Crane Q4 2025 Crane Co Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Crane Co Earnings Call
Speaker #1: Company's live presentation, both of which are available on our website at www.craneco.com in the Investor Relations section. Now, let me turn the call over to Max.
Allison Poliniak: Company slide presentation, both of which are available on our website at www.craneco.com in the Investor Relations section. Now, let me turn the call over to Max.
Allison Poliniak: Company slide presentation, both of which are available on our website at www.craneco.com in the Investor Relations section. Now, let me turn the call over to Max.
Speaker #2: Thank you, Allison. Thanks, everyone, for joining the call today. While we've got many exciting things to discuss today as we exit the fourth quarter, and we're already off to a fantastic start for 2026, our performance last year and our initial guidance for 2026 show that we are consistently and reliably delivering on our commitments and our long-term value creation thesis.
Max Mitchell: Thank you, Allison. Thanks, everyone, for joining the call today. Wow, we've got many exciting things to discuss today as we exit Q4, and we're already off to a fantastic start for 2026. Our performance last year and our initial guidance for 2026 show that we are consistently and reliably delivering on our commitments and our long-term value creation thesis: 4% to 6% core sales growth, and we were just at the high end of that last year. 35% to 40% core operating leverage and upside from capital deployment. That's just the baseline. We're always working to overdeliver. All aspects of this thesis have continued to play out as expected and will continue. For the quarter, once again, we exceeded even our high expectations, underscoring the strength of our team's strategy, excellence in execution, and a relentless commitment to delivering shareholder value.
Max Mitchell: Thank you, Allison. Thanks, everyone, for joining the call today. Wow, we've got many exciting things to discuss today as we exit Q4, and we're already off to a fantastic start for 2026. Our performance last year and our initial guidance for 2026 show that we are consistently and reliably delivering on our commitments and our long-term value creation thesis: 4% to 6% core sales growth, and we were just at the high end of that last year. 35% to 40% core operating leverage and upside from capital deployment. That's just the baseline. We're always working to overdeliver. All aspects of this thesis have continued to play out as expected and will continue.
Speaker #2: 4% to 6% core sales growth, and we were just at the high end of that last year. 35% to upside from capital deployment. And that's just the baseline.
Speaker #2: We're always working to overdeliver all aspects of this thesis have continued to play out as expected and will continue. For the quarter, once again, we exceeded even our high expectations underscoring the strength of our teams' strategy, excellence in execution, and a relentless commitment to delivering shareholder value.
For the quarter, once again, we exceeded even our high expectations, underscoring the strength of our team's strategy, excellence in execution, and a relentless commitment to delivering shareholder value. Adjusted EPS of $1.53 was up 21% over the prior year, driven by an impressive 5.4% core sales growth, reflecting broad-based strength in aerospace and advanced technologies and continued strong execution of process flow technologies. For the full year, adjusted EPS increased by 24%, driven by our outstanding teams delivering on customer expectations enabled by our sustained investments in advanced technologies and innovative solutions.
Max Mitchell: Adjusted EPS of $1.53 was up 21% over the prior year, driven by an impressive 5.4% core sales growth, reflecting broad-based strength in aerospace and advanced technologies and continued strong execution of process flow technologies. For the full year, adjusted EPS increased by 24%, driven by our outstanding teams delivering on customer expectations enabled by our sustained investments in advanced technologies and innovative solutions. In 2025, we also continued building on our strong track record of enhancing and shaping our portfolio by adding technologies and capabilities inorganically that will drive growth and support both existing and new customers. Having previously announced the signing with Baker Hughes on 9 June 2023, we are excited to formally welcome the Druck, Panametrics, and Reuter-Stokes brands to the Crane portfolio, having closed on the acquisition of these brands on 1 January 2024.
Driven by an impressive 5.4%. Core sales growth reflecting broad-based strength at Aerospace and Advanced Technologies and continued strong execution of process flow Technologies.
In 2025, we also continued building on our strong track record of enhancing and shaping our portfolio by adding technologies and capabilities inorganically that will drive growth and support both existing and new customers. Having previously announced the signing with Baker Hughes on 9 June 2023, we are excited to formally welcome the Druck, Panametrics, and Reuter-Stokes brands to the Crane portfolio, having closed on the acquisition of these brands on 1 January 2024.
For the full year, the adjusted EPS increased by 24% driven by our outstanding teams, delivering customer expectations, enabled by our sustained investment in Advanced Technologies, and innovative solutions.
In 2025, we also continue building on our strong track record of enhancing and sharing our portfolio by adding Technologies and capabilities into organically that will drive growth and support both existing and new customers.
Having previously announced the signing with Baker Hughes on June 9th last year.
Max Mitchell: As a reminder, Reuter-Stokes doubles the size of our nuclear business, adding industry-leading radiation sensing and detecting technologies for nuclear plant operations as well as for homeland security applications. Nuclear is an exciting market space today, and we see additional applications for the core Reuter-Stokes technology in a number of other high-growth adjacent markets. This business is being integrated into our Crane nuclear business, which Chris Mitchell has successfully run for us over the last six years. Panametrics will operate as a standalone business unit in our Process Flow Technologies segment, reporting directly to SVP Sanjeev Sharma. This business, as advanced ultrasonic flow meters and precision moisture analyzers, is a really incredible portfolio of solutions that enables accurate measurement of liquids and gases across applications such as cryogenic gas storage, LNG transportation, wastewater treatment, chemical, and petrochemical production.
As a reminder, Reuter-Stokes doubles the size of our nuclear business, adding industry-leading radiation sensing and detecting technologies for nuclear plant operations as well as for homeland security applications. Nuclear is an exciting market space today, and we see additional applications for the core Reuter-Stokes technology in a number of other high-growth adjacent markets. This business is being integrated into our Crane nuclear business, which Chris Mitchell has successfully run for us over the last six years. Panametrics will operate as a standalone business unit in our Process Flow Technologies segment, reporting directly to SVP Sanjeev Sharma.
We are excited to formally welcome the Truck, Panametrics, and Reuter-Stokes brands to the Crane portfolio, having closed on the acquisition of these brands on January 1st.
As a reminder, reuter Stokes doubles the size of our nuclear business, adding industry-leading, radiation sensing and detecting Technologies for nuclear plant operations, as well as for Homeland Security applications.
Nuclear is an exciting Market space today and we see additional applications for the core rotor Stokes technology and a number of other high growth adjacent markets. This business is being integrated into our crane nuclear business, which Crystal has successfully run for us over the last 6 years.
This business, as advanced ultrasonic flow meters and precision moisture analyzers, is a really incredible portfolio of solutions that enables accurate measurement of liquids and gases across applications such as cryogenic gas storage, LNG transportation, wastewater treatment, chemical, and petrochemical production.
Panametrics will operate as a standalone business unit in our process flow technology segment reporting directly to SVP Shang Gaza, Don.
Max Mitchell: And lastly, Druck will be maintained as a standalone business unit reporting to SVP Jay Higgs under the newly renamed Aerospace and Advanced Technologies segment. This new name better captures who we are today and our future strategic direction for this segment than the prior Aerospace and Electronics name. Still the same focus on proprietary, highly differentiated technologies with primarily sole-source positions, but continuing to expand our range of technologies and offerings and looking at adjacent end markets where our capabilities are similarly valued. We expect to selectively and carefully widen our aperture in this segment without losing focus on what differentiates us. Specifically, the addition of Druck's complementary product line meaningfully strengthens our pressure sensing capabilities across critical applications, including aircraft engine monitoring and hydraulics, with strong positions in both single aisle and wide-body aircraft platforms, as well as environmental control solutions.
And lastly, Druck will be maintained as a standalone business unit reporting to SVP Jay Higgs under the newly renamed Aerospace and Advanced Technologies segment. This new name better captures who we are today and our future strategic direction for this segment than the prior Aerospace and Electronics name. Still the same focus on proprietary, highly differentiated technologies with primarily sole-source positions, but continuing to expand our range of technologies and offerings and looking at adjacent end markets where our capabilities are similarly valued. We expect to selectively and carefully widen our aperture in this segment without losing focus on what differentiates us.
This business adds advanced ultrasonic flow meters and precision moisture analyzers, which are really incredible. It's a portfolio of solutions that enables accurate measurement of liquids and gases across cryogenic, gas storage, LNG, nutrition, water treatment, chemical, and petrochemical production.
And lastly, Drug will be maintained as a standalone business unit, reporting to SVP J. Higgs, under the newly renamed Aerospace and Advanced Technologies segment.
This new name better captures who we are today and our future strategic direction for this segment and the Pryer Aerospace, and electronics name.
Still the same focus on proprietary. Highly differentiated Technologies with primarily sole source positions But continuing to expand our range of Technologies and offerings and looking at adjacent and markets where our capabilities are similarly valued.
Specifically, the addition of Druck's complementary product line meaningfully strengthens our pressure sensing capabilities across critical applications, including aircraft engine monitoring and hydraulics, with strong positions in both single aisle and wide-body aircraft platforms, as well as environmental control solutions.
We expect a selectively and carefully widen our aperture in this segment without losing focus, on what differentiates us.
