Q2 2025 Crane Co Earnings Call
Welcome to the Crane Company second quarter 2025 earnings Conference call. At this time, all participants have been placed on a listen only mode and the floor will be opened for your questions. Following the presentation.
I would like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star too. So others can hear your questions. Clearly we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance. Please press star Zero I would now like to turn the call.
<unk> to Allison plenty Acker, Vice President of Investor Relations. Please go ahead.
Thank you operator, and good morning, everyone welcome to our second quarter 2025 earnings release Conference call analysis linear Vice President of Investor Relations.
On our call. This morning, we have Max Mitchell, our chairman, President and Chief Executive Officer.
Alex alcohol executive Vice President and Chief operating Officer, and Rich Maue, Our executive Vice President and Chief Financial Officer, along with Jason Feldman Senior Vice President Treasury tax and Investor Relations for.
Please stand by, your meeting is about to begin.
For Q&A.
We will start off our call with a few prepared remarks from Max and rich after which we will respond to questions.
Just a reminder, the comments we make on this call will include some forward looking statements.
Welcome to the Crane Co. second quarter 2025 earnings conference call. At this time, all participants have been placed on a listen-only mode. The floor will be open for your questions following the presentation.
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 will be using certain non-GAAP.
Numbers, which are reconciled to the comparable GAAP numbers and tables at the end of our press release and accompanying slide presentation, both of which are available on our website at www Dot <unk> dot com in the Investor Relations section.
If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point, your question have been answered. You may remove yourself from the queue, by pressing star 2, so others can hear your questions. Clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Allison. Piac vice president of investor relations. Please go ahead.
Now, let me turn the call over to Max Thank you Alison and thanks, everyone for joining the call today.
I want to start by thanking my teams across the world for delivering yet another excellent quarter outperforming expectations, despite an uncertain macro backdrop.
Thank you, operator. And good morning, everyone. Welcome to our second quarter of 2025 earnings release conference calls. I'm Alison, PLC vice president of investor relations.
And dynamic environment.
On our call this morning, we have Max Mitchell, our Chairman's, president and chief executive officer.
Adjusted EPS was $1 49.
Driven by an impressive six 5% core sales growth, reflecting strength across both aerospace and electronics and process flow technologies.
Core orders were also solid up nearly 20% in the quarter driven primarily by the ongoing strength in our aerospace <unk> electronics business.
Alex Alcala, Executive Vice, President and Chief Operating Officer and reach Maui or Executive Vice President and Chief Financial Officer along with Jason Feldman, senior vice, president treasury tax and investor relations, Susan Q&A.
We will start off our call with a few prepared remarks from Max, Alex, and Rich, after which we will respond to questions.
and just a reminder, the comments we make on this call will include some floors, looking statements,
This entire leadership team has demonstrated consistently differentiated execution across cycles, we once again.
This was reflected in our second quarter results.
We refer you to the cautionary line with the bottom of our earnings release and also on our annual report, 10K and subsequent filings for teaming to forward the pain statements.
The cadence and discipline that the crane business system, our machine if you will.
Along with our performance based culture enables us to make data driven decisions quickly with flexibility to adapt.
Conditions change and with accountability.
Also, during the call, we will be using that 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.sco.com in the investor relations section.
And the benefits of that approach or most noticeable in environments like we're operating in today.
Now let me turn the call over to back. Thank you Alison. Thanks everyone for joining the call today.
And given our consistent and unwavering investing in technology customer requirements and commercial excellence initiatives.
Both of our strategic platforms remains well positioned to continue to deliver great results.
I want to start by thanking my teams across the world for delivering yet. Another excellent quarter outperforming expectations, despite an uncertain macro backdrop and dynamic environment.
Inorganically, we also announced in June the agreement to acquire the precision sensors and instrumentation businesses for PSA from Baker Hughes executing on our strategy to add proprietary and differentiated technologies to our portfolio and to broaden our unique capability.
Adjusted EPS was a149.
Driven by an impressive, 6.5% core sales, growth reflecting strength, across both Aerospace, and electronics and process flow Technologies.
Capabilities through acquisitions.
Core orders were also solid, up nearly 20% in the quarter, driven primarily by the ongoing strength in our aerospace and electronics business.
Alex will provide more color on the acquisition in a moment, but I am incredibly excited about the people.
Technology and the capabilities that these three iconic brands that make up <unk> bring to create.
This entire leadership team has demonstrated, consistently, differentiated execution of cycles. And once again,
This was reflected in our second-quarter results.
And also about the capabilities that we will bring to <unk> to enhance its long term performance.
Our balance sheet remains very strong and we have both the financial and operational capacity for significant additional M&A. We continue to work on a robust pipeline of potential opportunities.
The cadence and discipline of the Crane business system, our machine, if you will, along with our performance-based culture, enables us to make data-driven decisions quickly, with the flexibility to adapt as conditions change and with accountability.
And we are optimistic about our ability to deploy further capital on acquisitions over the next several quarters.
And the benefits of that approach are most noticeable in environments like we're operating in today.
Just a lot of very exciting activities and development to create overall.
And given our consistent and unwavering investment in technology customer requirements and Commercial. Excellence initiatives.
As we look to the balance of the year, while the macro backdrop remains unpredictable our backlog consistently strong execution and our performance year to date gives us the confidence to raise our full year adjusted earnings outlook to a range of $5 50 to $5 80.
Both of our strategic platforms remain. Well, positioned to continue to deliver great results.
Up from our prior view of $5 30 to $5 60.
Now, let me pass it over to our Chief operating officer, Mr. Alex Alcoa to provide some color on our pending acquisition of Si along with comments on the current environment.
PSI from Baker, Hughes executing on our strategy, to add proprietary and differentiated Technologies to our portfolio, and to broaden our unique capabilities through acquisitions.
Alex will provide more color on the acquisition in a moment, but I am incredibly excited about the people.
Thanks Max.
We're very excited about the technologies and capabilities that drop panna metrics and Murdo stroke spring decline.
Technology and the capability that these 3 iconic brands that make up PSI bring to Crane.
All three brands are global leaders in highly sophisticated sensor based technologies for mission critical applications and harsh and hazardous environments.
And also about the capabilities that we will bring to PSI to enhance its long-term performance.
Extremely clean life businesses.
There are a perfect fit with our existing portfolio.
Our balance sheet remains very strong. We have both the financial and operational capacity for significant additional m&a. We continue to work on a robust pipeline of potential opportunities.
Each brand contributes a robust technology foundation.
And we are optimistic about our ability to deploy further capital on Acquisitions over the next several quarters.
Along with a durable and resilient aftermarket presence.
Just a lot of very exciting activities and developments at Crane overall.
Further strengthening the claim portfolio.
Combined with the strength of the Crane business system.
These businesses will be accretive to our financial profile within the next few years.
The drug brand approximately $150 million in revenue, while we position within our aerospace and electronics segment.
The addition of drugs complementary product line.
As we look to the balance of the year, while the macro backdrop remains unpredictable, our backlog, consistently strong execution, and our performance year to date give us the confidence to raise our full-year adjusted earnings outlook to a range of $5.50 to $5.80, up from our prior view of $5.30 to $5.60.
<unk> truly strengthens our pressure sensing capabilities across critical applications.
Including environmental control systems, Hydraulics and aircraft engine monitoring with.
Now, let me pass it over to our Chief Operating Officer, Mr. Alejandro Alcala, to provide some color on our pending acquisition of PSI, along with comments on the current environment.
With strong positions in both single aisle and wide body aircraft platform.
Operator: Welcome to the Crane Company Second Quarter 2025 Earnings Conference Call.
Additionally dropped.
Technologies and capabilities that Drop Panametrics and Rotor Strokes bring to claim.
<unk> expands our presence into the ground based test and calibration equipment for aerospace.
Operator: At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.
Further extending our technological capabilities and market reach.
All 3 brands are global leaders in highly sophisticated, sensor-based Technologies for Mission critical applications in harsh, and hazardous environments.
Extremely crane-like businesses.
As we are planning for the drop integration and to create the optimal structure for continued growth both organically and inorganically within the aerospace <unk> electronics segment.
That are a perfect fit with our existing portfolio.
Operator: So others can hear your questions clearly, we ask that you pick up your handset for best sound quality.
Operator: Lastly, if you should require operator assistance, please press star 0.
Each brand contributes, a robust technology Foundation along with a durable and resilient aftermarket pressing.
I'm also excited to announce that Jay hit.
Further, strengthening the crane portfolio.
Allison Poliniak: I would now like to turn the call over to Allison Poliniak, Vice President of Investor Relations. Please go ahead. Thank you, Operator, and good morning, everyone.
Who many of you know the president of any has been promoted to senior Vice President of the Crane Aerospace and electronics segment reporting to me.
Combined with the strength of the crane business system. These businesses will be accredited to our financial profile within the next few years.
Allison Poliniak: Welcome to our second quarter 2025 earnings release conference call. I'm Allison Poliniak, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our Chairman, President and Chief Executive Officer, Alex Alcala, Executive Vice President and Chief Operating Officer, and Rich Maui, our Executive Vice President and Chief Financial Officer, along with Jason Feldman, Senior Vice President, Treasury, Tax and Investor Relations. He's on for Q&A.
Dave who has been with claim for 35 years has been a driving force behind the success of our A&D business.
The truck brands, approximately $150 million in revenue, will be positioned within our L space and electronic segment.
I look forward to partnering with Jay and driving further record growth in operating performance at AAD.
The addition of drugs complementary product line, meaningfully strengthens, our pressure sensing capabilities across critical applications.
The new A&D segment structure now mirrors, the organizational model used at PSP under some gas of the fab.
Including environmental control systems, hydraulics, and aircraft engine monitoring.
Which is also the role I held prior to our 2023 separation.
Allison Poliniak: We will start off our call with a few prepared remarks from Max, Alex, and Rich, after which we will respond to questions. And just a reminder, the comments we make on this call will 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 will be using numbers which are reconciled to the comparable gap numbers in tables at the end of our press release and accompanying slides.
With strong positions in both single aisles and wide body aircraft platforms.
This structure will get Jay greater capacity to focus on strategic initiatives and M&A.
Additionally.
Drug expands our presence into the ground-based tests and calibration equipment for aerospace.
A&D going forward and it will give us greater flexibility to integrate complementary acquisitions into our current operations in A&D.
Further extending or technological capabilities, and Market reach.
As was to continue pursuing acquisitions, including near Adjacencies that.
That can be managed as independent business entities.
As we are planning for the drug integration and to create the optimal structure for continued growth, both organically and inorganically, within the Aerospace and Electronics segment.
<unk> drug.
I'm also excited to announce that J. Higgs.
Allison Poliniak: both of which are available on our website at www.craneco.com in the investor release.
We appointed today will be the future president of drugs, along with our head of M&A and strategy for the segment.
Max Mitchell: Now let me turn the call over to Max. Thank you, Allison, and thanks everyone for joining the call today. I want to start by thanking my teams across the world for delivering yet another excellent quarter, outperforming expectations despite an uncertain macro backdrop and dynamic environment. Adjusted EPS was $1.49. driven by an impressive 6.5% core sales growth, reflecting strength across both aerospace and electronics and process flow technology. core orders were also solid, up nearly 20% in the quarter, driven primarily by the ongoing strength in our aerospace and electronics business. This entire leadership team has demonstrated consistently differentiated execution across cycles.
And the new President of our current aerospace business.
How many of the presidents of A&E have been promoted to Senior Vice President of the Crane Aerospace and Electronics segment, reporting to me?
Replacing J, Mr. Joseph Monday.
Joseph was previously the vice President and general manager of our largest any solution and has been with claim for 13 years.
Today, who has been with the claim for 35 years, has been a driving force behind the success of our A&E business.
I look forward to partnering with j in driving further record growth and operating performance at A&E.
A reflection of the bench of talent within Crane.
The <unk> business, which is about $150 million of revenue.
The new A&E segment structure now mirrors, the organizational model used at PFT under some gas of descent.
Advanced ultrasonic flow meters and precision moisture analyzers.
Which is also the role I helped prior to our 2023 separation.
Similar to drug.
Panamax <unk> will be a standalone entity.
Although within our process flow technology segment reporting period and as a percent.
Panna metrics sensing solution support critical process industries by enabling accurate measurement of liquids and gases across applications, such as chemical production Lg's transportation cryogenic gas storage and wastewater treatment facilities.
Max Mitchell: And once again, this was reflected in our second quarter results. The cadence and discipline of the crane business system, our machine, if you will, along with our performance based culture enables us to make data driven decisions quickly, with flexibility to adapt as conditions change and with accountability. And the benefits of that approach are most noticeable in environments like we're operating in today. and given our consistent and unwavering investment in technology, customer requirements and commercial excellence initiatives. Both of our strategic platforms remain well positioned to continue to deliver great results.
This structure will give J greater capacity to focus on strategic initiatives and M&A for A&E going forward. And it will provide us with greater flexibility to integrate complementary acquisitions into our current operations in A&E.
As well as to continue pursuing acquisitions.
Including near adjacencies.
That can be managed, as Independent Business entities like drug.
It is complementary adjacency to our current portfolio that expands our capabilities and test and measurement.
Reporting to J will be the future president of Drug, along with a head of M&A and strategy for the segment.
And finally.
And the new president of our current Aerospace business.
The addition of Reuter Stokes approximately $90 million of revenue will double the size and capabilities of our existing <unk> nuclear business.
Replacing J, Mr. Joseph monninger.
We have industry, leading radiation sensing and detection technologies Reuter Stokes enhances our offerings for nuclear plant operation and Homeland security.
