make sense, it's going to be right down the sweet spot. It is going to be something that we can clearly.
Speaker Change: Integrate and.
And do well, but we've looked at some larger.
Speaker Change: Assets as well and we continued we even considered not just cash but does it ever make sense.
Speaker Change: To use our equity as a currency also.
Speaker Change: Not something that we've got teed up in the immediate future, but things that we look at also so we were looking we will continue to look at.
Speaker Change: Bob.
Speaker Change: All opportunities to continue to drive shareholder value in some of those are larger.
Speaker Change: Opportunities that could be quite synergistic.
Speaker Change: Thanks, so much Max and team great job.
Tony Bancroft: Thanks, Tony Thank you.
Speaker Change: Thank you. This concludes the Q&A portion of today's call I would now like to turn the floor over to Max Mitchell for closing remarks.
Max Mitchell: Thank you, operator, hey, again, yet another strong year with results outperforming expectations, even with surprises outside our control that our teams reacted to incredibly well.
Max Mitchell: 'twenty 'twenty four prove that our strategy is working the team is executing driving improved earnings through its growth and commercial excellence initiatives. Our M&A pipeline is full and we have the balance sheet capacity to execute.
Max Mitchell: We are well positioned for continued growth and delivering on expectations in 'twenty five and look forward to another hugely successful year.
Max Mitchell: We look forward to seeing many of you on Wednesday evening, and Thursday March 5th and sixth at our Investor Day, before Walton Beach, Florida, where we will highlight the machine.
Max Mitchell: In place with our holistic crane business system strategy disciplined cadence and execution.
Max Mitchell: Like the late Great Quincy Jones said.
Max Mitchell: Every day My father told me the same thing once a task has just begun never leave it until it's done b, the labor, great or small do it well or not at all right Alex absolutely.
Alex Crane: Crane, we submit sweat the small details of our culture and business system, because our team knows that this adds up to outsized results and performance and execution and driving profitable growth. Thank you all for your interest in Crane and your time and attention. This morning have a great day.
Alex Crane: Thank you. This concludes today's Crane company fourth quarter and full year 2024 earnings Conference call. Please disconnect. Your line at this time and have a wonderful day.
Alex Crane: Okay.
Alex Crane: Hum.
Alex Crane: Hum.
Alex Crane: [music].