Max Mitchell: Druck also expands our presence into ground-based test and calibration equipment for aerospace and certain other end markets, leveraging the same best-in-class pressure sensing technology. In other exciting news, in addition to Druck, Panametrics and Reuter-Stokes business is closing 1 January. At the start of the year, we also closed on the acquisition of Optek-Danulat, headquartered in Essen, Germany. Optek-Danulat is the leader in inline process control optical sensing measurement solutions for biopharma, pharma, and other demanding markets, with annual sales of approximately $40 million. Optek-Danulat is a perfect complement to our growing instrumentation business. My personal thanks to Jürgen Danulat for his trust in Crane as stewards of his legacy moving forward and to the outstanding team at Optek-Danulat. Just really a fantastic addition. The teams have hit the ground running across all businesses. The integration process is well underway, and the machine is fully in motion.
Druck also expands our presence into ground-based test and calibration equipment for aerospace and certain other end markets, leveraging the same best-in-class pressure sensing technology. In other exciting news, in addition to Druck, Panametrics and Reuter-Stokes business is closing 1 January. At the start of the year, we also closed on the acquisition of Optek-Danulat, headquartered in Essen, Germany. Optek-Danulat is the leader in inline process control optical sensing measurement solutions for biopharma, pharma, and other demanding markets, with annual sales of approximately $40 million. Optek-Danulat is a perfect complement to our growing instrumentation business.
Specifically, the addition of drugs complementary product line, meaningfully strengthens, our pressure sensing capabilities across critical applications, including aircraft engine monitoring and hydraulics with strong positions in both single aisle and wide wide body, aircraft platforms as well as environmental control Solutions.
Truck also expands our presence into ground-based tests and calibration equipment for Aerospace and certain other end markets, leveraging the same best-in-class pressure sensing technology.
In other exciting news, in addition to Drunk Panametrics and Router Stokes businesses closing January 1st at the start of the year, we also closed on the acquisition of Optech Daniel, headquartered in Essen, Germany.
Process control Optical sensing measurement solutions for biofarma Pharma, and other demanding markets with those annual sales of approximately 40 million.
My personal thanks to Jürgen Danulat for his trust in Crane as stewards of his legacy moving forward and to the outstanding team at Optek-Danulat. Just really a fantastic addition. The teams have hit the ground running across all businesses. The integration process is well underway, and the machine is fully in motion.
Optek is a perfect complement to our growing instrumentation business. My personal thanks to Jurgen, Daniel at Optek for his trust in Crane as stewards of his legacy moving forward, and to the outstanding team at Optek—just really a fantastic addition.
Max Mitchell: Further M&A activity is robust, and we continue to execute and cultivate accelerated opportunities. We see many opportunities progressing through 2026, but at this time, nothing additional is imminent in Q1. Alex will provide more details on our core businesses as well as the recent acquisition shortly, but let me touch on the planned succession timeline that we announced last night. I want to congratulate Alex for being appointed as Crane's next CEO, effective 27 April 2026, at our next annual shareholder meeting. And at that time, at the request of the board, I will move to serve as executive chairman for a transitionary period expected to be no more than two years. Having partnered with Alex for more than a decade, I can confidently say he is the right leader to accelerate Crane's strong momentum.
Further M&A activity is robust, and we continue to execute and cultivate accelerated opportunities. We see many opportunities progressing through 2026, but at this time, nothing additional is imminent in Q1. Alex will provide more details on our core businesses as well as the recent acquisition shortly, but let me touch on the planned succession timeline that we announced last night. I want to congratulate Alex for being appointed as Crane's next CEO, effective 27 April 2026, at our next annual shareholder meeting. And at that time, at the request of the board, I will move to serve as executive chairman for a transitionary period expected to be no more than two years. Having partnered with Alex for more than a decade, I can confidently say he is the right leader to accelerate Crane's strong momentum.
The teams have hit the ground running at Cross all businesses. The integration process is well underway and the Machine is fully in motion.
Further M&A activity is robust, and we continue to execute and cultivate accelerated opportunities.
We see many opportunities progressing through 2026, but at this time, nothing additional is imminent in Q1.
Alex will provide more details on our core businesses, as well as the recent acquisitions, shortly. But let me touch on the planned succession timeline that we announced last night.
I want to congratulate Alex for being appointed as Crane's next CEO.
Effective April 27, 2026, at our next annual shareholder meeting.
And at that time at the request of the board, I will move to serve as executive chairman for a transitionary period, expected to be no more than 2 years.
Max Mitchell: His deep operational expertise, proven ability to develop and execute complex strategic initiatives, and unwavering commitment to our high-performance culture have been critical in shaping Crane into the market leader it is today, and our proven performance across PFT and AAT. In my new role as executive chairman, I look forward to supporting Alex and the leadership team as we continue driving strategic growth and long-term value creation. Coming off the incredibly strong performance in 2005 and turning to 2026, I remain highly confident in the strength and resilience of Crane's team and portfolio. Moving to 2026 guidance, I'd like to highlight that our guidance for '26 includes a change to our non-GAAP presentation of adjusted EPS, which now excludes non-cash, tax-affected, acquisition-related intangible amortization.
His deep operational expertise, proven ability to develop and execute complex strategic initiatives, and unwavering commitment to our high-performance culture have been critical in shaping Crane into the market leader it is today, and our proven performance across PFT and AAT. In my new role as executive chairman, I look forward to supporting Alex and the leadership team as we continue driving strategic growth and long-term value creation. Coming off the incredibly strong performance in 2005 and turning to 2026, I remain highly confident in the strength and resilience of Crane's team and portfolio. Moving to 2026 guidance, I'd like to highlight that our guidance for '26 includes a change to our non-GAAP presentation of adjusted EPS, which now excludes non-cash, tax-affected, acquisition-related intangible amortization.
Having partnered with Alex, for more than a decade, I can confidently. Say he is the Right leader to accelerate Crane's, strong momentum.
His deep operational expertise, proven ability to develop and execute complex strategy, strategic initiatives, and unwavering commitment to our high performance culture have been critical in shaping crane into the market. Leader, it is today and are proven performance across PFT, and aat
In my new role as Executive Chairman, I look forward to supporting Alex and the leadership team.
As we continue driving strategic growth and long-term value creation.
Coming off the incredibly strong performance in 2005 and turning to 2026. I remain highly confident in the strength and resilience of Crane's, team and portfolio.
Moving to 2026 guidance.
Max Mitchell: Rich will provide more on this during his remarks, but using this new convention for both 2025 and 2026, I'm pleased to announce our initial 2026 adjusted EPS guidance of $6.55 to $6.75, a solid 10% adjusted EPS growth at the midpoint, when excluding the $0.16 benefit of one-time hurricane-related insurance recoveries that we received in 2025, as well as after-tax acquisition-related intangible amortization in both years. Importantly, I'm excited to share that we estimate that the acquisitions will be slightly accretive to 2026 earnings results. As I started with, many exciting developments across the company, and our investment thesis is stronger than ever. Now, let me pass it over to our Chief Operating Officer and incoming Chief Executive Officer, Mr. Alex Alcala, to provide some color on the current environment, segment performance, and recent acquisitions. Alex?
Rich will provide more on this during his remarks, but using this new convention for both 2025 and 2026, I'm pleased to announce our initial 2026 adjusted EPS guidance of $6.55 to $6.75, a solid 10% adjusted EPS growth at the midpoint, when excluding the $0.16 benefit of one-time hurricane-related insurance recoveries that we received in 2025, as well as after-tax acquisition-related intangible amortization in both years. Importantly, I'm excited to share that we estimate that the acquisitions will be slightly accretive to 2026 earnings results. As I started with, many exciting developments across the company, and our investment thesis is stronger than ever. Now, let me pass it over to our Chief Operating Officer and incoming Chief Executive Officer, Mr. Alex Alcala, to provide some color on the current environment, segment performance, and recent acquisitions. Alex?
I'd like to highlight that our guidance for 26, includes a change to our non-gaap presentation of adjusted EPS which now excludes non-cash tax. Affected acquisition related, intangible amortization.
Rich will provide more on this during his remarks.
But using this new convention for both 25 and 26.
I'm pleased to announce our initial 2026 adjusted EPS guidance of $6.55 to $6.75.
A solid 10% adjusted EPS growth at the midpoint when excluding the $0.16 benefit of one-time hurricane-related insurance recoveries that we received in 2025, as well as after-tax acquisition-related intangible amortization in both years.
Importantly, I'm excited to share that we estimate that the acquisitions will be slightly accretive to 2026 earnings results.
as I started with,
Many exciting developments across the company and our investment thesis is stronger than ever.
Alejandro Alcala: Thank you, Max. I'm truly honored to have been appointed the next Chief Executive Officer of Crane. I'm enormously grateful to the board and, in particular, to Max for his trust and support over the years. I'm also thrilled that Max will continue as Executive Chairman, allowing me to keep benefiting from his tremendous experience and leadership. But this is not about me. It's about our leadership team and the 8,500 associates who execute every day, living the Crane culture of incredible intensity, focus, and accountability. I've been fortunate to be part of the Crane journey for the past 13 years. We've transformed our portfolio, substantially improved our margins and our growth profile, and delivered significant shareholder value under Max's leadership.
Alex Alcala: Thank you, Max. I'm truly honored to have been appointed the next Chief Executive Officer of Crane. I'm enormously grateful to the board and, in particular, to Max for his trust and support over the years. I'm also thrilled that Max will continue as Executive Chairman, allowing me to keep benefiting from his tremendous experience and leadership. But this is not about me. It's about our leadership team and the 8,500 associates who execute every day, living the Crane culture of incredible intensity, focus, and accountability. I've been fortunate to be part of the Crane journey for the past 13 years. We've transformed our portfolio, substantially improved our margins and our growth profile, and delivered significant shareholder value under Max's leadership.