Max Mitchell: Inorganically, we also announced in June the agreement to acquire the Precision Sensors and Instrumentation Businesses, or PSI, from Baker Hughes, executing on our strategy to add proprietary and differentiated technologies to our portfolio and to broaden our unique capabilities through acquisitions. Alex will provide more color on the acquisition in a moment, but I am incredibly excited about the people, technology, and the capabilities that these three iconic brands that make up PSI bring to Crane. and also about the capabilities that we will bring to PSI to enhance its long-term performance.
Joseph was previously, the vice president and general manager of our largest Annie solution and has been with claim for 13 years.
A reflection of the bench of talent within crane.
It also positions us strongly to capitalize on the renewed global investment in nuclear energy.
<unk> will be integrated into our existing nuclear business.
The panametrics business, which is about 150 million of Revenue, adds Advanced ultrasonic flow meters and precision, moisture and electrics.
Similar to drug.
The leadership of our President Chris Mitchell, who has been serving as the president of our nuclear business for the past six years.
Panametrics will be a standalone entity.
Although within our process flow technology segment, reporting phishing, Gaza descent.
We anticipate the acquisition closed January one.
And the integration planning is well underway and progressing smoothly working with the existing Baker Hughes and Crane teams.
Max Mitchell: Our balance sheet remains very strong. We have both financial and operational capacity for significant additional M&A. We continue to work on a robust pipeline of potential opportunities, and we are optimistic about our ability to deploy further capital on acquisitions over the next several quarters.
In terms of further M&A, our funnel of inorganic opportunities remains full and we continue to look to accelerate EPS growth through additional capital deployment.
Panametrics sensing solutions support critical processes and industries by enabling accurate measurement of liquids and gases across applications such as chemical production, LNG transportation, cryogenic gas storage, and wastewater treatment facilities.
It is complimentary adjacency to our current portfolio that expands our capabilities into test and measurement.
The deals we are working on today include a number of opportunities in both aerospace and electronics as well as process flow technologies and they range in deal size from sub $100 million to $1 billion.
and finally,
Max Mitchell: Just a lot of very exciting activities and developments at Crane overall. As we look to the balance of the year, while the macro backdrop remains unpredictable, our backlog, consistently strong execution, and our performance year-to-date gives us the confidence to raise our full-year adjusted earnings outlook to a range of $5.50 to $5.80, up from our prior view of $5.30 to $5.60.
The addition of Roto Stokes, approximately $90 million in revenue, will double the size and capabilities of our existing Creighton nuclear business.
Now some thoughts on the segments in the quarter, starting with aerospace and electronics.
With his industry-leading radiation sensing and detecting technologies, growth tools enhance our offerings for nuclear plant operations and homeland security.
Aerospace and defense markets continue to see very strong demand environment.
On the commercial side of the business activity remains healthy with Boeing continuing to ramp up production and aftermarket activity continuing at elevated levels.
It also positions us strongly to capitalize on the renewed, Global investment in nuclear energy.
Alex Alcala: Now let me pass it over to our Chief Operating Officer, Mr. Alex Alcala, to provide some color on our pending acquisition of PSI, along with comments on the current environment. Thanks, Max. Well, we're very excited about the technologies and capabilities that drug, parametrics, and motor strokes bring to Crane. All three brands are global leaders in highly sophisticated sensor-based technologies for mission-critical applications in harsh and hazardous environments. Extremely crane-like businesses that are a perfect fit with our existing portfolio. Each brand contributes a robust technology foundation, along with a durable and resilient aftermarket price. Further strengthening the crane portfolio.
On the defense side, we continue to see solid procurement spending and our continued focus on reinforcing the broader defense industrial base, given heightened global uncertainty today.
as the president of our nuclear business, for the past 6 years,
We anticipate the acquisition of closed January 1st.
Looking ahead to the balance of 2025.
We now anticipate core sales growth for the year to be up high single digits to low double digits compared to our prior view for core growth to be up mid to high single digits.
and the integration planning is well underway and progressing, smoothly working with the existing Baker Hughes and crane teams
We expect that growth to leverage at 35% to 40% for the full year.
In terms of further M&A, our final inorganic opportunities remain full, and we continue to look to accelerate EPS growth through additional capital employment.
If you are working.
today, include a number of
Our guidance assumes continued strong sales with the ramp up at Boeing partially offset by decelerating year over year growth rates in commercial aftermarket that we have previously highlighted as the comparisons become more challenging and will naturally moderate over time.
Was processed.
Alex Alcala: Combined with the strength of the Crane business system, these businesses will be accreted to our financial profile within the next few years. The JORC brand, approximately $150 million in revenue, will be positioned within our aerospace and electronic segment. The addition of drug's complementary product line meaningfully strengthens our pressure sensing capabilities across critical applications. including environmental control systems, hydraulics, and aircraft engine monitoring, with strong positions in both single aisle and wide body aircraft platform. Additionally... drug expands our presence into the ground based test and calibration equipment for aerospace. further expanding our technological capabilities and market reach.
In the range and deal size from sub 100 million to 1 billion.
Now, some thoughts on the segments in the quarter, starting with Aerospace and electronics.
We also continue to pursue new opportunities and win new business across this segment that gives us confidence that we will continue to see above market growth for the remainder of this decade.
Aerospace and defense markets continue to see a very strong demand environment.
A few examples.
On the commercial side of the business activity, remains healthy with boing, continuing to ramp up production and aftermarket activity continuing at elevated levels.
First we agreed to terms on a development contract for the <unk> hundred 30 demonstrator power converter in our defense power business.
Second activity around Air Defense systems remains very robust with crane, having secured multiple orders in the quarter.
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.
Third Crane was also selected to supply the doors signal system on the coal Mac CA 19, nine widebody aircraft claim.
<unk> and <unk> sampling system solution will include nearly 100 proximity sensors, along with proximity sensor data concentrated.
Looking ahead to the balance of 2025. We now anticipate core sales growth for the year to be up high single digits to low double digits compared to our prior view, for core growth to be up mid to high single digits.
Alex Alcala: As we are planning for the drug integration and to create the optimal structure for continued growth, both organically and inorganically within the aerospace and electronics segment, I'm also excited to announce that Jade Higgs who many of you know as the President of A&E has been promoted to Senior Vice President of the Crane Aerospace and Electronics Segment, reporting to me. Jay, who has been with Crane for 35 years, has been a driving force behind the success of our A&E business. I look forward to partnering with Jay in driving further record growth and operating performance at A&E.
We expect that growth to leverage at 35 to 40% for the full year.
And door indicators per ship set.
In addition, our preparation for the F 16 brake control upgrade ramp up remains on track.
And last we are also pleased to see a significant increase in funding for the <unk> and the recent full year 'twenty six defense budget.
For guidance assumes continued strong sales with the ramp up at buying partially offset by decelerating year-over-year growth rates in commercial aftermarket that we have previously highlighted as the comparisons become more challenging and will naturally moderate over time.
This is a large ground based radar program that we've spoken about many times.
And where we have significant content.
This further increases our confidence in the long term growth for our defense power business in 2027 and beyond.
We also continue to pursue new opportunities and win new business across this segment, which gives us confidence that we will continue to see above-market growth for the remainder of this decade.
A few examples.
Alex Alcala: The new A&E segment structure now mirrors the organizational model used at PFT under Shangaza Dasent. which is also the role I held prior to our 2023 separation. This structure will give Jay greater capacity to focus on strategic initiatives and M&A for A&E going forward.
With a record backlog and pipeline of opportunities aerospace and electronics is poised to well outperformance markets over the next decade.
First, we agreed to terms on a development contract for the xm30 demonstrator power converter in our defense power business.
Second.
Okay.
Activity around air defense systems remains very robust, with Crane having secured multiple orders in the quarter.
Our profit flow technologies.
While end markets have not inflected in any meaningful way since our April earnings call.
Alex Alcala: And it'll give us greater flexibility to integrate complementary acquisitions into our current operations in A&E, as well as to continue pursuing acquisitions, including near adjacencies that can be managed as independent business entities like DRUX. We point to Jay, who will be the future president of DRUG, along with the head of M&A and strategy for the segment, and the new president of our current aerospace business, replacing Jay, Mr. Joseph Mondego. Joseph was previously the Vice President and General Manager of our largest AME solution and has been with Crane for 13 years. a reflection of the bench of talent within Crane.
We remain well positioned to outgrow across the cycle.
Third Quinn was also selected to supply the door signal system on the camac. C929 widebody. Aircraft.
As a reminder, we have systematically repositioning our portfolio around our core end markets, where we have the strongest competitive position and the most differentiation, enabling sustainable market outgrowth.
Crane A&E sensing system solution. Will include nearly 100, proximity sensors, along with proximity sensor, data, concentrators and door indicators per ship set.
And we continue to win in this segment, despite the volatile market backdrop.
In addition, our preparation for the F-16 brake control upgrade ramp up remains on track.
For example, our cryogenics business reached a record high backlog on orders driven by strong demand and space launch and other segments.
And last we're also pleased to see a significant increase in funding for the ltams in the recent 4-year 26, defense budget.
We secured key orders and space launch platforms for multiple customers for over $8 million in the quarter.
This is a large ground-based Aisa radar program that we've spoken about many times.
And where we have significant content.
We continue to see our cryogenics front end engineering support and manufacturing capability as.
This further increases our confidence in the long-term growth for our defense power business in 2027 and beyond.
Alex Alcala: The Panametrics business, which is about 150 million of revenue, adds advanced ultrasonic flow meters and precision moisture analyzer. Similar to drug, Panametrix will be a standalone entity, although within our process flow technology segment, reporting Shangaza Dasent. Panametric sensing solutions support critical process industries by enabling accurate measurement of liquids and gases across applications, such as chemical production, LG transportation, cryogenic gas storage, and wastewater treatment facilities. It is complimentary adjacency to our current portfolio that expands our capabilities into test and measurement.
A differentiator in the market and Crane maintains its leadership position as a supplier of vacuum insulated pipes for space launch platforms.
With the record, backlog and pipeline of opportunities Aerospace, and electronics is poised to well, outperformed its markets over the next decade.
Also in the chemical space.
Have process flow Technologies.
Our teams continue to secure key projects in the Manly applications, such as <unk> and PVC due to a reliable soma lined valve and our portfolio of line pipe from our system flex some bonds.
Well, in Marcus have not inflected in any meaningful way, since our April earnings call.
We remain well, positioned to our goal across the cycle.
Despite the overall reduction in Capex announced by many of our chemical customers.
This quarter, we booked a $4 million a project for an upgrade to our PVC plant as well as a $3 million project for the expansion of our plant in Texas.
As a reminder, we have systematically repositioned our portfolio around our core and markets where we have the strongest competitive position and the most differentiation enabling sustainable Market algorithm.
And.
With our new high temperature resistant <unk> R. E X technology in pharma, we continue to take share securing a nearly $1 million win with a key pharmaceutical company.
And we continue to win in this segment despite the volatile markets backdrop.
Alex Alcala: And finally. The addition of Roda Stokes, approximately 90 million of revenue, will double the size and capabilities of our existing crate nuclear business. With its industry-leading radiation sensing and detecting technologies, Rotorstoke enhances our offerings for nuclear plant operations and homeland security. It also positions us strongly to capitalize on the renewed global investment in nuclear energy. The Roto-Stokes plan will be integrated into our existing nuclear business under the leadership of our president, Chris Mitchell, who has been serving as the president of our nuclear business for the past six years. We anticipate the acquisition to close January 1st, and the integration planning is well underway and progressing smoothly, working with the existing Baker Hughes and Crane team.
For example, our cryogenic business reached a record high backlog on orders, driven by strong demand in space, bonds, and other segments.
Tactically, we have proven our ability to react to any changes in demand quickly and we will remain nimble, taking any necessary and appropriate price and cost measures required.
We secured key orders in space, launch platforms for multiple customers, for over 8, million in the quarter.
However, our strategy is unchanged.
And we will manage through any potential demand fluctuations.
Losing focus on our longer term goals and objectives.
Looking ahead to the second half of 2025 and given our line of sight today.
Also in the chemical space.
We anticipate core growth to fall at the lower end of our low to middle single digit core growth range with volume leveraging at 30% to 35%.
Our teams continue to secure key projects in the Manning applications such as chlorine and PVC due to a reliable Soma Cline valves and our portfolio of line pipes from a system flex and bonds.
No.
Despite the overall reduction in capex announced by many of our chemical customers.
All of our businesses remain well positioned to continue to deliver great results.
Alex Alcala: In terms of further M&A, our funnel of inorganic opportunities remains full, and we continue to look to accelerate EPS growth through additional capital deployment. The deals we are working on today include a number of opportunities in both aerospace and electronics, as well as process flow technologies, and they range in deal size from sub $100 million to $1 billion.
Now, let me turn the call over to our CFO, Mr. Rich maue for more specifics on the quarter.
This quarter, we booked a $0 million project for an upgrade to a PVC plant, as well as a $3 million project for the expansion of a plant in Texas.
and,
Thank you Alex and good morning, everyone.
Starting off with total company results, we drove six 5% core sales growth in the quarter driven primarily by.
With our new high temperature resistant. Diaphragm valves are eex technology and Pharma. We continue to take share, securing our nearly $1 million win with a key pharmaceutical company.
The ongoing strength within aerospace and electronics.
Adjusted operating profit increased 15% driven by strong net price and productivity.
Alex Alcala: Now, some thoughts on the segments in the quarter, starting with aerospace and electronics. Aerospace and defense markets continue to see a very strong demand environment. On the commercial side of the business, activity remains healthy, with Boeing continuing to ramp up production and aftermarket activity continuing at elevated levels. 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.
Tactically. We have proven our ability to react to any changes in the man, quickly.
In the quarter core FX neutral backlog was up 18% compared to last year.
And we will remain Nimble, taking any necessary, and appropriate, price and cost measures required.
However, our strategy is unchanged.