Now let me pass it over to our Chief Operating Officer and incoming Chief Executive Officer, Mr. Alex Alcala, to provide some color on the current environment, segment performance, and recent acquisitions. Alex.
Thank you, Max. I'm truly honored to have been appointed the next Chief Executive Officer of Crane.
I'm enormously grateful to the board and in particular to Max for his trust and support over the years,
I'm also thrilled that Max will continue as Executive Chairman.
Allowing me to keep benefiting from this experience and leadership.
But this is not about me; it's about our leadership team and the 8,500 associates who execute every day.
Leaving the crane culture of incredible intensity focused and accountability.
I've been fortunate to be part of the Crane journey for the past 13 years.
Alejandro Alcala: But I can tell you, I've never been more excited about our future and the progress we'll continue to make for our customers, our associates, our communities, and our shareholders. Looking ahead, we will stay true to our journey, driving the Crane business system to deliver strong organic growth while also pursuing our strategy of accelerated inorganic growth. Over the years, I have literally traveled more than a million miles as part of this incredible journey with Crane, and I'm ready for the next million with this extraordinary team. Now, some thoughts on the segments in the quarter as we look to 2026. Let me start with Aerospace and Advanced Technologies. These markets remain very strong. The backlog we've built, along with the new programs and opportunities our Aerospace and Electronics teams have secured, continues to provide us with great visibility into 2026 and beyond.
But I can tell you, I've never been more excited about our future and the progress we'll continue to make for our customers, our associates, our communities, and our shareholders. Looking ahead, we will stay true to our journey, driving the Crane business system to deliver strong organic growth while also pursuing our strategy of accelerated inorganic growth. Over the years, I have literally traveled more than a million miles as part of this incredible journey with Crane, and I'm ready for the next million with this extraordinary team. Now, some thoughts on the segments in the quarter as we look to 2026. Let me start with Aerospace and Advanced Technologies. These markets remain very strong.
And delivered significant shareholder value on their matched leadership.
But I can tell you, I've never been more excited about our future and the progress we will continue to make for our customers, our associates, our communities, and our shareholders.
Looking ahead.
We will stay true to our journey, driving the Crane Business System to deliver strong organic growth, while also pursuing our strategy of accelerated inorganic growth.
Over the years, I've literally traveled more than a million miles as part of this incredible journey with crane.
And I'm ready for the next million with this extraordinary team.
now, some thoughts on the segments in the quarter, as we look to 2026
The backlog we've built, along with the new programs and opportunities our Aerospace and Electronics teams have secured, continues to provide us with great visibility into 2026 and beyond. On the commercial side, things continue to look healthy. Boeing and Airbus continue to ramp up production, and aftermarket demand is still running at elevated levels, although the year-over-year comparisons have become increasingly challenging. On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remains solid, and there's a continued focus on strengthening the broader defense industrial base given the heightened global uncertainty we continue to see.
Let me start with Aerospace and Advanced Technologies these markets remain very strong.
The back book. We've built, along with the new programs and opportunities, our Aerospace and Electronics teams have secured.
Alejandro Alcala: On the commercial side, things continue to look healthy. Boeing and Airbus continue to ramp up production, and aftermarket demand is still running at elevated levels, although the year-over-year comparisons have become increasingly challenging. On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remains solid, and there's a continued focus on strengthening the broader defense industrial base given the heightened global uncertainty we continue to see. Given the level of activity we are seeing for 2026, we expect core sales growth for the year to be up at the high end of our 7% to 9% long-term growth assumption. And importantly, that growth should leverage at about 35% to 40% for the full year, despite the less favorable mix, which is moving back to normal levels.
Continues to provide us with great visibility into 2026 and beyond.
Boeing and Airbus continue to ramp up production and aftermarket demand is still running at an elevated levels.
Although the year-over-year comparisons have become increasingly challenging,
On the defense side, a lot of activity and interesting industry announcements over the past few weeks.
Given the level of activity we are seeing for 2026, we expect core sales growth for the year to be up at the high end of our 7% to 9% long-term growth assumption. And importantly, that growth should leverage at about 35% to 40% for the full year, despite the less favorable mix, which is moving back to normal levels. Our guidance assumes OEE sales will grow double digits year-over-year, partially offset by a decelerating growth rate in commercial aftermarket. We are excited for Druck to join the AAT segment and expect over the next few years that it will be incremental to both the segment's growth and margin profile.
Procurement spending remains solid, and there's a continued focus on strengthening the broader defense industrial base. Given the heightened global uncertainty, we continue to see
Given the level of activity we are seeing for 2026, we expect core sales growth for the year to be up at the high end of our 7% to 9% long-term growth assumption.
And importantly that growth should leverage at about 35 to 40% for the full year, despite the less favorable mix, which is moving back to normal levels.
Alejandro Alcala: Our guidance assumes OEE sales will grow double digits year-over-year, partially offset by a decelerating growth rate in commercial aftermarket. We are excited for Druck to join the AAT segment and expect over the next few years that it will be incremental to both the segment's growth and margin profile. However, while it will be incremental to growth in 2026, we expect Druck to be diluted to overall segment margin in the near term. Overall, we are on track for another outstanding year. And beyond this, we continue to develop new technologies, win new business, and pursue additional opportunities across the segment. That gives us confidence we'll deliver above-market growth for the rest of the decade. A few highlights for the quarter in AAT.
Our guidance assumes OE cells will grow double digits year-over-year partially offset by decelerating growth rate in commercial aftermarket.
However, while it will be incremental to growth in 2026, we expect Druck to be diluted to overall segment margin in the near term. Overall, we are on track for another outstanding year. And beyond this, we continue to develop new technologies, win new business, and pursue additional opportunities across the segment. That gives us confidence we'll deliver above-market growth for the rest of the decade. A few highlights for the quarter in AAT.
We are excited for drug to join the aat segment and expect over the next few years that it will be incremental to both the segments growth and margin profile.
However, while it will be incremental to growth in 2026, we expect the drug to be dilutive to the overall segment margin in the near term.
Overall, we are on track for another outstanding year.
And Beyond this, we continue to develop new technologies, when new business and pursue additional opportunities across the segments.
That gives us confidence will deliver above market growth for the rest of the decade.
Alejandro Alcala: First, in our defense power business, we remain actively engaged and solidly positioned with defense vehicle OEMs collaborating on the Common Tactical Truck and new combat vehicle programs. Second, Crane also continues to win funded next-generation military demonstrator programs for our brake control systems. We will also begin production for the F-16 brake control project in 2026 and receive 2 more follow-on orders, one from the United States Air Force and the other from a foreign military customer. And last, with elevated interest around air defense systems, we're actively tracking and pursuing new high-power AESA radar opportunities. Overall, our Aerospace and Advanced Technologies segment is positioned to significantly outperform its markets over the next decade. We're extremely proud of what this team has accomplished and the momentum they've built. At Process Flow Technologies, we remain well-positioned to outgrow the cycle.
First, in our defense power business, we remain actively engaged and solidly positioned with defense vehicle OEMs collaborating on the Common Tactical Truck and new combat vehicle programs. Second, Crane also continues to win funded next-generation military demonstrator programs for our brake control systems. We will also begin production for the F-16 brake control project in 2026 and receive 2 more follow-on orders, one from the United States Air Force and the other from a foreign military customer. And last, with elevated interest around air defense systems, we're actively tracking and pursuing new high-power AESA radar opportunities.
A few highlights for the quarter in AAT.
First, in our Defense Power business.
We remain actively engaged and solidly positioned with defended vehicle OEMs, collaborating on the Common Tactical Truck and new combat vehicle programs.
Second Crane also continues to win the funded Next Generation military demonstrative programs for brake control systems.
We will also begin production for the F-16 brake control project in 2026 and received two more follow-on orders.
One from the United States Air Force, and the other from a foreign military customer.
And last.
Overall, our Aerospace and Advanced Technologies segment is positioned to significantly outperform its markets over the next decade. We're extremely proud of what this team has accomplished and the momentum they've built. At Process Flow Technologies, we remain well-positioned to outgrow the cycle.
With elevated interest around air defense systems, we're actively tracking and pursuing new high-power AESA radar opportunities.
Overall, our Aerospace and Advanced Technology segment is positioned to significantly outperform its markets over the next decade.
We're extremely proud of what this team has accomplished and the momentum they've built.
Alejandro Alcala: Over the past decade, we have deliberately repositioned our portfolio towards technologies and end markets that are higher growth and where we maintain leading competitive advantages and clear differentiation, positioning us to deliver consistent, sustainable growth ahead of the market. The latest acquisitions enable us to continue that journey. Similar to Q3, we continue to see strength in segments such as pharmaceuticals, cryogenics, power generation, and water, while chemical markets remain subdued at trough levels. Our disciplined approach and sharp focus enable us to maintain leadership in this segment, as evidenced by our Q4 performance, even given today's macro backdrop. A few highlights from PFT in the quarter. Our cryogenics business had another strong Q4, securing orders for a number of space launch customers.
Over the past decade, we have deliberately repositioned our portfolio towards technologies and end markets that are higher growth and where we maintain leading competitive advantages and clear differentiation, positioning us to deliver consistent, sustainable growth ahead of the market. The latest acquisitions enable us to continue that journey. Similar to Q3, we continue to see strength in segments such as pharmaceuticals, cryogenics, power generation, and water, while chemical markets remain subdued at trough levels. Our disciplined approach and sharp focus enable us to maintain leadership in this segment, as evidenced by our Q4 performance, even given today's macro backdrop. A few highlights from PFT in the quarter. Our cryogenics business had another strong Q4, securing orders for a number of space launch customers.
At process flow Technologies, we remain well, positioned to outgrow the cycle.
over the past decade, we have deliberately reposition our portfolio towards Technologies and in markets that are higher growth and where we maintain leading competitive advantages and clear differentiation
Positioning us to deliver consistent, sustainable growth ahead of the market.
And the latest acquisition enables us to continue that journey,
the Q3 we can continue to see strength and segments such as Pharmaceuticals cryogenics.
Our Generation and Water. While chemical markets remain subdued at trust levels.
Our disciplined approach and sharp focus enable us to maintain leadership in this segment, as evidenced by our Q4 performance—even given today's macro backdrop.
A few highlights from PST in the quarter.
Alejandro Alcala: We continue to win and expand our share in this important vertical due to our excellence in engineering solutions, along with our ability to rapidly execute orders. Additionally, we continue to drive solid wins in pharma, securing another large order supporting capacity expansion to manufacture GLP-1 drugs. Our ability to deliver high-performance solutions for a critical pharmaceutical application continues to set us apart in a competitive market and positions us for sustained growth in this segment. And lastly, despite the sluggish chemical industry, our teams continue to secure targeted opportunities within chemicals, securing key new project wins in the Middle East. Looking ahead to 2026 for PFT, given our Q4 orders remain sluggish, we are adopting a cautious view of 2026 demand levels to start the year and expect that core growth to be flat to low single digits for 2026.
We continue to win and expand our share in this important vertical due to our excellence in engineering solutions, along with our ability to rapidly execute orders. Additionally, we continue to drive solid wins in pharma, securing another large order supporting capacity expansion to manufacture GLP-1 drugs. Our ability to deliver high-performance solutions for a critical pharmaceutical application continues to set us apart in a competitive market and positions us for sustained growth in this segment. And lastly, despite the sluggish chemical industry, our teams continue to secure targeted opportunities within chemicals, securing key new project wins in the Middle East.
Our cryogenics business had another strong Q4, securing orders for a number of space launch customers.
We continue to win and expand their share in this important vertical due to our excellence and Engineering Solutions.
Along with our ability to rapidly execute orders.
Facture go1, drugs.
Our ability to deliver high-performance solutions for a critical pharmaceutical application continues to set us apart in a competitive market and positions us for sustained growth in this segment.
Last week.
Looking ahead to 2026 for PFT, given our Q4 orders remain sluggish, we are adopting a cautious view of 2026 demand levels to start the year and expect that core growth to be flat to low single digits for 2026. However, we do expect core leverage to still be within our targeted range of 30% to 35%. With the additions of Panametrics, Reuter-Stokes, and Optek-Danulat joining the PFT family, we fully expect over the next couple of years that there will be incremental to both segment growth and margins. In 2026, while there will be incremental to growth, near-term, we expect them to be dilutive to overall segment margin.
Despite the sluggish chemical industry, our teams continue to secure targeted opportunities within chemicals, securing key new project wins in the Middle East.
Looking ahead to 2026 for PFT.
Given our fourth quarter orders, remains luggage
Alejandro Alcala: However, we do expect core leverage to still be within our targeted range of 30% to 35%. With the additions of Panametrics, Reuter-Stokes, and Optek-Danulat joining the PFT family, we fully expect over the next couple of years that there will be incremental to both segment growth and margins. In 2026, while there will be incremental to growth, near-term, we expect them to be dilutive to overall segment margin. Overall, both businesses are strongly positioned for sustained success, with the resilience and strategic foundation needed to deliver outstanding results in 2026 and beyond. Before I wrap up, I want to provide additional color on the acquisitions of Panametrics, Druck, and Reuter-Stokes. The integration process is off to a strong start, and our outlook for these businesses is already exceeding our initial expectations.
We are adopting a cautious view of 2026 demand levels to start the year and expect that core growth will be flat to low single digits for 2026.
however, we do expect core leverage to still be within our targeted range of 30 to 35%
With the additions of Panametrics, Roto, Stokes, and Optic Dynamo joining the PSD family, we fully expect over the next couple of years that they will be incremental to both segment growth and margins.
Overall, both businesses are strongly positioned for sustained success, with the resilience and strategic foundation needed to deliver outstanding results in 2026 and beyond. Before I wrap up, I want to provide additional color on the acquisitions of Panametrics, Druck, and Reuter-Stokes. The integration process is off to a strong start, and our outlook for these businesses is already exceeding our initial expectations.
In 2026, while there will be incremental growth near-term, we expect them to be diluted to the overall segment margin.
Overall, both businesses are strongly positioned for sustained success.
With the resilience and strategic Foundation needed to deliver outstanding results in 2026 and Beyond.
Before I wrap up.
I want to provide additional color on the acquisitions of Panametrics, Drug, and Murder Stokes.
The integration process is off to a strong start.
Alejandro Alcala: As Max mentioned, we now anticipate these businesses to be slightly accretive to earnings in 2026, compared to our original expectation of no accretion in year one. We have been preparing for the last six months, and I personally spent a significant portion of this month visiting all these teams, and the CBS machine is already being deployed. I'm extremely confident that these businesses will become some of our best-performing and most profitable businesses within Crane in the years ahead. As I think about the levers of focused improvement, the cost synergies will come from three major areas, all driven by CBS: organizational simplification and focus. By operating these businesses as three independent entities, we're eliminating the top management cost layer. Product line simplification or 80/20, reducing complexity and eliminating work with limited return on investment. And traditional productivity improvements, driving efficiency through supply chain and lean tools and processes.
As Max mentioned, we now anticipate these businesses to be slightly accretive to earnings in 2026, compared to our original expectation of no accretion in year one. We have been preparing for the last six months, and I personally spent a significant portion of this month visiting all these teams, and the CBS machine is already being deployed. I'm extremely confident that these businesses will become some of our best-performing and most profitable businesses within Crane in the years ahead.
And our outlook for these businesses is already exceeding our initial expectations.
As Max mentioned, we now anticipate these businesses to be slightly accretive to earnings in 2026.
Compared to the original expectation of no accretion in year one.
We have been preparing for the last 6 months, and I personally spend a significant portion of this month. Visiting all these teams?
And the CBS machine is already being deployed.
As I think about the levers of focused improvement, the cost synergies will come from three major areas, all driven by CBS: organizational simplification and focus. By operating these businesses as three independent entities, we're eliminating the top management cost layer. Product line simplification or 80/20, reducing complexity and eliminating work with limited return on investment. And traditional productivity improvements, driving efficiency through supply chain and lean tools and processes.In addition, all growth synergies are fully incremental upside to our financial model. We have dedicated teams in place and are off to a great start. I'm very confident we will meet or exceed our targets. Now, let me turn the call over to our CFO, Mr. Rich Maue, for more specifics on the quarter.
I'm extremely confident that these businesses will become some of our best-performing and most profitable businesses within Crane in the years ahead.
As I think about the levers of focus improvement, the cost synergies will come from three major areas.
All driven by CBS.
Organizational, simplification and focus.
By operating these businesses, as 3 independent entities were eliminating. The top management cosplayer
Product line simplification, or 80/20—reducing complexity and eliminating work with limited return on investment.
And traditional productivity improvements driving efficiency through supply chain and lean tools and processes.
Alejandro Alcala: In addition, all growth synergies are fully incremental upside to our financial model. We have dedicated teams in place and are off to a great start. I'm very confident we will meet or exceed our targets. Now, let me turn the call over to our CFO, Mr. Rich Maue, for more specifics on the quarter.
In addition, all growth synergies are fully incremental upside to our financial model.
We have dedicated teams in place, and are off to a great start.
I'm very confident, we will meet or exceed our targets.
Richard Maue: Thank you, Alex, and congratulations as well. Hey, I really look forward to having as much fun with you as I've had with Max over the last decade. And Alex, I gave Max this same advice when he became CEO, borrowed from Michael Caine as Charlie Croker in the timeless movie classic, The Italian Job. It's a difficult job, and the only way to get through it is if we all work together as a team. And that means you do everything I say. I'm kidding, of course.
Rich Maue: Thank you, Alex, and congratulations as well. Hey, I really look forward to having as much fun with you as I've had with Max over the last decade. And Alex, I gave Max this same advice when he became CEO, borrowed from Michael Caine as Charlie Croker in the timeless movie classic, The Italian Job. It's a difficult job, and the only way to get through it is if we all work together as a team. And that means you do everything I say. I'm kidding, of course.
Now, let me turn the call over to our CFO, Mr. Rich Maue, for more specifics on the quarter.
Thank you, Alex and congratulations uh as well.
Hey, I I really look forward to having as much fun with you as ever. I had with Max over the last decade.
And Alex, I gave Max this same advice when he became CEO.
Borrowed from Michael Caine, as Charlie Croker in the timeless movie classic, The Italian Job.
it's a difficult job and the only way to get through it is if we all work together as a team,
And that means you do everything I say.
[Company Representative] (Crane Company): I don't remember that.
Alex Alcala: I don't remember that.
Richard Maue: Well, not really. To Max, borrowing Humphrey Bogart's ever-famous line as Rick Blaine in the Academy Award-winning drama Casablanca, we'll always have Paris. Good morning, everyone.
Rich Maue: Well, not really. To Max, borrowing Humphrey Bogart's ever-famous line as Rick Blaine in the Academy Award-winning drama Casablanca, we'll always have Paris. Good morning, everyone.
I'm kidding. Of course, I don't remember that. Not really
and to Max,
Borrowing Humphrey Bogart's ever-famous line as Rick Blaine.