Driven by continued outsized strength at aerospace and electronics.
And core FX neutral orders were up 19% compared to last year as well also driven by aerospace and electronics.
And we will manage to any potential, demand fluctuations without losing focus, on a longer term goals and objectives.
But also modest growth and process flow technologies.
Looking ahead to the second half of 2025 and given our line of sight today.
We are in a net cash position today and after the <unk> transaction, our leverage will be roughly.
One times.
Alex Alcala: Looking ahead to the balance of 2025, we now anticipate core sales growth for the year to be up high single digits to low double digits, compared to our prior view for core growth to be up mid to high single digits. We expect that growth to leverage at 35 to 40% for the full year. Our guidance assumes continued strong sales with the ramp up at Boeing partially offset by decelerating year over year growth rates in commercial aftermarket that we have previously highlighted as the comparisons become more challenging and will naturally moderate over time.
Net debt to EBITDA is still below our two to three times targeted range, leaving us well positioned for further M&A.
We anticipate core growth to fall at the lower end of our low, to Middle single digit core growth range with volume leveraging at 30 to 35%.
With respect to tariffs as a reminder, only about 7% to 8% of our cost of goods sold consist of materials and components that are directly imported into the United States. Another.
Both our businesses remain. Well, positioned to continue to deliver great results.
Now, let me turn the call over to our CFO Mr. Rich Maui for more specifics on the quarter.
Another 3% to 4% of cost of goods sold our intercompany sales into the United States.
Thank you, Alex and good morning everyone.
<unk> of which is exempt from tariffs.
Based on current tariff rates, we anticipate the gross cost increase to be roughly $30 million for the year down from the $60 million. We noted last quarter due to the reduction in the China related tariffs relative to when we last spoke.
Starting off with total company results and we drove 6 and a half percent core sales growth in the quarter due to primarily by the ongoing strength within Aerospace and electronics.
Adjusted operating profit. Increased 15% driven by Strong net price and productivity.
But this is subject to change of course as we move forward.
Alex Alcala: We also continue to pursue new opportunities and win new business across this segment that gives us confidence that we will continue to see above market growth for the remainder of this decade. A few examples. First, we agreed to terms on a development contract for the XM-30 demonstrator power converter in our defense power business. Second, activity around air defense systems remains very robust, with crane having secured multiple orders in the quarter. Third, Crane was also selected to supply the DOORS signal system on the COMAC C929 wide-body aircraft. Crane A&E sensing system solution will include nearly 100 proximity sensors, along with proximity sensor data concentrators and DOORS indicators per ship set.
In the quarter, core FX neutral backlog was up 18% compared to last year.
And as we said last quarter, we expect to offset the tariff impacts through price and productivity.
Driven by continued outsized strength in Aerospace and Electronics.
A few more details on the segments in the quarter.
And core FX neutral orders were up 19% compared to last year as well, also driven by Aerospace and electronics.
Starting with aerospace and electronics.
Sales of $258 million increased 12% in the quarter nearly all of that organic growth.
But also modest growth in process flow Technologies.
And even with the continued high level of core sales growth, notably our record backlog of just over $1 billion increased even further up 29% year over year and up 9% sequentially.
We are in a net cash position today and after the PSI transaction or leverage will be roughly 1 times.
Uh meant that the Eva still below our 2 to 3 times. Targeted range leaving us. Well, positioned for further m&a.
Total aftermarket sales increased 18%.
Commercial aftermarket sales up 9% and military aftermarket up 37%.
And OEM sales increased 9% in the quarter with both commercial.
With respect to tariffs, as a reminder, only about 7% to 8% of our cost of goods sold consists of materials and components that are directly imported into the United States.
And military up 9%.
another 3 to 4% of cost of goods sold are in our company sales into the United States, a portion of which is exempt from tariffs
Alex Alcala: In addition, our preparation for the F-16 Brake Control Upgrade Ramp-Up remains on track. And last, we're also pleased to see a significant increase in funding for the LTAM in the recent full year 26 defense budget. This is a large ground-based AESA radar program that we've spoken about many times. and well, we have significant content.
Adjusted segment margin of 26, 3% a record high for the segment increased 250 basis points from 23, 8% last year, primarily reflecting higher volumes price net of inflation favorable mix and productivity.
Based on current tariff rates, we anticipate the gross cost increase to be roughly $30 million for the year, down from the $60 million we noted last quarter, due to the reduction in the China-related tariffs relative to when we last spoke.
We continue to expect operating margin to be lower in the second half due to a less favorable mix between commercial OEM and the aftermarket.
But this is subject to change, of course, as we move forward.
Excuse me our process flow technologies in Q2, we delivered sales of $319 million up 7% driven by solid core sales growth of 3% in the quarter.
And as we said last quarter, we expect to offset the Tariff impacts for price and productivity.
Alex Alcala: This further increases our confidence in the long term growth for our defense power business in 2027 and beyond.
A few more details on the segments in the quarter.
Starting with Aerospace and electronics.
One was a 3% benefit from the cryo works in tech the fab acquisitions and appoint a favorable foreign exchange.
Alex Alcala: With a record backlog and pipeline of opportunities, aerospace and electronics is poised to well outperform its markets over the next decade.
sales of 258 million increased 12% in the quarter, nearly all of that, organic growth,
Compared to the prior year core FX neutral backlog decreased 4%, however, core FX neutral orders were up 4%.
And even with the continued high level, of course, sales growth notably our record backlog of just over $1 billion increased even further.
Alex Alcala: At Process Flow Technologies, while end markets have not inflected in any meaningful way since our April earnings call, we remain well positioned to outgrow across the cycle. As a reminder, we have systematically repositioned our portfolio around our core in markets, where we have the strongest competitive position and the most differentiation, enabling sustainable market output. And we continue to win in this segment despite the volatile market backdrop. For example, our cryogenics business reached a record high backlog on orders driven by strong demand in space launch and other segments. We secured key orders in space launch platforms for multiple customers for over 8 million in the quarter.
29% year-over-year and up 9% sequentially.
On a sequential basis core FX neutral orders were down 1% compared to the first quarter.
Total aftermarket sales increased 18%.
Adjusted operating margin.
Of 27% expanded 20 basis points.
With commercial aftermarket sales up 9% and military aftermarket up 37%.
Importantly, core operating leverage was 35% at the high end of our 30% to 35% targeted range driven by strong net price and productivity inclusive of net tariff headwinds in the quarter.
And OEM sales increase 9% in the quarter, with both Commercial and Military up 9%.
Below the segment's adjusted corporate expense was about 25 million in the quarter, which is spot on when I guided last quarter.
Similar to Q1 and as anticipated it was higher than our normal quarterly average because of accounting rules that require accelerated amortization of stock compensation expense for associates that are retirement eligible.
Adjusted segment margin of 26.3% a record high for the segment increased, 250 basis points from 23.8%. Last year, primarily reflecting higher volumes price, net of inflation, favorable, mix and productivity.
We continue to expect operating margins to be lower in the second half, due to a less favorable, mix between commercial, OEM and the aftermarket.
So as I noted last quarter. This year stock compensation expense was much higher in the first half and will be lower in the second half.
Alex Alcala: We continue to see our cryogenic strontium engineering support and manufacturing capability as a differentiator in the market, and Crane maintains its leadership position as a supplier of vacuum insulator pipes for space launch platforms. Also, in the chemical space, our teams continue to secure key projects in the manning applications, such as chlorine and PVC, due to our reliable SOMOX line valves and our portfolio of line pipes from assistaflex and bond. Despite the overall reduction in capex announced by many of our chemical customers, This quarter, we booked a $4 million project for an upgrade to a PVC plant, as well as a $3 million project for the expansion of a plant in Texas.
We still expect just above $80 million of corporate costs for the full year.
I also wanted to address some questions. We've received about the $14 million swing in net non operating income compared to our previous guidance.
and a point of favorable foreign exchange,
The largest component of that difference was just a change in geography on how we treated the insurance recovery related to hurricane Helene in.
Compared to the prior year core FX, neutral backlog decreased 4%. However core FX neutral orders were up 4%
In September of last year.
And a sequential basis core FX neutral. Orders were down 1% compared to the first quarter.
As we discussed in January our guidance included about $9 million of business interruption insurance recovery.
Adjusted operating margin.
4 million of which was recognized in the second quarter.
Of 20.7% expanded 20 basis points.
Our original guidance assumed that recovery at the separate components of operating income.
And our revised guidance issued today, we have moved that 9 million recovery to non operating income, which we believe is a better presentation and more clearly illustrates the strength of our core operating performance in the quarter.
Importantly, core operating leverage was 35% at the high end of our 30th. Strong net price in productivity, inclusive of net tariff, headwinds in the quarter.
Below the segments.
Adjusted corporate expenses about 25 million in the quarter which is spot on what I guided last quarter.
Alex Alcala: And with our new high temperature resistant diaphragm valves, our EX technology in pharma, we continue to take share securing a nearly $1 million win with a key pharmaceutical company. Tactically, we have proven our ability to react to any changes in demand quickly. And we will remain nimble, taking any necessary and appropriate price and cost measures required. However, our strategy is unchanged. and we will manage through any potential demand fluctuations without losing focus on our longer term goals and objectives.
This change does not impact segment income or EPS in any way compared to our original guidance.
The remaining $5 million difference reflects earlier than expected pay off of our 2023 term loan and better investment income on our cash.
Similar to Q1 and as anticipated, it was higher than our normal quarterly average because of the accounting rules that require accelerated amortization of stock compensation expense for associates that are retirement eligible. As I noted last quarter, this year, stock compensation expense was much higher in the first half and will be lower in the second half.
For the full year as Max noted, we are raising our outlook to a range of $5 50 to $5 80.
We still expect just above 80 million of corporate costs for the full year.
And from an earnings cadence perspective, the second half that will be weighted more towards Q3 consistent with typical.
I also wanted to address some questions. We've received about the 14 in net non-operating income compared to our previous guidance.
Seasonality.
Outstanding quarter teams continue to be energized and motivated and if not for some of the events outside our control and keeping us penned in.
Alex Alcala: Looking ahead to the second half of 2025. And given our line of sight today, We anticipate core growth to fall at the lower end of our low to middle single digit core growth range, with volume leveraging at 30 to 35%. So, both our businesses remain well-positioned to continue to deliver great results.
The largest component of that difference was just a change in geography on how we treated the Insurance Recovery related to hurricane haleem.
In September of last year.
As we discussed in January, our guidance included about 9 million of business, Interruption Insurance Recovery.
We would really be flying high.
Reminds me, what Mark Wahlberg said.
$4 million of which was recognized in the second quarter.
As detective Terry hoists in the thrilling crime drama the other guys.
Our original guidance assumed recovery at this separate component of operating income.
When he screens.
Can't keep me cooped up in here I'm, a peacock you've got to let me fly.
Rich Maui: Now, let me turn the call over to our CFO, Mr. Rich Maui, for more specifics on the court. Thank you, Alex, and good morning, everyone. Starting off with total company results, we drove 6.5% core sales growth in the quarter driven primarily by the ongoing strength within aerospace and electronics. Adjusted operating profit increased 15%, driven by strong net price and productivity. In the quarter core FX neutral backlog was up 18% compared to last year, driven by continued outsized strength at aerospace and electronics. And core FX neutral orders were up 19% compared to last year as well, also driven by aerospace and electronics, but also modest growth in process flow technologies.
And with that operator, we are now ready to take our first question.
In our revised guidance issued. Today, we have moved that 9 million recovery to 9 operating income, which we believe is a better presentation and more clearly illustrates the strength of our core operating performance in the quarter,
The floor is now open for questions. At this time, if you have a question or comment. Please press star one on your telephone keypad.
This change does not impact segment income or EPS in any way compared to our original guidance.
Any point to your question is answered you may remember yourself from the queue by pressing star Q again, we ask that you pick up your handset when posing your questions to provide optimal sound quality.
The remaining $5 million difference reflects the earlier-than-expected payoff of our 2023 Term Loan and better investment income on our cash.
Thank you. Our first question is coming from Scott delay chalk, let's Deutsche Bank. Please go ahead.
For the full year. As Max noted, we are raising our Outlook to a range of 5.50 cents to 5 dollars and 80 cents and from an earnings Cadence perspective. The second half
Hey, good morning, Rich I'm still recovering from that one offs.
I will be weighted more towards Q3, consistent with typical.
Seasonality.
Yeah good morning.
So back to the backlog of any by 29% year over year and 10% sequentially. Obviously, it's just a strong environment.
Environment broadly that maybe you can go around the horn.
outstanding quarter teams continue to be energized and motivated and if not for some of the events outside our control and keeping us pinned in
Rich Maui: We are in a net cash position today. And after the PSI transaction, our leverage will be roughly one time Net debt to EBITDA still below our two to three times targeted range, leaving us well positioned for further M&A. With respect to tariffs, as a reminder, only about seven to eight percent of our cost of goods sold consists of materials and components that are directly imported into the United States. Another three to four percent of cost of goods sold are in our company sales into the United States, a portion of which is exempt from tariff. Based on current tariff rates, we anticipate the gross cost increase to be roughly $30 million for the year, down from the $60 million we noted last quarter due to the reduction in the China-related tariffs relative to when we last spoke.
Talk about the areas of the A&D business, maybe even the specific programs that are driving this recent bookings strength.
We would really be flying high.
Reminds me what Mark Wahlberg said as detective Terry hoist.
Yes, Hey, Scott I'll take that it's rich.
In the thrilling crime drama, The Other Guys.
I would start off by saying that it is fairly broad based across both commercial and military.
When he screamed.
As well as broad base across customers right. So not one unique customer set.
You can't keep me cooped up in here. I'm a peacock. You got to let me fly.
And with that operator, we are now ready to take our first question.