In the academy award-winning drama Casablanca.
[Company Representative] (Crane Company): I'm going to get choked up.
Max Mitchell: I'm going to get choked up.
Will always have Paris.
Richard Maue: Good morning, everyone. Let me start off with total company results. We drove 5.4% core sales growth in the quarter, reflecting the ongoing strength within the Aerospace and Advanced Technologies segment. Adjusted operating profit increased 16%, reflecting the impact of higher productivity and favorable pricing net of inflation. In the quarter, core FX-neutral backlog was up 14% compared to last year. Again, continued strength at Aerospace and Advanced Technologies, and core FX-neutral orders were up 2%. From a balance sheet perspective, with the close of the acquisition of Druck, Panametrics, and Reuter-Stokes, we ended the year with net leverage of 1.1 times, which reflected 102% adjusted free cash conversion in 2025, an outstanding performance by our teams globally. And as Max noted earlier in January, we also closed on the acquisition of Optek-Danulat. That brought our net leverage to 1.4 times, leaving us well-positioned for further M&A.
Rich Maue: Good morning, everyone. Let me start off with total company results. We drove 5.4% core sales growth in the quarter, reflecting the ongoing strength within the Aerospace and Advanced Technologies segment. Adjusted operating profit increased 16%, reflecting the impact of higher productivity and favorable pricing net of inflation. In the quarter, core FX-neutral backlog was up 14% compared to last year. Again, continued strength at Aerospace and Advanced Technologies, and core FX-neutral orders were up 2%. From a balance sheet perspective, with the close of the acquisition of Druck, Panametrics, and Reuter-Stokes, we ended the year with net leverage of 1.1 times, which reflected 102% adjusted free cash conversion in 2025, an outstanding performance by our teams globally.
Good morning, everyone. I'm going to get choked up. Good morning everyone. Let me start off with total company results.
We drove 5.4% core sales growth in the quarter.
Reflecting the ongoing strength within the Aerospace and advanced technology segment.
Adjusted operating profit increased 16%, reflecting the impact of higher productivity and favorable pricing, net of inflation.
From a balance sheet perspective, with the close of the acquisition of Truck Panametrics and Reuter-Stokes, we ended the year with net leverage of 1.1 times.
And as Max noted earlier in January, we also closed on the acquisition of Optek-Danulat. That brought our net leverage to 1.4 times, leaving us well-positioned for further M&A. A few more details on the segments in the quarter. Starting with Aerospace and Advanced Technologies, sales of $272 million increased 15% in the quarter, nearly all of that growth organic. Even with the continued high level of Core Sales Growth, our record backlog of just over $1 billion was up 25% year-over-year and was up slightly sequentially. Core orders were up 8%. Again, no surprises and continued strong demand broadly. Total aftermarket sales increased 1%, with commercial aftermarket sales up 3% and military aftermarket down 3%. OEM sales increased 23% in the quarter, with commercial sales up 27% and military sales up 18%, all in line with our expectations.
Which reflected 102% adjusted free cash conversion in 2025 and outstanding per performance by our teams globally.
and as Max noted earlier, in January, we also closed on the acquisition of optech Daniel at
Richard Maue: A few more details on the segments in the quarter. Starting with Aerospace and Advanced Technologies, sales of $272 million increased 15% in the quarter, nearly all of that growth organic. Even with the continued high level of Core Sales Growth, our record backlog of just over $1 billion was up 25% year-over-year and was up slightly sequentially. Core orders were up 8%. Again, no surprises and continued strong demand broadly. Total aftermarket sales increased 1%, with commercial aftermarket sales up 3% and military aftermarket down 3%. OEM sales increased 23% in the quarter, with commercial sales up 27% and military sales up 18%, all in line with our expectations. Adjusted segment margin of 23.6%, expanding 50 basis points from 23.1% last year, primarily due to strong productivity, higher volumes, and higher price net of inflation.
That brought our net leverage to 1.4 times, leaving us well positioned for further M&A.
A few more details on the segments in the quarter.
Starting with Aerospace and Advanced Technologies sales of 272 million increased 15% in the quarter and nearly all of that growth organic.
And even with the continued high level, of course, sales growth. Our records backlog of just over 1 billion was up, 25% year-over-year and was up slightly consequentially.
Q4 orders were up 8% again. No surprises, and continued strong demand broadly.
Total aftermarket sales increased 1%, with commercial aftermarket sales up 3% and military aftermarket down 3%.
Adjusted segment margin of 23.6%, expanding 50 basis points from 23.1% last year, primarily due to strong productivity, higher volumes, and higher price net of inflation. At Process Flow Technologies, in Q4, we delivered sales of $309 million, flat relative to a year ago, with core sales down 1.5% as we anticipated, offset by a slight benefit from the Technophab acquisition and 1.6 points of favorable FX. Compared to the prior year, core FX-neutral backlog at PFT decreased 7%, and core FX-neutral orders remained soft, down 3%, driven by the weaker chemical end markets, as expected. However, adjusted operating margin of 22% expanded again, and the quarter was 170 basis points higher.
And OEM sales increased 23% in the quarter with commercial sales up, 27% and Military sales up 18%. All in line with our expectations
Adjusted segment. Margin of 23.6% expanding 50 basis points from 23.1%. Last year.
Richard Maue: At Process Flow Technologies, in Q4, we delivered sales of $309 million, flat relative to a year ago, with core sales down 1.5% as we anticipated, offset by a slight benefit from the Technophab acquisition and 1.6 points of favorable FX. Compared to the prior year, core FX-neutral backlog at PFT decreased 7%, and core FX-neutral orders remained soft, down 3%, driven by the weaker chemical end markets, as expected. However, adjusted operating margin of 22% expanded again, and the quarter was 170 basis points higher. Despite the headwinds on the top line, productivity is reading through as well as price. Moving to the non-operational items below the segments, along with some additional 2026 guidance matters. To start, as Max mentioned, beginning in 2026, we are excluding intangible amortization from our non-GAAP presentation of adjusted EPS.
Primarily due to strong productivity, higher volumes, and higher price, net of inflation.
A process flow Technologies.
In Q4 we delivered sales of 309 million, flat relative to a year ago with core sales down 1.5% as we anticipated offset by a slight benefit from the technical acquisition and 1.6 points.
A favorable FX.
Compared to the prior year, core FX neutral backlog at PFT decreased 7%, and core FX neutral orders were also down.
Remained soft down 3%. Driven by the weaker chemical and markets as expected.
Despite the headwinds on the top line, productivity is reading through as well as price. Moving to the non-operational items below the segments, along with some additional 2026 guidance matters. To start, as Max mentioned, beginning in 2026, we are excluding intangible amortization from our non-GAAP presentation of adjusted EPS.
However, adjusted operating margin of 22% expanded again and in the quarter was 170 basis points higher.
Despite the headwinds on the top line, productivity is reading through as well as price.
Moving to the non-operational items below the segments, along with some additional 2026 guidance matters,
Richard Maue: Following the significant increase in intangible amortization related to this month's acquisition activity, we believe that excluding it from adjusted EPS gives investors a better picture of Crane's free cash flow and also enables better comparison to the majority of our peer companies that use the same convention. Reconciliations recasting last year are in the slide presentation accompanying this call. Now, moving on to a few non-operational items. Corporate expense for the full year of 2025 was $87 million, modestly up above our prior view of $85 million due primarily to M&A activity. For 2026, we anticipate corporate expense to be in the range of $80 to 85 million. In Q4, we received $5.2 million of insurance recoveries from the Hurricane Helene flood. We had, at one of our PFT sites, a $0.07 benefit to results in the quarter.
Following the significant increase in intangible amortization related to this month's acquisition activity, we believe that excluding it from adjusted EPS gives investors a better picture of Crane's free cash flow and also enables better comparison to the majority of our peer companies that use the same convention. Reconciliations recasting last year are in the slide presentation accompanying this call. Now, moving on to a few non-operational items. Corporate expense for the full year of 2025 was $87 million, modestly up above our prior view of $85 million due primarily to M&A activity. For 2026, we anticipate corporate expense to be in the range of $80 to 85 million. In Q4, we received $5.2 million of insurance recoveries from the Hurricane Helene flood. We had, at one of our PFT sites, a $0.07 benefit to results in the quarter.
As Max mentioned, beginning in 2026, we are excluding intangible amortization from our non-GAAP presentation of adjusted EPS.
Following the significant increase in anti related to this month's acquisition activity, we believe that excluding it from adjusted, EPS gives investors a better picture of Crane's free, cash flow.
And also enables better comparison to the majority of our peer companies that use the same convention.
Reconciliations recasting last year are in the slide presentation, accompanying this call.
Now, moving on to a few non-operational items, corporate expense for the full year of 2025, was 87 million modestly up above our prior view of 85 million due primarily to m&a activity.
For 2026, we anticipate corporate expense to be in the range of $80 million to $85 million.
In Q4, we received 5.2 million of insurance. Recoveries from the hurricane Helen flood.
Richard Maue: With this final payment, the matter is now fully resolved with our insurers. Remember that our full year 2025 guidance included $9 million of insurance recovery related to Hurricane Helene, with $6.7 million received through Q3. 2.3 million, or about $0.03 of the fourth quarter's insurance recovery, was in our latest October guidance. The actual amount received was $2.9 million, or $0.04 per share, better than we had expected. Also, keep in mind that for the full year, total insurance recoveries benefited adjusted results by $0.16, a benefit that will not repeat in 2026. Given the funding for the acquisitions of Panametrics, Druck, Reuter-Stokes, and Optek-Danulat, we now anticipate full year 2026 interest expense of approximately $58 million. Lastly, we estimate our tax rate for 2026 to approximate 23%, slightly higher than our 2025 rate of 22.9%.