If I was to oppose to point out just a couple of areas, where we were where we saw some outsized strength I would say Eric.
Air Defense.
In particular.
It was fairly strong with some.
Orders that were not they were not actually for 2025, they were for 'twenty six 'twenty seven primarily.
The floor is now open for questions at this time. If you have a question or comment, please press star 1 on your telephone keypad. If at any point to your question, is answered. You may remove yourself from the queue, by pressing star 2. Again, we ask that you pick up your handset when pausing your questions to provide optimal sound quality,
And I think youre familiar with some of those programs that are in the air defense that we have.
I would say another area was.
Rich Maui: But this is subject to change, of course, as we move forward. And as we said last quarter, we expect to offset the tariff impacts through price and productivity.
Thank you. Our first question is coming from Scott, the Witchell with Deutsche Bank. Please go ahead.
Our longstanding program that we have.
Legacy program and the <unk> ISR space.
Hey, good morning Rich. I'm still recovering from that 1. That was, that was pretty good.
Communication platform.
Rich Maui: A few more details on the segments in the quarter, starting with aerospace and electronics. Sales of $258 million increased 12% in the quarter, nearly all of that organic growth. And even with the continued high level of core sales growth, notably our record backlog of just over a billion increased even further, up 29% year over year and up 9% sequentially. Total aftermarket sales increased 18% with commercial aftermarket sales up 9% and military aftermarket up 37%. and OEM sales increased 9% in the quarter with both commercial and military up 9%. Adjusted segment margin of 26.3%, a record high for the segment, increased 250 basis points from 23.8% last year, primarily reflecting higher volumes, price net of inflation, favorable mix and productivity.
We have some power solutions also.
A pretty a pretty sizable order in the quarter and then also was 426 and 27.
So back, she grew the backlog at A&E by 29% year-over-year and 10% sequentially. Obviously, it's it's just a strong environment. Broadly, that maybe you can go around the horn.
As we think about.
The backlog.
And then if I was to pick another out on the <unk> side, Alex highlighted in his prepared remarks. The successes we had on the C 929.
And talk about the areas of the Annie business, maybe even the specific programs that are driving this recent booking strength.
Program, but we also had some really nice order flow coming in for the <unk>.
<unk> 109 dose to pick something out and again for 2026 demand satisfaction and forward. So.
Yeah. Hey Scott. I'll take that, uh, it's Rich. Uh, look, I would start off by saying that it is fairly broad-based across both Commercial and Military, uh, as well as broad-based across customers, right? So, not 1 unique customer set.
Just really I think to come back to it it was broad based both military and commercial but hopefully those are some examples that are helpful.
Yeah. That's helpful. Thank you rich and then to get to your EBIT Guide I do have to have the A&D margins draw.
Drop a lot in the second half I think down to like a 30% decremental margin I would just blow your own kind of longer term framework.
um, if I was to, if I was to point out, just a couple of areas where we were where we Source some outside strength, I would say, uh, air defense, uh, in particular, um, was, was was fairly strong with some, uh, orders that were not neces, they were not actually for 2025, they were for 26 and 27 primarily
Um, and I think you're familiar with some of those programs that are in air defense that we have.
I guess, what's going to drive that particularly since I think you do make money on OE and you should have volume leverage on the higher sales overall in the second half.
Rich Maui: We continue to expect operating margin to be lower in the second half due to a less favorable mix between commercial OEM and the aftermarket.
Yes, I would say very consistent with what I had mentioned in my prepared remarks last quarter that the mix shift between comm OE and aftermarket.
Rich Maui: At Process Flow Technologies in Q2, we delivered sales of $319 million, up 7% during my solid core sales growth of 3% in the quarter, along with a 3% benefit from the CryoWorks and Technofab acquisitions and a point of favorable foreign exchange. Compared to the prior year, core FX neutral backlog decreased 4%. However, core FX neutral orders were up 4%. On a sequential basis, core FX neutral orders were down 1% compared to the first quarter. adjusted operating margin of 20.7% expanded 20 basis points. Importantly, core operating leverage was 35% at the high end of our 30 to 35% targeted range, driven by strong net price and productivity, inclusive of net tariff headwinds in the quarter.
We'll clearly go in.
6 and 27, uh, as we as we think about, uh, you know, the backlog.
The direction, where commerce is increasing pretty pretty significantly we had a very nice.
On the <unk> side here in the quarter, but that's going to go up call. It 10% ish. When you look at Q3, and then sustaining at that level.
And then with commercial aftermarket.
Similarly that comp is going to be very difficult. If you look back to our Q4. It was the highest level of commercial aftermarket that we've ever shipped and so we face that still good levels I would say, we're not saying that it is going to decline, but on year over year basis, it'll be a challenging comp.
Um and then if I was to pick another route in in the comma we side you know Alex highlighted in his prepared remarks uh successes we had on the sea 929 program but we also had some really nice order flow, uh, coming in for the uh, c919, if I was to, if I was to pick something out and again for 2026 demand satisfaction and forward. So uh, just really I think to, to come back to it. It was broad-based both Military and Commercial, um, but hopefully, those are some examples that are helpful.
In the quarter here in Q2 as well as in Q1, we enjoyed some benefits from engineering programs that really fall through nicely.
Yeah, that's helpful. Thank you, Rich. And then to get to your eBay guide, I do have to have the A&E margins.
Rich Maui: Below the segments, adjusted corporate expense was about $25 million in the quarter, which is spot on what I guided last quarter. Similar to Q1, and as anticipated, it was higher than our normal quarterly average because of accounting rules that require accelerated amortization of stock compensation expense for associates that are retirement eligible. So, as I noted last quarter, this year, stock compensation expense was much higher in the first half and will be lower in the second half. We still expect just above $80 million of corporate costs for the full year.
Drop a lot in the second half. I think down to like a 30% incremental margin, which is below your own kind of longer-term framework.
We don't see that opportunity in the second half.
So those are some of the elements I would say so yes at 30%, perhaps a little bit on the lower side and perhaps exit.
I guess, what's going to drive that? Particularly sense. I think you, you do make money on OE and you should have volume leverage on the higher sales overall in the second half.
<unk> a little bit of.
Caution on our side.
But I'd also reiterate on a full year basis, it's still 35% to 40%.
And we feel comfortable with our construct going forward in any given quarter. There can always be a couple of items here or there, but thats the right way to look at the business.
Rich Maui: I also wanted to address some questions we've received about the $14 million swing in non-operating income compared to our previous guidance. The largest component of that difference was just a change in geography on how we treated the insurance recovery related to Hurricane Helene in September of last year. As we discussed in January, our guidance included about $9 million of business interruption insurance recovery, $4 million of which was recognized in the second quarter. Our original guidance assumed that recovery is a separate component of operating income. In our revised guidance issued today, we have moved that nine million recovery to non-operating income, which we believe is a better presentation and more clearly illustrates the strength of our core operating performance in the quarter.
In the medium and long term.
Yeah, I would say can very consistent with with what I had mentioned. Uh in my prepared remarks last quarter that the mix shift between kamo e and aftermarket, uh, you know, we'll clearly go in the, you know, in the direction where a kamo is increasing pretty pretty significantly. You know, we had a very nice
Great. Okay. Thank you and then last question sorry to be a peg, but as the GTS program a material part of your commercial aftermarket mix, yet and then can you give us rich any sense for how quickly GTS aftermarket revenues have been growing in the last couple of quarters.
Now, let's do Jose Hey.
Hey, Scott, it's Alex So I think the second part of your question first we're seeing pretty strong growth rates in the aftermarket and repair and overhaul.
For that program for the DTF.
Uh print on the comma, we side here in the quarter but uh you know that's going to go up call at 10 percentage uh when you look at 23 and then sustaining at that level and then with commercial aftermarket, uh similarly uh, that comp is going to be very difficult. If you look back to our Q4, at least the the highest level of commercial aftermarket that we've ever shipped. And so we face that uh still good levels, I would say we're not saying that it's going to decline. Uh but a year-over-year basis it'll be a challenging comp.
Year around 15% or so.
Rates accelerate so next year, we're expecting somewhere around.
The 30% growth as we see.
How the projections on the flight hours come together.
Rich Maui: This change does not impact segment income or EPS in any way compared to our original guidance. The remaining $5 million difference reflects earlier than expected payoff of our 2023 term loan and better investment income on our cash. For the full year, as Max noted, we are raising our outlook to a range of $5.50 to $5.80. And from an earnings cadence perspective, the second half will be weighted more towards Q3 consistent with typical seasonality. Outstanding quarter. Teams continue to be energized and motivated. And if not for some of the events outside our control and keeping us penned in, we would really be flying high.
That said, it's still today, a relatively small part.
Of our aftermarket sales to address the first part of your question.
Um, you know, in the quarter here in Q2, as well, as in q1, we enjoyed some benefits from engineering programs that really fall through nicely. Uh, we don't see that opportunity in the second half. Um, so those are those are some of the elements I would say. So yeah, at 30%, perhaps a little bit on the Lower Side, uh, and perhaps, you know, exhibiting a little bit of, uh, caution on our side.
Less than 5% today.
Commercial aftermarket sales were growing so an important platform for us.
Sounds good thank you.
Thanks Scott.
Thank you and our next question comes from Matt Summerville with D. A Davidson. Please go ahead.
But I don't have to reiterate on a full year basis. It's still 35 to 40% um and we feel comfortable with that construct going forward. In any given quarter, there can always be a couple of items here or there um but but that's the right way to look at the business um in a medium and long term.
Thanks.
Morning.
Can you talk a little bit about the.
Cadence you saw throughout the quarter in PST orders and what Youre seeing in July and it's always appreciate if you can do a little bit of a deeper dive on the business in terms of end market and geographic trends and then I have a follow up thank you.
Right. Okay, thank you. And then last question, sorry to be a pig, but is the GTF program a material part of your commercial aftermarket mix yet? And then can you give us, Rich, any sense for how quickly GTF aftermarket revenues have been growing in the last couple of quarters? Alex, do you want to take that one? Yeah. Hey, Scott, it's Alex. So I think the second part of your question for us, what we're seeing is pretty strong.
Rich Maui: reminds me what Mark Wahlberg said as Detective Terry Hoyts in the thrilling crime drama, The Other Guys. when he screamed, You can't keep me cooped up in here. I'm a peacock. You gotta let me fly.
Strong growth rates in the aftermarket and repair and overhaul.
Yes, Matt this Alex so four four PFT the quarter played out pretty much as expected. We mentioned orders were up four 7% year over year.
Sequentially up a little bit so I think.
Operator: And with that, operator, we are now ready to take our first question. The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you.
Starting at the high level overall, the market continues to be stable somewhat sluggish I think there are some areas of strength and other areas that are soft.
I'll start with the software side.
As expected and as we anticipated coming out of Q1, not really surprised on the chemical market.
Uh, for that program for the DTs. I think that this year around 15% or so uh and those rates accelerate. So next year, we're expecting somewhere around uh, 30% growth. As we see, uh, how the the projections and the flat Hours come together. Uh, that set is still today, a relatively small part after of our aftermarket sales to address, the first part of your question. Uh, less than 5% today. We're at the commercial aftermarket sales but growing. So an important platform for us,
Sounds good. Thank you.
We're out there we're seeing some softness and we included that in our guidance.
Thanks Scott.
Scott Deuschle: Our first question is coming from Scott Deuschle with Deutsche Bank. Please go ahead. Hey, good morning, Rich. I'm still recovering from that one. Good morning. So Max, you grew the backlog at A&E by 29% year over year and 10% sequentially. Obviously, it's just a strong environment broadly that maybe you can go around the horn.
<unk> pushing to the right I think Europe in particular has been the softest.
Thank you. And our next question comes from Matt Somerville with D.A. Davidson. Please go ahead.
With other regions, it's holding in there better.
Customers have as you know lower capex expenditures this year.
It's been relatively stable for us.
And we continue to win some important projects as you heard in my in my remarks, So I think chemical is soft but stable.
Rich Maui: and talk about the areas of the A&E business, maybe even the specific programs that are driving this recent booking strength. Yeah, hey, Scott, I'll take that. It's rich. Look, I would start off by saying that it is fairly broad based across both commercial and military, as well as broad based across customers, right? So not one unique customer set. If I was to, if I was to point out just a couple of areas where we were, where we saw some outsized strength, I would say, air defense, in particular, was fairly strong with some orders that were not necessary.
Morning, Matt. Thanks. Good morning. Um, can you talk a little bit about the cadence you saw throughout the quarter in PFT orders and what you're seeing in July? It's always appreciated. If you can do a little bit of a deeper dive on the business in terms of markets and geographic trends, and then have a follow-up. Thank you.
Bright spots in the market for PST cryogenics.
Is growing at double digits.
You mentioned space launch Biopharma. These acquisitions that we've done over the last couple of years are really growing very strongly water wastewater segment.
We're also seeing that strength.
So that's how we ended up with that but the result on orders I think when we look at the second half we expect something similar stable.
And and.
And we're still going to see some growth in PSC on the low single digit side on core growth sales for the year.
Rich Maui: They were not actually for 2025. They were for 26 and 27, primarily. And I think you're familiar with some of those programs that are in air defense that we have. I would say another area was a long standing program that we have, legacy program in the C4ISR space, communication platform, where we have some power solutions, also a pretty, a pretty sizable order in the quarter. And that also is for 26 and 27. As we as we think about, you know, the backlog. And then if I was to pick another out in the COMOE side, you know, Alex highlighted in his prepared remarks, the successes we had on the C929 program, but we also had some really nice order flow coming in for the C919, if I was to, if I was to pick something out.
Got it and then as a follow up if I think about 2025, and the $5 60 to $5 85.
I wanted to try and derive a cash EPS number rich what would be your acquired intangibles amortization for this year.
Are you thinking any differently about guiding towards cash EPS going forward. Thank you.
Yes sure.
We're going to we're not going to make a final decision until we provide guidance, but that's something that we're seriously considering.
As we've said previously.
It was a two part question.
Cathy sorry, 25, if we were to reach.
We were to look at our 25, guys and economically it's not a material yes.
$7 million split of scrap that we get them. We have we have in that but it's not as you would expect we're modeling that stuff is whereas we're thinking through the details. So we do have it.
Expenditures this year have been relatively stable for us, and we continue to win some important projects. As you heard in my remarks, I think the chemical sector is soft but stable. There are bright spots in the market for PST Cryogenics, which is growing at double digits. I mentioned space launch and biopharma. These acquisitions that we've done over the last couple of years are really growing very strongly. The water and wastewater segments are also seeing that strength.
Scott Deuschle: And again, for 2026 demand satisfaction and forward. So just really, I think, to come back to it, it was broad based, both military and commercial, but hopefully those are some examples that are helpful. Yeah, it's helpful. Thank you, Rich.
We'll make sure we we show that.
And then just one final one quickly can you just give a little bit of insight into the more immediate term action ability in your M&A funnel, which business segment that may be tilted more heavily towards but.
Rich Maui: And then to get to your EBIT guide, I do have to have the A&E margins. drop a lot in the second half, I think down to like a 30% incremental margin, which is below your own kind of longer term framework. I guess what's going to drive that particularly since I think you do make money on OE and you should have volume leverage on the higher sales overall in the second half. Yeah, I would say very consistent with what I had mentioned in my prepared remarks last quarter, that the mixed shift between COMOE and aftermarket, you know, will clearly go in the, you know, in the direction where COMOE is increasing pretty, pretty significantly, you know, we had a very nice print on the COMOE side here in the quarter.
Uh, so that's how we ended up with those results on orders. I think, when we look at the second half, we expect something similar, uh, stable, and we’re still going to see some growth in PST on the low single-digit side on core growth sales for the year.
But still.
It is still balanced Matt across both I would say that there is nothing.
Active immediately there is a number of things in Q. There are some things that we know are coming across.
Expected to come up for market some others that we've been working long term as we've described in the past we have a rich robust funnel of opportunities both what we track within conglomerates that make strategic decisions private equity thats coming out.
Got it. And then as a follow-up, if I think about, you know, 2025 in the 550 to 580 range, if I wanted to try and derive a cash EPS number, Rich, what would be your acquired intangibles amortization for this year? And are you thinking any differently about guiding towards cash EPS going forward? Thank you.
Yeah, we're sure. I mean we're gonna We're not gonna make a final decision until we provide guidance, but that's something that we're seriously considering.
Companies that are family run that we established great relationships with over the long term.
um, as we as we've said previously,
Rich Maui: But, you know, that's going to go up, call it 10%, when you look at 2.3, and then sustaining at that level. And then with commercial aftermarket, similarly, that comp is going to be very difficult. If you look back to our Q4, it was the highest level of commercial aftermarket that we've ever shipped. And so we face that still good levels, I would say we're not saying that it's going to decline. But a year over year basis, it'll be a challenging comp. You know, in the quarter here in Q2, as well as in Q1, we enjoyed some benefits from engineering programs that really fall through nicely.
The funnel is very very full on both PFT and 80 balanced.
What's in front of us is balanced nothing imminent within the next quarter for sure.
Hopefully that helps.
Understood. Thank you.
Susan.
Thank you and our next question comes from Jordan Leone with Bank of America. Please go ahead.
It was a 2-part question that you Cathy sorry for 25. If we were to reach, if we were to look at our 25 guide, if it's not a, it's not a material. Yeah. It's about 7 million. Yeah. Let us let us grab that for you. We have it not, but it's not as you'd expect we're modeling that stuff as we're as we're thinking through the details. Uh, so we do have it. Uh, we'll, we'll make sure we uh, we share that.
On Jordan, Hey, good morning.
Morning, So on the Big beautiful Bill and the R&D tax changes that have come through how are you guys thinking about the impact there.
Then just 11, 1, final 1 quickly. Can you just give a little bit of insight into the more immediate term?
Scott Deuschle: We don't see that opportunity in the second half. So those are some of the elements, I would say. So, yeah, at 30%, perhaps a little bit on the lower side, and perhaps, you know, exhibiting a little bit of caution on our side. But I'd also reiterate on a full year basis, it's still 35 to 40%. And we feel comfortable with that going forward. In any given quarter, there can always be a couple of items here or there. But that's the right way to look at the business in the medium and long term. Great. Okay. Thank you.
Yeah, well, we're still studying and as you might imagine.
Looking at.
The R&D capitalization as well as accelerated depreciation for Capex. So things that were still modeling we would expect a modest improvement in free cash flow this year and next year, but nothing overly significant.
Difficult, but it's it'll be a nice.
Modest improvement, let's say less than 5% of our total free cash flow.
Got it Okay, and then on the truck.
Could you guys just talk through a little bit on why.
Alex Alcala: And then last question, sorry to be a pig, but is the GTF program a material part of your commercial aftermarket mix yet? And then can you give us, Rich, any sense for how quickly GTF aftermarket revenues have been growing in the last couple of quarters?
Youre confident in the value you guys are going to be able to add what should it look like.
Actionability in your m&a funnel Which business segments that may be tilted more heavily towards like, let's go. Yeah, uh, it's still balanced, Matt across both, I would say that. There's nothing, uh, uh, I think the active immediately. Uh, there's a number of things in queue. There's some things that we know are coming across the, um, expected to come up from Market. Some others that we've been working long term as as we've described in the past, we have a rich robust funnel of opportunities. Both, uh, what we track within conglomerates that make strategic decisions private Equity that's coming out. Uh, private companies that are family runs that we established great relationships with over the long term. Uh, the funnel is very, very full on both PFT and A&E balanced. Uh, what's in front of
What does that do going forward.
Alex sure, Yes, so I mean, we love these businesses Jordan, we love the technology.
This is balanced nothing, uh, imminent within the next quarter, uh, for sure.
Hopefully, that helps.
Alex Alcala: Alex, do you want to take over? Yeah. Hey, Scott, it's Alex. So I think the second part of your question, first, we're seeing pretty strong growth rates in the aftermarket and return overhaul for that program for the DTF, I think this year around 15% or so, and those rates accelerate. So next year, we're expecting somewhere around 30% growth as we see how the projections and the flight hours come together. That said, it's still today, a relatively small part of our aftermarket sales. So that's the first part of your question. Less than 5% today of our commercial aftermarket sales.
Understood, thank you.
Robust aftermarket it has.
We love the improvements that the team has driven especially over the last few years with recent management.
Thank you. And our next question comes from Jordan Leon with Bank of America. Please go ahead.
That they implemented so at a high level of these businesses have.
All the fundamentals.
Characteristics could be really one of the best businesses in Crane.
I'm Jordan. Hey, good morning. Good morning. So on the big, beautiful bill in the R&D tax changes that have come through, how are you guys thinking about the impact?
As we as we execute our integration plan over the next five years and deliver that 10% ROIC.
So we have.
A bit of a different vision of how we are we will operate those businesses.
Versus Baker.
And.
For those of you that attended our Investor meeting in for a while and beach, we heard a little bit about our playbook and driving the Cvs machine.
Alex Alcala: We're growing. So an important platform for us.
Scott Deuschle: Sounds good. Thank you. Thanks, Scott. Thank you.
Yeah. Well we're still studying and as you might imagine uh, you know, looking at uh you know uh the R&D capitalization as well as accelerated depreciation for capex. So things that we're still modeling, we would expect a modest Improvement in free cash flow uh, this year and next year, but nothing overly significant nice. Uh, modest Improvement, I would say less than 5% of our total free cash flow.
Can tell you that we have.
Matt Summerville: And our next question comes from Matt Summerville with DA Davidson. Please go ahead. Morning, Matt. Thanks. Morning.
Very clear line of sight on how we're achieve that and potentially some upside.
Got it. Okay. And then on the drug uh, could you guys just talk through a little bit on why?
And we'll share more after closing and educate on our roadmap and a path to do that but.
Matt Summerville: Can you talk a little bit about the cadence you saw throughout the quarter in PFT orders and what you're seeing in July?
You're confident in the value, you guys are going to be able to add. What should it look like uh and what does that do going forward?
Very confident and very excited that these businesses are going to be one of the best businesses in our portfolio.
Alex Alcala: And I'd always appreciate if you can do a little bit of a deeper dive on the business in terms of end market and geographic trends, and then have a follow up. Thank you. Yeah, Matt, this is Alex. So for for PFT, the quarter played out pretty much as expected. We mentioned orders were up 4.7% year over year, sequentially up a little bit. So I think, you know, starting at the high level, overall, the market continues to be stable, somewhat sluggish. I think there's some areas of strength and other areas that are soft. I think I'll start with the softer side.
Got it thank you so much.
Yeah, so, I mean, we love these businesses, Jordan. We love, uh, the technology, uh, the robust aftermarket it has.
Good.
Thank you and our next question is coming from Damian Karas with UBS. Please go ahead.
Uh, we love the improvements that the team has driven, especially over the last few years with the recent management that that they implemented.
We're good.
Hey, good morning, congratulations on a.
So at a high level these businesses have
Hey, beautiful available the company the big Beautiful Bill out there.
Just a follow up on Tsi.
So I just want to make sure you don't really expecting any synergies per se, but youre just planning on running the business a little bit differently to drive that.
All the fundamentals uh, characteristics to be really 1 of the best businesses in crane. As we as we execute our integration plan over the next 5 years and deliver that 10% Ric. So we have a, a bit of a different vision of how we all we will operate those businesses.
Financial profile uplift.
And Alex I think you made a comment that it didn't make it easier going forward to integrate complementary acquisitions could you just elaborate on what you meant by that.
Alex Alcala: As expected, and as we anticipated coming out of Q1, no really surprised on the chemical market, where we're seeing some softness, and we included that in our guidance. Projects pushing to the right, I think Europe in particular has been the softest, with other regions holding in there better. Customers have, as you know, lowered CapEx expenditures this year. But it's been relatively stable for us. And we continue to win some important projects, as you heard in my, in my remarks. So I think chemical is soft but stable. Bright spots in the market for PFT cryogenics is growing at double digits.
Yes so.
Uh versus Baker. And, uh, if you, for those of you that attended our investor meeting in uh for Long Beach, you heard a little bit about our Playbook and driving the CBS machine? I can tell you that, uh, we have.
I think first of all just the second part of your question. So.
We reorganized.
That and potentially some upside.
The greatest segment.
Similar to what you've seen in the PSD side.
<unk> had a before the split.
You may recall, we have five independent business units.
Reporting to our senior Vice President.
And, uh, we'll share more after closing and educate on a roadmap in our path to do that. But I am very confident and very excited that these businesses are going to be one of the best businesses in our portfolio.
Does that in this case.
Got it. Thank you so much.
Thank you.
So on the A&D side with this change <unk> is now a leader of the segment and two presidents will report.
And our next question is coming from Damen Keras with UBS. Please go ahead.
To him the future president of <unk>.
What is it?
Alex Alcala: I mentioned space launch, biopharma, these acquisitions that we've done over the last couple years are really growing very strongly. Water, wastewater segments, also seeing that strength. So that's how we ended up with that, that result on water. So I think when we look at the second half, we expect something similar, stable. And we're still going to see some growth in PFT on the low single digit side on core growth sales for the year. Got it.
And Jay as replacement, which is Mr. Joseph Mundinger, a long tenured claim.
Hey, good morning, Max. Congratulations on a uh you know, big beautiful deal to a company. The big, beautiful bill out there.
Leader.
This structure allows us to incorporate future standalone businesses under the A&D segment right under day under just how we operate PFT so from that regardless, where we were prepared to do more.
Just a follow-up on PSI. Um, so I just want to make sure you’re not really expecting any synergies per se, but you're just planning on running the business a little bit differently to drive that.
Uh, Financial profile, uplift.
And it positions us to continue to execute on inorganic growth.
I think on the synergy side.
There are some synergies from the aspect of.
And, Alex, I think you made a comment that it's going to make it easier going forward to integrate complementary acquisitions. Could you elaborate on what you meant by that?
Rich Maui: And then as a follow-up, if I think about, you know, 2025 and the 550 to 580, if I wanted to try and derive a cash EPS number, Rich, what would be your acquired intangibles amortization for this year? And are you thinking any differently about guiding towards cash EPS going forward? Thank you. Yeah, we're sure. I mean, we're gonna, we're not gonna make a final decision until we provide guidance, but that's something that we're seriously considering. As we've, as we've said previously.
The drug has a very strong content on aerospace if not necessarily run the traditional aerospace model. So.
With our skill set.
Customer relationships and processes, we're going to see some benefits and synergies on the aerospace side in particular, and then on the execution of the Cvs machine is where we're going to see the majority of the gains with.
Yeah, so on I think on the first of all, just the second part of your question. So we reorganized uh, to create a segment, uh, similar to what you've seen in the PSD side, which is the the role I had before the split uh, you may recall we have 5 Independent Business units and on PSD reporting to a senior vice president. So if you guys are does not in this case,
With these businesses just like we've done.
In the last few acquisition, but your summary is pretty pretty spot on David in the traditional sense of synergies.
It's less about the synergies it's more about the focused.
Rich Maui: That was a two part question. Sorry, for 25. If we were to reach, if we were to look at our 25 guides, it's not a it's not a material. Yeah, it's about 7 million. Yeah, let us let us grab that. We have it, but it's not as you'd expect. We're modeling that stuff as we're as we're thinking through the details. So we do have it. We'll make sure we we share that. Thanks.
Investment.
Commercial excellence.