With this final payment, the matter is now fully resolved with our insurers. Remember that our full year 2025 guidance included $9 million of insurance recovery related to Hurricane Helene, with $6.7 million received through Q3. 2.3 million, or about $0.03 of the fourth quarter's insurance recovery, was in our latest October guidance. The actual amount received was $2.9 million, or $0.04 per share, better than we had expected. Also, keep in mind that for the full year, total insurance recoveries benefited adjusted results by $0.16, a benefit that will not repeat in 2026. Given the funding for the acquisitions of Panametrics, Druck, Reuter-Stokes, and Optek-Danulat, we now anticipate full year 2026 interest expense of approximately $58 million. Lastly, we estimate our tax rate for 2026 to approximate 23%, slightly higher than our 2025 rate of 22.9%.
Uh, we had at 1 of our PFT sites or a 7 Cent benefit to results in the quarter.
With this final payment, the matter is now fully resolved with our insurers.
remember that our full year 2025 guidance included 9 million of Insurance Recovery related to Hurricane Helen with 6.7 million received through Q3
So, $2.3 million, or about $0.03 of the fourth quarter's insurance recovery, was in our latest October guidance.
So, the actual amount received was 2.9 Million or 4 cents per share better than we had expected.
Also keep in mind that for the full year, total insurance recoveries benefited adjusted results by $0.16.
A benefit that will not repeat in 2026.
Even with the funding for the acquisitions of Panametrics, Drug, Reuter, Stokes, and Optec, Daniel, we now anticipate full-year 2026 interest expense of approximately $58 million.
And lastly, we estimate our tax rate for 2026 to approximate 23%.
Slightly higher than on 2025 rate of 22.9%.
Richard Maue: Looking at the cadence of quarterly results for the year, we expect Q1 2026 to be seasonally soft this quarter, coming in roughly flat with the first quarter of 2025, lower than historical patterns given acquisition integration and increased interest expense. For the full year earnings split, we expect the first half of 2026 to represent about 45% of full year earnings, with 55% weighted toward the second half. Overall, another outstanding year at Crane planned for 2026. With that, operator, we are now ready to take our first question.
Looking at the cadence of quarterly results for the year, we expect Q1 2026 to be seasonally soft this quarter, coming in roughly flat with the first quarter of 2025, lower than historical patterns given acquisition integration and increased interest expense. For the full year earnings split, we expect the first half of 2026 to represent about 45% of full year earnings, with 55% weighted toward the second half. Overall, another outstanding year at Crane planned for 2026. With that, operator, we are now ready to take our first question.
Looking at the cadence of quarterly results for the year, we expect Q1 2026 to be the seasonally softest quarter, coming in roughly flat with the first quarter of 2025.
A full year earnings.
With 55% weighted towards the second half.
Overall, another outstanding year at Crane planned for 2026.
And with that, operator, we are now ready to take our first question.
Operator: Thank you. 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. Our first question is coming from Scott Deuschle with Deutsche Bank.
Operator: Thank you. 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. Our first question is coming from Scott Deuschle with Deutsche Bank.
Thank you. 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. Thank you. Our first question is coming from Scott Diesel with Deutsche Bank
[Analyst] (Deutsche Bank): Hey, good morning. Max, what are you going to do with all your free time here?
Scott Deuschle: Hey, good morning. Max, what are you going to do with all your free time here?
Alejandro Alcala: Oh, I'm going to remain busy, Scott. Very, very busy. In addition to executive chair, I think you know I've become a very popular Gen X influencer. I have my podcast that started, and my OnlyFans page is going well. It's going to be busy.
Max Mitchell: Oh, I'm going to remain busy, Scott. Very, very busy. In addition to executive chair, I think you know I've become a very popular Gen X influencer. I have my podcast that started, and my OnlyFans page is going well. It's going to be busy.
Hey, good morning, Max. What are you going to do with all your free time here?
oh,
I'm gonna remain busy Scott very, very busy.
in addition to Executive cheer, I think, you know, I've, uh, I've become a very popular Genex influencer
Um, I have my podcast that started, and my OnlyFans page, which is going well.
[Analyst] (Deutsche Bank): Well, I'm looking to hire someone for my team, so if you're interested in the career and full-time research, I'll let you ride the Crane nuts. In all seriousness, Alex, I was wondering if you could speak to the pricing opportunity at Druck in 2026 and 2027. Specifically, I was curious if there are any meaningful LTAs coming up for renewal this year or next, and what type of price increase might be possible there.
Scott Deuschle: Well, I'm looking to hire someone for my team, so if you're interested in the career and full-time research, I'll let you ride the Crane nuts. In all seriousness, Alex, I was wondering if you could speak to the pricing opportunity at Druck in 2026 and 2027. Specifically, I was curious if there are any meaningful LTAs coming up for renewal this year or next, and what type of price increase might be possible there.
It's going to be oh, I'm looking to hire someone for my team. So if you're interested in the career in sales side of research, you know, I'll let you guys the crane notes.
Um, in all seriousness, Alex was wondering if you could speak to the pricing opportunity at drop in 2026 and 2027.
And specifically, I was curious if there are any meaningful ltas coming up for renewal.
Alejandro Alcala: Yeah, thanks, Scott. So just pulling back on all three businesses, right? Druck, Panametrics, Reuter-Stokes. In our financial model, we assume significant opportunity. I've been working with this team for six months, spent most of the months with them. So definitely validate our hypothesis on opportunities, potentially more than we even thought. So feeling very bullish about these acquisitions. All three businesses have significant opportunity to drive the Crane Business System. I talked about the areas on product line simplification, restructuring, how the business model, and just traditional operational excellence. As far as value pricing, as you know, in Crane, we do a good job standing up for our value, our differentiated technology. There's opportunity to do better in all three businesses. In Druck, we would expect to see improvements starting this year, reading more into next year as it takes some time.
Alex Alcala: Yeah, thanks, Scott. So just pulling back on all three businesses, right? Druck, Panametrics, Reuter-Stokes. In our financial model, we assume significant opportunity. I've been working with this team for six months, spent most of the months with them. So definitely validate our hypothesis on opportunities, potentially more than we even thought. So feeling very bullish about these acquisitions. All three businesses have significant opportunity to drive the Crane Business System. I talked about the areas on product line simplification, restructuring, how the business model, and just traditional operational excellence. As far as value pricing, as you know, in Crane, we do a good job standing up for our value, our differentiated technology.
This year or next, and what type of price increase might be possible there?
Yeah, thanks Scott. So just pulling back on all 3 businesses right drug panametrics order Stokes uh in our in our financial model, we assume significant opportunity. Been working with this team for 6 months, spent, uh, most of the months with them. So definitely validate our hypothesis on opportunities. Uh, potentially more than we even thought. So, feeling very bullish about, uh, these Acquisitions, all 3 businesses have
Uh, significant opportunity to drive the crane business system. I talked about, uh, the areas
There's opportunity to do better in all three businesses. In Druck, we would expect to see improvements starting this year, reading more into next year as it takes some time. Just like any aerospace business, there are contracts. Some expire naturally. They need to be renewed, renegotiated. So no real obstacles to achieve our goals in that area, Scott.
Alejandro Alcala: Just like any aerospace business, there are contracts. Some expire naturally. They need to be renewed, renegotiated. So no real obstacles to achieve our goals in that area, Scott.
On, uh, product line simplification restructuring how the business model. Uh, and this traditional operational excellence as far as you know, value pricing as you know in crane we do a good job standing for standing up for a value or differentiated technology. Uh there's opportunity to to do better in all 3 businesses and Drug. We would expect to uh see improvements of starting this year, reading more into uh next year as it takes some time. Uh just like any Aerospace visits there are uh contracts some expire naturally.
That need to be renewed. Renegotiated so everything. Uh,
You know, no no real obstacles to achieve our our goals in that area Scott.
[Analyst] (Deutsche Bank): Okay. Rich, can you clarify what guidance contemplates as it relates to cost takeout at PSI? I think you've spoken about $ high single-digit million corporate cost takeout, and I wanted to clarify if that was in the guide or still on the comp?
Scott Deuschle: Okay. Rich, can you clarify what guidance contemplates as it relates to cost takeout at PSI? I think you've spoken about $ high single-digit million corporate cost takeout, and I wanted to clarify if that was in the guide or still on the comp?
Okay, and Rich. Can you clarify what? Guidance contemplates.
Alejandro Alcala: Yeah, I think no change to what we've previously discussed. There's a few buckets. I think they're the same buckets that Alex mentioned. So the cost element is going to, or productivity element, however you want to categorize it, is clearly going to be one of them. On the commercial side being another, and then leveraging the growth at rates that we would expect to, leveraging our operating cadence. So across all three, and I would say no difference versus what we previously had communicated.
Rich Maue: Yeah, I think no change to what we've previously discussed. There's a few buckets. I think they're the same buckets that Alex mentioned. So the cost element is going to, or productivity element, however you want to categorize it, is clearly going to be one of them. On the commercial side being another, and then leveraging the growth at rates that we would expect to, leveraging our operating cadence. So across all three, and I would say no difference versus what we previously had communicated.