Execution in each of these businesses and the focus that we're going to drive the leveraging.
Broader synergies in terms of operating models.
If that makes sense.
Uh, so on the any side with this change, J. Higgs is now leader of the segment, and 2 presidents will report to him in the future: the President of Duck and Jay's replacement, which is Mr. Joseph Mundinger, along with the 10-year Crane leader. So this structure allows us to incorporate future standalone businesses under the A&E segment, right on the day under, you know, just how we operate PST. So from that, regardless of what we’re prepared to do more,
Yes understood thanks for clarifying.
Rich Maui: And then just, I'll love in one final one quickly. Can you just give a little bit of insight into the more immediate term actionability in your M&A funnel, which business segment that may be tilted more heavily towards, thanks. Let's go. Yeah, it's still balanced, Matt, across both. I would say that there's nothing active immediately. There's a number of things in queue. There's some things that we know are coming across, expected to come up for market, some others that we've been working long term.
And rich you alluded to earlier on.
And, uh, it positions us to continue to execute on inorganic growth.
<unk> productivity strength that you saw in the second quarter.
I think on the Synergy side, you know, there are some synergies from the aspect of...
Could you maybe give us a little bit more color on kind of how the pricing.
Actions, you've taken it played out and how we should be thinking about that pricing in the second half of the year here.
Yes, I think I would say pricing has played out as we expected and thought we were going to execute back when we issued.
Uh, drug has a very strong content on Aerospace. It's not necessarily run in a traditional Aerospace model. So, with our skill sets and customer relationships and processes, we're going to see some benefits of synergies on the Aerospace side in particular.
Rich Maui: As we've described in the past, we have a rich, robust funnel of opportunities, both what we track within conglomerates that make strategic decisions, private equity that's coming out, private companies that are family run that we establish great relationships with over the long term. The funnel is very, very full on both PFT and A&E, balanced. What's in front of us is balanced. Nothing imminent within the next quarter, for sure. Hopefully that helps. Understood. Thank you.
And our discussion at the end of the first quarter.
<unk>.
So we expect to fully offset that tariff incremental cost with price in the year. So.
A little bit of a headwind here in the quarter, but nothing really to shout out about or call out we pretty much covered.
And then on the execution of the CBS machine, as we're, we're going to see the majority of the games, uh, with these businesses just like we've done, uh, in the last few Acquisitions. But your summary is, that is, is pretty pretty spot on David in, in the traditional sense of synergies. It's it's less about the synergies. It's more about the focused, uh, investment.
At all.
But yes, consistent I would say from here through the balance of the year on price on price costs relative to tariffs.
Commercial excellence.
Execution in each of these businesses and the focus that that we're going to to drive leveraging.
From a margin point of view when you look at.
Broader synergies, in terms of operating models.
Yes.
If that makes sense.
Our typical model is to ensure that we're holding our margin profile.
Jordan Lyonnais: And our next question comes from Jordan Lyonnais with Think of America. Please go ahead. I'm Jordan. Hey, good morning. Good morning. So on the big, beautiful bill and the R&D tax changes that have come through, how are you guys thinking about the impact there? Yeah, well, we're still studying it, as you might imagine, you know, looking at, you know, the R&D capitalization, as well as accelerated depreciation for CapEx.
A little bit of a headwind there that's included in our in our guide and included in those leverage rates here as we closeout as we close out the year.
Okay. So just to clarify you wouldn't expect me to take any additional price because of some of the.
Productivity strength, uh, that you saw in the second quarter, um, could you maybe give us a little bit more color on?
Kind of how the price.
Steel copper other raw materials.
Copper copper really was not material, Alex if you'd add anything.
And and how we should be thinking about the pricing and the second half of the Year here.
Jordan Lyonnais: So things that we're still modeling, we would expect a modest improvement in free cash flow this year and next year, but nothing overly significant, but it's, it'll be a nice, modest improvement, let's say less than 5% of our total free cash flow. Got it. Okay.
We are taking additional price.
Additionally, supply chain tariffs in that regard.
Copper is really less than a million dollars of impact on our total tariff projections, so not really a significant either way and overall, it's all around PST primarily.
Max Mitchell: And then on drug, could you guys just talk through a little bit on why You're confident in the value you guys are going to be able to add? What should it look like? And what does that do going forward? Yeah, so, I mean, we love these businesses, Jordan, we love the technology, the robust aftermarket it has, we love the improvements that the team has driven, especially over the last few years with the recent management that they implemented. So, at a high level, these businesses have all the fundamental characteristics to be really one of the best businesses in Crane as we execute our integration plan over the next five years and deliver that 10% RIC.
Thanks again, good luck guys.
Thanks, Dan.
Thank you.
Our next question is coming from Nathan Jones with Stifel. Please go ahead.
Good morning, everyone.
I guess that was pushed a little bit Bob tsi understanding that youre not.
Yeah, I think, uh, I would say pricing is played out as we expected and thought we were going to execute back when we issued, uh, you know, had our discussion at the end of the first quarter. Um, you know, uh, so we expect to fully offset that that tariff incremental cost with price in the year. So uh, you know, a little bit of a headwind here in the quarter but nothing really to shout out about our call out. We we pretty much covered uh, it all. Um, but uh, yeah, consistent, I would say, from here, through the balance of the year on price on price costs, relative to tariffs
you know, from a margin point of view, when you look at
<unk> been getting on it for five months yet.
It looks like to get to 10% ROI by year, five there's going to be.
Pretty significant margin expansion across those businesses.
Imagine these are non core for Baker, and probably a little bit.
Um you know, our typical model is to ensure that we're holding our margin profile. Um so uh a little bit of a headwind there, that's included in our, in our guide, and included. In those leverage rates here, as we close out as we close out the year.
Last a little bit of attention lots of little bit of investment.
Maybe just any details you can give us on how you plan.
Okay, so just to clarify, you wouldn't expecting me to take any additional price because of some of the uh steel copper or other raw material tariffs.
Max Mitchell: So, we have a bit of a different vision of how we will operate those businesses. versus Baker. And if you, for those of you that attended our investor meeting in Proval Beach, you heard a little bit about our playbook and driving the CBS machine. I can tell you that we have a very clear line of sight on how we're going to achieve that and potentially some upside. And we'll share more after closing and educate on our roadmap and our path to do that. But very confident and very excited that these businesses are going to be one of the best businesses in our portfolio.
To get those margins up to kind of the place you need debate.
That kind of viral assay.
Yes sure Nathan this is how it so.
I think if you compare and contrast, the PFD.
Germany that even upon overseeing our witness from 2017 on and.
Actions. So not really a significant how to write an overall. It's all around PST, primarily
More than 1000 basis points of margin expansion and those fundamentals I think.
Thanks again. Good luck, guys.
Thanks Damon. Thanks Damon.
What we see as a strong resilient aftermarket, which is technology, that's incredibly sticky hard to replace.
Thank you. Our next question is coming from Nathan Jones with Stifel. Please go ahead.
We're Nathan. Good morning, everyone.
We see.
Many opportunities to adjust the model and.
Jordan Lyonnais: Alright, thank you so much. Thanks, Jordan. Thank you.
It'd be more efficient and reduce costs.
Uh I guess I'll I'll push a little bit more on PSI understanding that. You know, you're not even going to own it for 5 months yet. Um,
We are.
In those regards has even more of the trades that we liked and on some of our traditional businesses, where we've achieved very very strong margin improvement.
Damian Karas: And our next question is coming from Damian Karas with UBS. Please go ahead. Hey, good morning, Max.
Damian Karas: Congratulations on a, you know, big, beautiful deal to accompany the big, beautiful bill out there. Just a follow up on PSI. So I just want to make sure you're not really expecting any synergies per se, but you're just planning on running the business a little bit differently to drive that financial profile uplift. And Alex, I think you made a comment that it's going to make it easier going forward to integrate complimentary acquisitions.
So very very confident on that path too.
Significantly improve the margin in the first few years, certainly hitting that 10% of our IC or beating it.
It looks like to get to 10% ROI by year 5, it's going to need to be some pretty significant margin expansion across those businesses. I'd imagine these are, you know, non-calls from Baker, and probably a little bit, um, left a little bit of attention left, a little bit of investment.
I'd say that our model has upside to any of the additional growth that will drive.
Um, maybe just any details. You can give us on on how you plan to get those margins up to kind of the place you need to be to to generate that kind of Roi.
As all upside so we have very clear line of sight to how to increase those margins and then theres other opportunities that can drive upside so level confidence extremely high.
Yeah, sure Nathan. This is Alex. So uh, you know, I think if, if you, um, just to compare and contrast the the PFD
Max Mitchell: Could you just elaborate on what you meant by that? Yeah, so on, I think, first of all, just the second part of your question. So we reorganized to create a segment, similar to what you've seen in the PST side, which is the role I had before the split. You may recall, we have five independent business units on PST reporting to a senior vice president, Shangaza Dasent in this case. So on the A&E side, with this change, Jay Higgs is now leader of the segment, and two presidents will report to him, the future president of JUC, and Jay's replacement, which is Mr. Joseph Mundinger, a long-tenured Crane leader.
Maybe you can comment on what value based pricing.
I mean I'm sure you can do it in terms of.
Gotcha Nathan margin expansion.
I think we'll be more comfortable commenting on.
The full path once we're able to outline our full guidance, which we gave you in January and after the transaction is closed and.
Uh, Journey, that that you've been a part of or seeing, or, or witness from 2017 on and uh, you know, more than a thousand basis points of margin expansion and those fundamentals I think, uh, you know, we're what we see is a strong Brazilian aftermarket with his technology that's incredibly sticky hard to replace. Uh, we see
And so I think we'll wait and providing some additional specificity and details to that.
Uh, many opportunities to adjust the model and, uh, be more efficient and reduce costs.
Fair enough to kind of blame a guy for Jon I guess I'll ask one.
I guess I'll ask one on the iron ore again.
They can be lumpy and you guys did talk about.
So we're, you know, in those regards, has even more of the trades that we like that are some of our traditional businesses where we've achieved very strong margin improvements.
Some of the larger orders in the quarter and that stretch across 26 and 20 Kevin.
so very, very confident on that path to
Do those stay in or are they.
Max Mitchell: So this structure allows us to incorporate future standalone businesses under the A&E segment, right under Jay, under, you know, just how we operate PST. So from that regard, that's why we were prepared to do more, and it positions us to continue to execute on inorganic growth. I think on the synergy side, you know, there are some synergies from the aspect of truck has a very strong content on aerospace. It's not necessarily run in the traditional aerospace model. So with our skill sets and customer relationships and processes, we're going to see some benefits and synergies on the aerospace side in particular.
Large orders that you would then shipped in 2006 and 2007 and how should we think about the potential for sustainability of this kind of level of orders.
So these are.
They are in a phase <unk> theres not its not like we received a $20 million order and it's going to hit in the fourth quarter of next year, It's a phase in but let's think of it as a blanket order Nathan on.
Significantly improve the margins in the in the first uh few years. Certainly hearing that 5 year. 10% r i c or beating uh I would say that our model has upside to any of the additional growth that will drive uh is all upside, right? So we have very clear, line of sight to how it increase those margins. And then there's other opportunities that that can drive upside, so level of confidence is extremely high.
On each of those opportunities that I mentioned.
Yes, I mean I think.
We.
We ship to meet the.
Maybe you can comment on what value based pricing. Uh I mean I'm I'm sure you're not going to do it in terms of uh contrib.
Demand of the customer from a build standpoint right. So it's not all at once we ramp up level load and consistent continuing to ship and then we expect orders to continue to come in until as we continue to grow.
Rich Maui: And then on the execution of the CBS machine is where we're going to see the majority of the gains with these businesses, just like we've done in the last few acquisitions. But your summary is pretty spot on, Damian, in the traditional sense of synergies. It's less about the synergies. It's more about the focused investment. Commercial Excellence, Execution in each of these businesses and the focus that we're going to drive and leveraging broader synergies in terms of operating models. if that makes sense. Yes, understood.
I think we'll be more comfortable commenting on, uh, you know, the full path. Once we're able to outline the full guidance, which we give you in January and after the transaction is closed. Um, and so, I think we'll wait and providing some additional spec specificity and details to that.
Great. Thanks for taking my questions.
Thanks, Dan.
Fair enough. I can't believe we got for drawing. Uh, I guess I'll ask what on the A&A orders then?
Thank you and our next question is coming from Jeff Sprague with vertical research partners. Please go ahead.
On the A&E.
They can be Lumpy.
Hey, Thanks, good morning, all.
Some of the larger orders in the quarter that stretch across 26 and 27.
You're all doing well.
Just back just back on the.
Do those phase in or are they?
Sorry, if I could.
Just wondering if this deal itself do you see it kind of further opening the aperture.
Single large orders that you would then ship in Q2 and Q3, and how should we think about the potential for sustainability of this kind of level of orders? Thanks.
To go further and kind of the sensing related end markets.
The nature of my question is when I look at our metrics in particular right I see.
Damian Karas: Thanks for clarifying.
Rich Maui: And Rich, you alluded to earlier on the price productivity strength that you saw in the second quarter. Could you maybe give us a little bit more color on kind of how the pricing actions you've taken have played out and how we should be thinking about pricing in the second half of the year here? Yeah, I think I would say pricing has played out as we expected and thought we were going to execute back when we issued, you know, had our discussion at the end of the first quarter. You know, so we expect to fully offset that that tariff incremental cost with price in the year.
The ABB is the number so that their neighborhood.
Yeah, so these are it's it's there in a phase in. There's not uh it's not like we received a 20 million order and it's going to hit in the fourth quarter of next year. It's, it's a phase in think of it as a blanket order Nathan, uh, on each of those opportunities that I mentioned.
Just wondering youre kind of degrees of freedom.
In that space in particular.
yeah, I I mean, I think uh, you know we
Or should we view this as more of kind of.
Rifle shot kind of targeted situation as it relates to those.
Thanks.
Jeff.
I would say that the aperture has always been open as we've discussed in the past around sensing and sensing technologies.
We ship to meet the the uh demand of the customer from our build standpoint, right? So it's not all at once. We ramp up level load and continue with the, uh, ship and then we expect, you know, orders to continue to come in and and, and until as we continue to grow
We like the niche position that.
Parametric struck an order stopes holds even against some of the more larger.
Great. Thanks for taking my questions.
Hey, Nathan. Thanks
Competitors there is.
Rich Maui: So, you know, a little bit of a headwind here in the quarter, but nothing really to shout out about our call out, we pretty much covered it all. But yeah, consistent, I would say from here through the balance of the year on price on price costs relative to tariffs. You know, from a margin point of view, when you look at, you know, our typical model is to ensure that we're holding our margin profile. So a little bit of a headwind there that's included in our in our guide, and included in those leverage rates here as we close out as we close out the year.
A wide range of additional sensing solutions that are that are attractive as we as we think about it. This is going to be one of a few spaces that will continue to look at for continuing.
Thank you. And our next question is coming from Jeffrey with Vertical Research Partners. Please go ahead.
Ongoing portfolio.
Transformation as we as.
As we move forward would you add anything else.
I think that this test and measurement space is something that we've always.
Hi Jeff. Hey, thanks. Good morning, all hope you're all doing well. Um, thank you, yeah. Just back, just back on uh, PSI. If I could um, just wondering this deal itself. Do you see it kind of further opening the aperture you know, to go further in kind of these sensing the weighted end markets and and also I can make sure my question is when I look at Panama metrics in particular, right? I see
We're going to try to build on so.
And we'll continue to work in this space.
Alex Alcala: Okay, so just to clarify, you wouldn't expect me to take any additional price because of some of the steel, copper, other raw materials? and Alex. Copper really was not material. Alex, if you had anything. Yeah, I mean, we are taking additional price offset in addition with supply chain tariffs in that regard. Copper is really less than a million dollars of impact on our total tariff projections, so not really a significant headwind overall. It's all around PST primarily. Thanks again. Good luck, guys. Thanks, Damian. Thank you.
Although our adjacencies, both in A&D and PSP.
The other part of your question.
Panama I took this position in this high end of the highest accuracy.
In these products.
So in particular flow.
Distinct position.
Those other competitors you mentioned and also in gas analyzer. So.
Panna metric was really the pioneer of the ultrasonic flaw technology. So they've maintained that top highest accuracy for those most critical applications, though.
They do quite well.
We're pretty confident they'll continue to grow.
Nathan Jones: And our next question is coming from Nathan Jones with CIFL. Please go ahead. Good morning, everyone. I guess I'll push a little bit more on PSI, understanding that, you know, you're not even going to own it for five months yet. It looks like to get to 10% ROI by year five, there's going to be need to be some pretty significant margin expansion across those businesses. I imagine these are, you know, non call for Baker and probably a little bit less a little bit of attention, less a little bit of investment.
Right understood and then.
Alex let a little late but I heard your comments about the PFG.
Some of the projects slippage that's happening in some verticals.
Would you characterize that as simply slippage at this point around kind of uncertainty around tariffs and the like are you starting to see projects get.
Canceled.
Europe chemical in particular being pretty rough right.
Tough news out of Dow chemical last week.
Alex Alcala: Maybe just any details you can give us on how you plan to get those margins up to kind of the place you need to be to generate that kind of ROI thing. Yeah, sure, Nathan, this is Alec. So, you know, I think if you just compare and contrast the PFT journey that you've been a part of or seen or witnessed from 2017 on, and, you know, more than 1,000 basis points of margin expansion and those fundamentals, I think, you know, what we see is a strong, resilient aftermarket. We see technology that's incredibly sticky, hard to replace.
So that vertical market in particular.
Discussed in the past around sensing and sensing Technologies. Um, we like the niche position that uh, the panametric struck and rotor Stokes holds even against some of the uh, more, uh, larger, uh, competitors. There's uh a wide range of of additional sensing solutions that are that are attractive as we uh, as we think about it. Uh, this is going to be 1 of a few spaces that we'll continue to look at for continuing, you know, ongoing portfolio, uh, transformation as we uh, as we move forward. Uh, would you add anything else? Yeah, I mean, I think that this this test and measuring space is something that we've always uh, targeted try to build on. So uh, you know, we'll we'll continue to work in this space and authorizations. These both in A&E and PFT uh to the other part of your question. Uh, panametrics is positioned.
No I mean.
We don't see this big trend of projects being canceled.
And this high-end of the highest accuracy, uh, in these products.
Really things shifting to the right as we expected coming out of Q1.
I think it varies in degrees from region to region, I think you've probably seen in Europe some of the plant closures.
So, in particular flow, you know distinct positions where versus those other competitors you mentioned, and also, yes, analyzer. So.
That occurred in the chemical space It hasn't had a significant headwind for us.
But I think.
Some just pushing to the right.
Uh panametric was really the pioneer of the ultrasonic flow technology. So they've maintained that top highest accuracy for those most critical applications. So uh, they do quite well and uh, you know, we're we're pretty confident to continue to grow.
It's all based on customer demand right and customers waiting to see that inflection in demand of their product which is.
Alex Alcala: We see many opportunities to adjust the model and be more efficient, reduce costs. So, we're, you know, in those regards, has even more of the traits that we liked in our some of our traditional businesses where we've achieved very, very strong margin improvement. So, very, very confident on that path to significantly improve the margins in the in the first few years, certainly hitting that five year 10% RIC or beating, I would say that our model has upside to any of the additional growth that will drive is all upside, right. So we have very clear line of sight to how to increase those margins.
Driven by our key a few key factors in the economy like housing durable goods and so forth. So as customers start seeing some recovery in those markets.
These projects are moving again and that's what we've seen when we've been in this cycle. So.
Bill will inflect back at some point, we're continuing to watch carefully I mean all.
All the announcements coming out, but we still have not seen it.
Right, understood? And then, uh, Alex, I was on a little late but I heard your comments about the PFT and, you know, some of the projects slippage that's happening in in some verticals. Uh, would you would you characterize that as simply slippage at this point around kind of uncertainty around tariffs in the life or are you starting to see projects get cancelled? Yeah, I think of, you know, Europe chemical in particular being pretty rough, right? Um, and tough tough news out of Dow Chemical last week. Uh, so that that vertical Market in particular
So as we look into the back half it feels more of the same.
And then Max on the Ob three or big Beautiful Bill whatever you want to call it.
Alex Alcala: And then there's other opportunities that that can drive upside. So level confidence extremely high.
I think as rich said.
For 2025, we're probably just working through deductibility of Capex, and R&D and figuring out what what applies but when you think about the spill.
Nathan Jones: Maybe you can comment on what value-based pricing, I mean, I'm sure you're not going to do it in terms of contribution margin expansion. I think we'll be more comfortable commenting on, you know, the full path once we're able to outline the full guidance which we give you in January and after the transaction is closed. And so I think we'll wait on providing some additional specificity and details to that. Fair enough. Can't blame a guy for trying.
Uh, no. I mean, uh, but we don't see this big, uh, trend of projects being canceled. It's really things shifting to the right, as we expected coming out of Q1. I think it varies in degrees from region to region. I think, uh, you've probably seen in Europe some of the plant closures.
Going forward.
Do you see is actually impacting.
Capex decisions.
Leading the further investment in the U S.
It's probably early but they haven't gotten any kind of demand signals from customers, but just interested in your opinion on that.
Uh, that that occurred in the in the chemical space. It hasn't had a significant had 1 for us, uh, but I think, uh, you know, some just pushing to the right, uh, it's all based on customer Demand right and customers waiting to see that inflection in demand of their product.
Which is.
Okay.
I'll pull back we're going to continue to study. This is a big beautiful bill, but we've always made the right business decision regardless.
Nathan Jones: I guess I'll ask one on the A&E orders then. They can be lumpy. And you guys did talk about some of the larger orders in the quarter that stretch across 26 and 27. Do those phase in, or are they single large orders that you would then ship in 26 and 27?
Our presence in the U S.
Is very strong.
A number of our sites.
Driven by a key, a few key factors in the economy, like housing durable, goods and so forth. So as customers start seeing some recovery in those markets, uh these these projects are moving again and that's what we've seen and we've been in these Cycles. So
That are growing significantly or all U S.
Our U S based many of our locations are historic weaknesses in some of the LCC countries.
Rich Maui: And how should we think about the potential for sustainability of this kind of level of orders? Thanks. Yeah, so these are it's they're in a phase in there's not, it's not like we received a $20 million order and it's going to hit in the fourth quarter of next year. It's it's a phase in. Think of it as a blanket order, Nathan, on each of those opportunities that I mentioned. Yeah, I mean, I think, you know, we We ship to meet the the demand of the customer from a build standpoint, right? So it's not all at once, we ramp up level load, and continue to continually ship.
As a strength right now for us overall.
Things will will impact back at some point. We'll continue to watch carefully. I mean, uh, you know, all the announcements coming out but uh, we we still have not seen it uh, worsened. So as we look into the back half it feels more of the same.
I don't see any unique decisions at this point in time, specifically driven because of the bill.
We always look at the right capital allocation decisions, regardless that is in the best interest of shareholder value long term.
If there is some benefits in addition, because of some tax policy, we take advantage of that but thats historically, how we've operated.
Great understood. Thanks, a lot for <unk>.
Sure.
Thank you and our next question is coming from Justin Hs with CGS Securities. Please go ahead.
Rich Maui: And then we expect, you know, orders to continue to come in and fill as we continue to grow.
Is there is a Max on the, uh, ob3 or big beautiful bill, whatever you want to call it. Um, you know, I think it's rich said, you know, for 2025, we're probably just working through deductibility of capex and R&D and figuring out what, you know, what applies? But when you think about this bill, uh, going forward, um do you see it actually impacting you know, capex decisions, you know, leading the further investment in the US. Um, sure it's probably early that they have gotten any kind of demand signal from customers but just interested in your opinion on that.
Morning, Justin.
Good morning, all.
Nathan Jones: Great, thanks for taking my question. Congratulations. Thank you.
Question on the <unk> acquisition and maybe this is a bit early but can you give a sense of the opportunity in nuclear I know a lot of investors are keyed in on that so I wanted to get your comments.
Jeff Sprague: And our next question is coming from Jeff Sprague with Vertical Research Partners. Please go ahead. Good morning, Jeff. Hey, thanks. Good morning, all. Hope you're all doing well. Thank you.
You know, there, I'll pull back. We're going to continue to study, this is a big beautiful bill. But, uh, we've always made the right business decision. Regardless um our our presence in the US uh, is very strong.
Um, a number of our sites.
Jeff Sprague: Yeah, just back on PSI, if I could, just wondering, this deal itself, do you see it kind of further opening the aperture, you know, to go further in kind of these sensing-related end markets? And also, I kind of, the nature of my question is, when I look at panometrics in particular, right, I see, you know, the ABBs and Emersons in the near neighborhood, and just wondering your kind of, you know, degrees of freedom in that space in particular, or should we do this as more of kind of a, you know, rifle shot kind of targeted situation as it relates to, you know, those capabilities?
Yes, it does and thanks for the questions. This Alex so.
<unk> has a very strong share position in the boiler water reactor instead.
That are growing significantly are all U.S. Our U.S.-based, many of our locations are historic weaknesses in some of the LCC countries.
Installed nuclear facilities.
So very.
Mature position there over the years.
So the base business is really about replacement and those <unk>.
Secondly, taken advantage of any of the new nuclear plant restarts.
It would be the second growth opportunity.
That are happening and they are well positioned to take advantage of that and then third would be the small module reactor.
We've operated.
Right, understood. Thanks a lot; appreciate it.
Jeff Sprague: Thanks, Jeff. I would say that the aperture has always been open, as we've discussed in the past around sensing and sensing technologies. We like the niche position that the Panametric Strux and Reuter-Stokes holds, even against some of the larger competitors. There's a wide range of additional sensing solutions that are attractive. As we think about it, this is going to be one of a few spaces that we'll continue to look at for continuing, you know, ongoing portfolio transformation as we move forward. Would you add anything else, Alex? Yeah, I mean, I think that this test and measurement space is something that we've always targeted to try to build on.
Thanks Jeff.
I think we're just struck this decision to be a leader in radiation sensing for small modular reactors. They actually have a formal partnership.
Thank you. And our. Next question is coming from Justin Aegis with CGS security is, please go ahead.
One of the leading firms.
Small module reactor. So in all three legs I think they are very well positioned to take advantage of.
Replacement restarts and new technologies that come in and nuclear space.
Homeland security.
Hi Justin, hi morning off. Um, question on the PSI acquisition and maybe this is a bit early, but can you give a sense of the opportunity in nuclear? I know, you know, a lot of investors are keyed in on that. So I wanted to get your your comments.
And then separate than that Max.
<unk>.
Theres, a whole space about radiation sensing monitoring and homeland security Lotus jokes asset position on that.
Yeah, Justin, thanks for the questions. This is Alex. So, you know, Roto Strokes has a very strong share position in the Boiling Water Reactor installed nuclear facility.
So that will be a market that that would be interesting to continuing to explore and grow beyond nuclear power generation as well medical homeland security.
uh, so very, uh,
Segments further technology.
Alex Alcala: So, you know, we'll continue to work in this space and other adjacencies, both in A&E and PFT. To the other part of your question, Panametric is positioned in this high end of the highest accuracy in these products. So, in particular, flow, you know, distinct position versus those other competitors you mentioned, and also gas analyzers. So, Panametric was really the pioneer of the ultrasonic flow technology. So, they've maintained that top highest accuracy for those most critical applications. So, they do quite well. And, you know, we're pretty confident they'll continue to grow. Great, understood.