As it relates to cost takeout and the PSI, I think you've spoken about high single digit million corporate cost takeout. And I wanted to clarify, that was in the guide, we're still on the come
Yeah, I think no, no change to what we've previously discussed. I know there's a few buckets—I think they're the same buckets that Alex mentioned. So the cost element is going to, is, or productivity element, however you want to categorize it, is clearly going to be one of them.
Uh, on the commercial side of being another. And then, uh, and then leveraging the growth at rates that we would expect to, leveraging, uh, you know, our operating cadence. So, uh, across all three. And I would say no difference, uh, versus what we previously had communicated.
[Analyst] (Deutsche Bank): All right. I'll leave it there. Thank you.
Scott Deuschle: All right. I'll leave it there. Thank you.
Alejandro Alcala: Thanks, Scott.
Alex Alcala: Thanks, Scott.
All right, I'll leave it there. Thank you.
Operator: Thank you. Our next question is coming from Miles Walton with Wolfe Research. Please go ahead.
Operator: Thank you. Our next question is coming from Miles Walton with Wolfe Research. Please go ahead.
Thanks Scott.
Thank you. And our next question is coming from Miles. Walton with 4 research. Please go ahead.
[Analyst] (Wolfe Research): Hi, good morning, everyone. This is Greg Aurand from Miles. First of all, just want to say congrats to both Max and Alex.
Greg Aurand: Hi, good morning, everyone. This is Greg Aurand from Miles. First of all, just want to say congrats to both Max and Alex.
Alejandro Alcala: Thank you.
Alex Alcala: Thank you.
Hi, good morning, everyone. This is Greg Alderaan from Miles. Uh, first of all, congrats to both Max and Alex.
[Analyst] (Wolfe Research): So first one here, I guess with the renaming of A&E to AA&T, I think you mentioned in your remarks the widening of the aperture of what you would look at there. Can you go into more details, I guess, in terms of what adjacent tech and strategic direction this is actually referring to?
Greg Aurand: So first one here, I guess with the renaming of A&E to AA&T, I think you mentioned in your remarks the widening of the aperture of what you would look at there. Can you go into more details, I guess, in terms of what adjacent tech and strategic direction this is actually referring to?
Thank you. Thank you.
First, one year, I guess with the renaming of A&E to A&T. I think you mentioned in your remarks the widening of the aperture of what you would look at there. Can you go into more details? I guess in terms of what adjacent tech and strategic direction this is actually referring to.
Alejandro Alcala: Yeah, Greg, this is Alex. So just a reminder, our business unit, Aerospace and Electronics, was both business unit name and segment name. So last year, we announced the promotion of Jay Higgs as senior vice president of the segment. And it's really positioning us to do more deals like Druck. So Druck would be a perfect example of the technologies that we would expand in, where it has a foot in traditional aerospace, but also gets us into land-based calibration and even some high-growth industrial applications that are combined with the technology. So I think Druck would be a good reference of what you expect to see in that segment. And the model that we have right now in the structure allows us to keep adding not only bolt-ons, but standalone units to keep building out that segment, similar to what we've done in PFT.
Alex Alcala: Yeah, Greg, this is Alex. So just a reminder, our business unit, Aerospace and Electronics, was both business unit name and segment name. So last year, we announced the promotion of Jay Higgs as senior vice president of the segment. And it's really positioning us to do more deals like Druck. So Druck would be a perfect example of the technologies that we would expand in, where it has a foot in traditional aerospace, but also gets us into land-based calibration and even some high-growth industrial applications that are combined with the technology.
Yeah, Greg, this is Alex. So just a reminder, you know, our business unit Aerospace and electronics for both, uh, business unit name and segment name. So last year, we announced the promotion of, uh, J Higgs.
So I think Druck would be a good reference of what you expect to see in that segment. And the model that we have right now in the structure allows us to keep adding not only bolt-ons, but standalone units to keep building out that segment, similar to what we've done in PFT. You recall that when we changed the name from fluid handling to Process Flow Technologies, we were thinking about expanding our aperture, moving up the technology stack, having more differentiated products.
Alejandro Alcala: You recall that when we changed the name from fluid handling to Process Flow Technologies, we were thinking about expanding our aperture, moving up the technology stack, having more differentiated products. And those have been the acquisitions we've done on that side as well, with the sensing applications and now Optek as well adding to that. And that's what you would expect to see: high technology, differentiated, improving our growth and margin profiles on both sides of the segments. Growing both segments, doubling the size here in the next coming years is our goal. That continues to create shareholder value and also optionality for the future.
And those have been the acquisitions we've done on that side as well, with the sensing applications and now Optek as well adding to that. And that's what you would expect to see: high technology, differentiated, improving our growth and margin profiles on both sides of the segments. Growing both segments, doubling the size here in the next coming years is our goal. That continues to create shareholder value and also optionality for the future.
Uh I think uh, drug would be a good reference of what you expect to see in that segment. And, uh, you know, the model that we have right now in the structure allows us to keep adding not only bolt-ons but Standalone units to keep building out that segment similar to what we've done in PFT. Uh you recall that when we changed the name to from fluid handling to process flow Technologies we were uh thinking about expanding our aperture. Moving up the the uh technology stack having more differentiated products and those have been the Acquisitions. We've done on that side as well with the sensing uh applications and and now uptick as well adding to that. And that's what you would expect to see high technology differentiated improving our growth and margin profiles on both sides of the segments. Uh growing both segments uh double in the size here in the the next coming years is our goal uh that uh continues to create shareholder value and also optionality for the future.
[Analyst] (Wolfe Research): Great. Thanks. And then just quickly on PFT, I know backlog declined sequentially for the second quarter in a row, mostly due to the chem side. Can you just talk about what you're seeing? And I guess, is there a time frame you'd expect that to start turning more specifically to chemicals? And I guess, more broadly, your outlook for end markets in 2026 in PFT? Thank you.
Greg Aurand: Great. Thanks. And then just quickly on PFT, I know backlog declined sequentially for the second quarter in a row, mostly due to the chem side. Can you just talk about what you're seeing? And I guess, is there a time frame you'd expect that to start turning more specifically to chemicals? And I guess, more broadly, your outlook for end markets in 2026 in PFT? Thank you.
Alejandro Alcala: Yeah, Greg. So let me pull back just on PFT because we service various segments, right? So first, commenting on the areas and businesses, markets that grew in 2025 strongly, and we expect to continue in 2026. So wastewater, which is primarily our North America-based businesses, we saw high single-digit growth. We expect strong growth also in 2026. Cryogenics as well, double-digit growth in 2025. That will continue. Pharma, there's global growth that we're seeing also, in particular in North America, some increased investments and reshoring from pharma customers that we expect. Power, again, North America-based power generation, where we've seen momentum in 2025, expect that to move on. So a lot of our segments and verticals of our businesses continue with strong momentum. You did mention chemical, which has been sluggish.
Alex Alcala: Yeah, Greg. So let me pull back just on PFT because we service various segments, right? So first, commenting on the areas and businesses, markets that grew in 2025 strongly, and we expect to continue in 2026. So wastewater, which is primarily our North America-based businesses, we saw high single-digit growth. We expect strong growth also in 2026. Cryogenics as well, double-digit growth in 2025. That will continue. Pharma, there's global growth that we're seeing also, in particular in North America, some increased investments and reshoring from pharma customers that we expect. Power, again, North America-based power generation, where we've seen momentum in 2025, expect that to move on. So a lot of our segments and verticals of our businesses continue with strong momentum. You did mention chemical, which has been sluggish.
Great. Thanks. And then um, just quickly on PFT I know backlog the client sequentially for the second quarter in a row. Um, mostly due to the Ken side. Can you just talk about what you're seeing in? I guess is, is there a time frame? You'd expect that to start turning more specifically to to chemicals? And I guess more broadly, your outlook for end markets in 2026. Thank you.
Yeah, Greg. So, let me pull back just on on PSD because we have, uh, we serve as various segments, right? So first culminating on, uh, the areas and businesses markets that grew in 2025 strongly and we expect to continue in 2026. So Wastewater, which is a primarily North America based. Uh, businesses, we saw High single digit growth. Uh, we expect strong growth. Also in 2026 cryogenics as well, double digit growth in 25 that will continue Pharma. Uh, there's Global uh growth that we're seeing. Also in particular in North America, some increased Investments and reassuring from Pharma customers that we expect power. Uh, again, North America based power generation where we've seen momentum in 25. Expect that to, to move on. So, a lot of our
Alejandro Alcala: Just to pull back also, we expect to see similar to what we saw in 2025, which has been buried by region. You can't lump it all together. So Americas and Middle East, we saw growth year-over-year on orders. In 2025, we expect the sort of modest growth to continue in that area. Our teams are doing an excellent job winning. Again, those two regions have this feedstock energy advantage. So customers see good return on investment on taking action on capacity expansions or increases, brownfields in particular in the Middle East. So those will continue at a moderate pace. On a negative or sluggish, Europe, China, and the rest of Asia-Pac, that's been down. We don't expect those to change.
Just to pull back also, we expect to see similar to what we saw in 2025, which has been buried by region. You can't lump it all together. So Americas and Middle East, we saw growth year-over-year on orders. In 2025, we expect the sort of modest growth to continue in that area. Our teams are doing an excellent job winning. Again, those two regions have this feedstock energy advantage. So customers see good return on investment on taking action on capacity expansions or increases, brownfields in particular in the Middle East. So those will continue at a moderate pace.