Great.
Helpful and then shifting to PFT I know you.
<unk> had made some comments about the core segments that you're focused on is there any.
You know, there's a mature position there over the years. So, the base business is really about replacement in those. Then secondly, taking advantage of any of the new nuclear plant restarts, I think, would be the second growth opportunity that are happening, and they're well positioned to take advantage of that.
Signs of brightness and.
And then third would be the small modular reactors.
Those PFT sub segments that are not core like any pockets of strength there that youre seeing.
Yes, so outside of the chemical there is a lot of pockets of strength right. So.
Uh, I think water structures decision to be a leader in radiation sensing for small module reactors. They actually have a formal partnership, uh, with 1 of the leading affirms.
In the cryogenic space.
You May recall, we did a couple of acquisitions prior we're expecting a five plus our organic investments.
We're very strongly positioned in the space launch platforms.
Of small module reactor. So in all 3 legs, I think they're very well positioned to take advantage of replacement restarts and new technologies that come in the nuclear space.
Homeland Security.
Alex Alcala: And then, Alex, I'm a little late, but I heard your comments about PFT and, you know, some of the project slippage that's happening and some verticals. Would you characterize that as simply slippage at this point around kind of uncertainty around tariffs and the like? Are you starting to see projects get canceled? You know, I think of, you know, Europe chemical in particular being pretty rough, right? Tough news out of Dow chemical last week. So that vertical market in particular. No, I mean, we don't see this big trend of projects being canceled. It's really been shifting to the right as we expected coming out of Q1.
Which is growing so that's driven by the increased demand of satellites.
This is a reference point the number of launches.
At occurred.
And.
2012 for Spacex.
Platform.
Julie and then 10 years later in 2020 to 60 this year.
Then, uh, separate from that, uh, maximize the—you know, there’s a whole space about radiation sensing and monitoring in homeland security. Broader strokes as a position on that, uh, so that'll be a market that’ll be interesting to continue and explore and grow beyond, uh, nuclear power generation, as well as medical, homeland security, or other segments for their technology.
More than 160, <unk>, so that's growing significantly in the cryogenic space as well as Biopharma solutions.
So very strong demand there.
On the for our Crane pumps and system business and the wastewater.
We're seeing high single digit growth demand municipalities.
Great. Uh, that's helpful and then shifting to TFT. I know you. Um, have made some comments about the core segments that you're focused on. Is there any, you know, signs of brightness in in the those pfft sub segments that are not core like any pocket to strength there that you're seeing?
Alex Alcala: I think it varies in degrees from region to region. I think you've probably seen in Europe, some of the plant closures that have occurred in the chemical space. It hasn't had a significant headwind for us. But I think, you know, some just pushing to the right, it's all based on customer demand, right? And customers waiting to see that inflection in demand of their product, which is driven by a few key factors in the economy, like housing, durable goods, and so forth. So as customers start seeing some recovery in those markets, these projects are moving again.
Look to become more efficient and attacking critical problems cost of operation.
Middle East.
From a regional standpoint, Saudi Arabia, where we have a presence there in our facility.
They continue to invest.
Both on the profit side and also just in the building services side with our building services business.
Water utilities.
Clean water as well with our Viking Johnson brand. So there's a lot of bright spots that.
Yeah. So outside of chemical there's a lot of pockets of strength, right? So uh in the cryogenic space, it was a you know, we as you may recall, we did a couple of Acquisitions prior Works thickness, 5 plus our organic Investments. So we're we're very strongly positioned in the space launch platforms, uh, which is growing, so that's driven by The increased demand of satellites.
Make overall PST strong and as you know those portions of those.
Markets have become a bigger part of the overall portfolio over the last seven years that we repositioned PST. So definitely a lot of good areas of growth.
Alex Alcala: And that's what we've seen when we've been in these cycles. So things will impact back at some point. We'll continue to watch carefully. I mean, you know, all the announcements coming out, but we still have not seen it worsen. So as we look in the back half, it feels more of the same.
I appreciate the thorough answer thank you for taking my question.
So, as a, this is a reference point, the number of launches that, uh, are current, uh, in in, uh, 2012 for SpaceX, uh, platform, uh, or 2 and then, uh, 10 years later in 2022, 60 this year. I think it's, uh, more than 160. So that's growing significantly in the cryogenic space as well as biofarma Solutions.
Thanks, Joe system.
Thank you and our next question is coming from Tony Bancroft with Gabelli. Please go ahead.
Max Mitchell: And then, Max, on the OB3, or Big Beautiful Bill, whatever you want to call it, you know, I think, as Rich said, you know, for 2025, we're probably just working through the adaptability of CapEx and R&D and figuring out what, you know, what applies. But when you think about this bill, going forward, do you see it actually impacting, you know, CapEx decisions, you know, leading to further investment in the US? I'm sure it's probably early that they haven't gotten any kind of demand signal from customers, but just interested in your opinion on that. You know, I'll pull back, we're going to continue to study the big, beautiful bill.
Good morning, Andy Good morning, well done on the quarter I know you've talked about this in your.
In your comments, but just.
Uh, so very, very strong demand there, uh, on the uh, for our claim pumps and system business in the Wastewater. Uh, we're seeing High single digit growth, demand municipalities, uh you know, look to become more efficient attacking critical problems cost of operation. Uh,
Just any any.
You see a pretty big deal closed today with our bakery or not closed Jimmy was announced today with Baker Hughes in chart.
Any.
Potential for acceleration.
Tsi closing or any changes with I know you said, it's going to expected to January but just maybe.
Any color with that since you are sort of connected there I guess in that sense.
Yes, Tony this is rich no change in timeline.
Still feel like end of the year <unk>.
December 31 January one is the way to think about.
Middle East from a regional standpoint, Saudi Arabia where uh, we have a presence there and a facility. Uh, they continue to invest, uh, both in the, uh, process side and also, just in the Building Services side, with the Building Services business, uh, water utilities, uh, clean water, as well, with a viking Johnson brand. So there's a lot of bright spots that uh, make overall PST strong. And as you know, those, Those portions of those.
Max Mitchell: But we've always made the right business decision regardless. Our presence in the US is very strong. A number of our sites that are growing significantly are all US-based, many of our locations. Our historic weaknesses in some of the LCC countries is a strength right now for us overall. I don't see any unique decisions at this point in time specifically driven because of the bill. We always look at the right capital allocation decisions regardless, that is in the best shareholder value long-term and if there's some benefits in addition because of some tax policy, we take advantage of that, but that's historically how we've operated.
To think about the clothes and tracking nicely as Alex said from an integration perspective.
Okay.
Blended year, okay, great. Thanks, so much.
Markets have become a bigger part of the overall portfolio over the last 7 years, that we reposition PFT. So definitely a lot of a good areas in growth.
Thanks, Tom Thanks, Tony.
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.
I appreciate the thorough answer. Thank you for taking the question.
Thank you all for joining us today, another solid quarter at Crane as we continue to strategically cook up some exciting opportunities for the future with the latest <unk> acquisition and more to come.
Thank you. And our next question is coming from Tony Vancraft with the Belly Funds. Please go ahead.
Good morning.
As the late Great celebrity chef and food Network Star Anne Burrell said regarding the cooking process taste as you go when you taste of food throughout the cooking process you can make adjustments as you go.
Strategy deployment and execution is sampled often at crane to ensure we're adding the right ingredients to delivering the best product for shareholder returns.
Any, you know, obviously a pretty big deal close today with Baker or not closed. Excuse me, was announced today with Baker Hughes and chart and any
Justin Ages: Great. I'm going to say thanks a lot. Appreciate it. Thanks, Jeff. Thank you.
Justin Ages: And our next question is coming from Justin Ages with CGS Securities. Please go ahead. Good morning, all.
<unk> acquisition adds a dash of spiced to kick up performance for the long term.
Potential for acceleration of the PSI closing or any changes with that. I know you said it's expected in January, but just maybe, uh, any color with that since you're sort of connected there, I guess, in that sense.
New savory dishes being added regularly.
Justin Ages: Question on the PSI acquisition, and maybe this is a bit early, but can you give a sense of the opportunity in nuclear? I know, you know, a lot of investors are keyed in on that. So I wanted to get your your comments. Yeah, Justin, thanks for the question. This is Alex. So, you know, Rotostoke has a very strong share position in the boiling water reactor installed nuclear facilities. So very you know, mature position there over the years. So the base business is really about replacement in those. Then secondly, taking advantage of any of the new nuclear plant restarts, I think would be the second growth opportunity that are happening and they're well positioned to take advantage of that.
Thank you all for your interest in Crane, and your time and attention. This morning have a great day.
Thank you. This concludes today's Crane company second quarter 2025 earnings Conference call. Please disconnect. Your line at this time.
Yeah. Tony. No, no, this is Red Snow change in Timeline. Uh, we still feel like end of the year, you know, December, 31st January 1st is the way to think about, uh, uh, to think about the clothes and tracking nicely, as Alex said, from an integration perspective in our Cadence, uh, but still still end of the year.
Okay. Great, thanks so much. Well done.
Thanks Tony.
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.
Thank you all for joining us today. Another solid quarter at Crane, and we continue to strategically cook up some exciting opportunities for the future with the latest PSI acquisition and more to come.
As the late great celebrity chef and Food Network star, Burrell said regarding the cooking process: "Taste as you go." When you taste the food throughout the cooking process, you can make adjustments as you go.
Alex Alcala: And then third would be the small module reactor. I think RotoStruxure is positioned to be a leader in radiation sensing for small module reactors. They actually have a formal partnership with one of the leading firms in. Small Module Reactor. So in all three legs, I think they're very well positioned to take advantage of replacement, restart, and new technologies that come in the nuclear space.
Strategy, deployment, and execution is sampled often at crane to ensure we're adding the right ingredients and delivering the best product for shareholder Returns. The PSI acquisition adds a dash of spice to kick up performance to the long term.
New Savory dishes being added regularly.
Thank you all for your interest in Crane and your time and attention this morning. Have a great day.
Thank you. This concludes today's Korean company, second quarter, 2025 earnings conference call. Please just check your line at this time and have a wonderful day.
Alex Alcala: Homeland Security. Then separate than that, Max reminds me, you know, there's a there's a whole space about radiation sensing, monitoring, and homeland security. Rotorstrokes has a position on that. So that'll be a market that will be interesting to continue to explore and grow beyond nuclear power generation as well. Medical, homeland security are the segments for their technology.
Justin Ages: Great, that's helpful.
Alex Alcala: And then shifting to PFT, I know you have made some comments about the core segments that you're focused on. Is there any, you know, signs of brightness in those PFT subsegments that are not core, like any pockets of strength there that you're seeing? Yeah, so outside of chemical, there's a lot of pockets of strength, right? So, in the cryogenic space, you know, we, as you may recall, we did a couple of acquisitions, CryoWorks, TechnoFab, plus our organic investments. So we're, we're very strongly positioned in the space launch platforms, which is growing. So that's driven by the increased demand of satellites.
Alex Alcala: So this is a reference point, the number of launches that occurred in 2012 for SpaceX platform two. And then 10 years later in 2022, 60. This year, I think it's more than 160. So that's growing significantly in the cryogenic space as well as biopharma solution. So very, very strong demand there on the, for our crane pumps and system business in the wastewater, we're seeing high single-digit growth, demand municipalities, you know, look to become more efficient, attacking critical problems, cost of operation, Middle East, from a regional standpoint, Saudi Arabia, where we have a presence there in a facility, they continue to invest.
Justin Ages: Both in the profit side and also just in the building services side with our building services business, water utilities, clean water as well, with our Viking Johnson brand. So there's a lot of bright spots that make overall PST strong. And as you know, those, those portions of those. markets have become a bigger part of the overall portfolio over the last seven years that we repositioned PFT. So definitely a lot of good areas in growth. I appreciate the thorough answer. Thank you for taking the question. Thank you all.
Tony Bancroft: Thank you. And our next question is coming from Tony Bancroft with Gabelli Funds. Please go ahead. Well, good morning. Hey, team. Good morning.
Rich Maui: Well, well done on the quarter. I know you talked about this in your comments, but just any, you know, obviously a pretty big deal closed today with Baker, or not closed, excuse me, it was announced today with Baker Hughes and any potential for acceleration of the PSI closing or any changes with that. I know you said it's going to expect it in January, but just maybe any color with that since you're sort of connected there, I guess, in that sense. Yeah, Tony, no, no, this is rich, no change in timeline. We still feel like end of the year, you know, December 31, January 1 is the way to think about to think about the close and tracking nicely, as Alex said, from an integration perspective in our cadence, but still still end of year.
Rich Maui: Okay, great. Thanks so much. Thanks. Thanks, Tony. Thank you.
Operator: This concludes the Q&A portion of today's call.
Max Mitchell: I would now like to turn the floor over to Max Mitchell for closing remarks. Thank you all for joining us today. Another solid quarter at Crane and we continue to strategically cook up some exciting opportunities for the future with the latest PSI acquisition and more to come. As the late great celebrity chef and Food Network star Anne Burrell said regarding the cooking process, taste as you go. When you taste the food throughout the cooking process, you can make adjustments as you go. Strategy deployment and execution is sampled often at Crane to ensure we're adding the right ingredients and delivering the best product for shareholder returns.
Max Mitchell: The PSI acquisition adds a dash of spice to kick up performance for the longterm. New savory dishes being added regularly.
Max Mitchell: Thank you all for your interest in Crane and your time and attention this morning. Have a great day. Thank you.
Operator: This concludes today's Crane Company second quarter 2025 earnings conference call.
Operator: Please disconnect your line at this time.