Segments and verticals of our businesses continue with with strong momentum. You did mention chemical, which has been sluggish, uh, you know, just to pull back. Also we, we expect to see similar to what we saw in 25, which has been buried by region. Uh, you can't lump it all together. So America's and Middle East, we saw growth year over year on orders in 25. We expect, you know, the sort of modest growth to continue in that area. Our teams are doing an excellent job, winning again, those 2 regions have this, uh, feed stock energy, uh, Advantage. So customers, see, good return on investment on
On a negative or sluggish, Europe, China, and the rest of Asia-Pac, that's been down. We don't expect those to change. So, on a net, our assumption for 2026 is continue to see working through the trough, not deteriorating, stable, but not planning for a strong uptick in the year. But we're ready for it. If it happens, we'll take advantage of it, but not built into our guidance right now.
Alejandro Alcala: So, on a net, our assumption for 2026 is continue to see working through the trough, not deteriorating, stable, but not planning for a strong uptick in the year. But we're ready for it. If it happens, we'll take advantage of it, but not built into our guidance right now.
Taking action on capacity expansions or increases, uh, brownfields in particular in the Middle East. Uh, so those will continue at a, at a moderate Pace, uh, on a negative or sluggish Europe. China, the rest of Asia pack, that's been down, we don't expect those to change. So, on a net, uh, our, our assumption for 2026 is continue to see uh, working through the trough, not deteriorating stable, uh, but not planning for a strong uptick in the year.
Uh, but we're ready for it. If, if it happens uh we'll take advantage of it but not built into your guidance right now.
[Analyst] (Wolfe Research): Great. Thank you.
Greg Aurand: Great. Thank you.
Great. Thank you.
Operator: Thank you. Our next question is coming from Jeff Sprague with Vertical Research.
Operator: Thank you. Our next question is coming from Jeff Sprague with Vertical Research.
Thank you.
Alejandro Alcala: Hey, thanks. Good morning, everyone. Congrats, Max and Alex. Exciting news for both of you.
Jeff Sprague: Hey, thanks. Good morning, everyone. Congrats, Max and Alex. Exciting news for both of you.
Question is coming from Jeffrey with vertical research.
[Analyst] (Wolfe Research): Thank you.
Alex Alcala: Thank you.
Alejandro Alcala: Hey, just a couple from me. First, just back on the deals, you kind of laid out the cost reduction opportunity and plan. I think there's also cost in to get these bedded down and integrated, given that they were carve-out entities. Could you just maybe speak to that, the interplay between kind of cost to integrate versus cost out? And I would assume those sort of flip as we look into 2027, 2028. Yeah, Jeff. So I mean, there is some cost in and cost out. On a net basis, it'll be a cost out. The improvements in the margins will increase in 2027, 2028, as a lot of our actions take a few quarters to materialize and read through to the P&L. I've mentioned before, Baker Hughes operated these businesses as PSI.
Jeff Sprague: Hey, just a couple from me. First, just back on the deals, you kind of laid out the cost reduction opportunity and plan. I think there's also cost in to get these bedded down and integrated, given that they were carve-out entities. Could you just maybe speak to that, the interplay between kind of cost to integrate versus cost out? And I would assume those sort of flip as we look into 2027, 2028.
Hey thanks. Good morning, everyone and congrats, Max and Alex exciting news for both of you. Um,
Hey just uh a couple from me. Um first just back on the deals. Um you know can you kind of laid out the you know, the cost reduction opportunity and plan? Uh, I think there's also you know, cost in
Uh, to get these bedded down and integrated given that they were, you know, carve out entities, could you just maybe speak to that, the interplay between kind of cost to integrate uh, versus cost out and I would assume those sort of flip as we look into 2728.
Alex Alcala: Yeah, Jeff. So I mean, there is some cost in and cost out. On a net basis, it'll be a cost out. The improvements in the margins will increase in 2027, 2028, as a lot of our actions take a few quarters to materialize and read through to the P&L. I've mentioned before, Baker Hughes operated these businesses as PSI. So they have that high-level PSI headquarters structure, which we're dissolving, shared services and finance, HR, and IT. So that goes away, replaced by standalone business unit resources that we're adding. Overall, on a net basis, we expect, once we're done, to operate leaner and more profitable with all these ins and outs from a cost standpoint, and then driving improvements on top of that.
Alejandro Alcala: So they have that high-level PSI headquarters structure, which we're dissolving, shared services and finance, HR, and IT. So that goes away, replaced by standalone business unit resources that we're adding. Overall, on a net basis, we expect, once we're done, to operate leaner and more profitable with all these ins and outs from a cost standpoint, and then driving improvements on top of that.
Yeah, Jeff, so I mean there is some cost in and cost out. On a net basis, it'll be a cost out. Uh, the improvements in the margins will increase in '27–'28, as a lot of our actions, uh, take a few quarters to materialize and, and read through the P&L. Uh, you know, I've mentioned before, Baker Hughes operated these businesses as a PSI, so they have that, that...
Services and finance HR and IT so that goes away replaced by Standalone business unit, uh, resources that, that we're adding over on on that basis. We expect once we're done to operate leaner and uh, more profitable with all these ins and outs from our cost standpoint, and then driving improvements on top of that.
[Analyst] (Wolfe Research): And then just thinking about what Rich shared on Q1, it sounds like the expenses could be heavy here in Q1. Maybe you could just give us a little bit of color on kind of the expected organic performance in Q1 versus kind of the deal impact in Q1 to get to kind of that relatively flat number.
Jeff Sprague: And then just thinking about what Rich shared on Q1, it sounds like the expenses could be heavy here in Q1. Maybe you could just give us a little bit of color on kind of the expected organic performance in Q1 versus kind of the deal impact in Q1 to get to kind of that relatively flat number.
And then just thinking about um what Rich shared on on q1. Um it sounds like you know the expenses could be Heavy here in q1. Uh maybe you could just give us a little bit of color on. Um, kind of the expected organic performance in q1 versus kind of the deal impact in q1 to get to kind of that relatively flat number.
Alejandro Alcala: So legacy Crane organic will be clearly up in A&E and likely down a bit in PFT in Q1. That would be part of that dynamic, in addition to the incremental interest expense that we have compared to last year in the first quarter. This is sort of, I would say, the big drivers, Jeff.
Alex Alcala: So legacy Crane organic will be clearly up in A&E and likely down a bit in PFT in Q1. That would be part of that dynamic, in addition to the incremental interest expense that we have compared to last year in the first quarter. This is sort of, I would say, the big drivers, Jeff. There's also within Druck, Panametrics, and Reuter-Stokes, there is seasonality, and they tend to be stronger in the second half than the first half historically.
uh, so for so Legacy Legacy crane, uh, organic uh,
You know, we'll be, uh, clearly up in, in A&E, uh,
And likely.
Uh, down a bit in uh, in PFT uh, in q1.
Um, that would be part of that dynamic. In addition to, you know, the incremental interest expense that we have compared to last year in the first quarter.
[Analyst] (Deutsche Bank): There's also within Druck, Panametrics, and Reuter-Stokes, there is seasonality, and they tend to be stronger in the second half than the first half historically.
It's sort of a is I would say the big the big drivers. Jeff there, there's also within um drug panametrics where they're Stokes there is seasonality and they tend to be stronger in the second half than the first half. Historically.
[Analyst] (Wolfe Research): Okay, great. Understood. Then maybe just kind of stepping back just on the deal activity. So a lot of bandwidth still on the balance sheet. It sounds like you feel pretty comfortable with just the internal bandwidth to kind of execute all this. Maybe kind of address that, the ability for the organization to take on something else of size this year, or should we expect maybe sort of smaller bolt-ons as the year is progressing here?
Jeff Sprague: Okay, great. Understood. Then maybe just kind of stepping back just on the deal activity. So a lot of bandwidth still on the balance sheet. It sounds like you feel pretty comfortable with just the internal bandwidth to kind of execute all this. Maybe kind of address that, the ability for the organization to take on something else of size this year, or should we expect maybe sort of smaller bolt-ons as the year is progressing here?
Alejandro Alcala: Yeah, Jeff. So the machine is working, right, in CBS. Our funnel, we're integrating these four different businesses very well with resources. We have bandwidth to do more, expect to do more in 2026. I can tell you that we're also building capabilities constantly. We improved our capabilities not only to integrate, but also our strategic resources that are evaluating adjacencies proactively increasing the potential targets. So we're only getting stronger on the M&A front. Expect to accelerate that going forward. So funnel's strong. Nothing imminent in Q1, but expect to continue the momentum as we move forward. Plenty of bandwidth on our side.
Alex Alcala: Yeah, Jeff. So the machine is working, right, in CBS. Our funnel, we're integrating these four different businesses very well with resources. We have bandwidth to do more, expect to do more in 2026. I can tell you that we're also building capabilities constantly. We improved our capabilities not only to integrate, but also our strategic resources that are evaluating adjacencies proactively increasing the potential targets. So we're only getting stronger on the M&A front. Expect to accelerate that going forward. So funnel's strong. Nothing imminent in Q1, but expect to continue the momentum as we move forward. Plenty of bandwidth on our side.
Okay, great. Uh, understood. And then, uh, maybe just kind of stepping back, um, just on, on the deal activity. Um, so a lot of band was still on the balance sheet. Um, it sounds like you've feel pretty comfortable with just the internal bandwidth to kind of execute all this, um, maybe kind of address that the, um, you know, the ability for the organization to take on something else of size this year, or should we expect maybe sort of smaller bolt-ons as the years progressing here?
Yeah, Jeff, so the the machine is working right on CBS or funnel. Uh, you know, we're integrating these 4 different businesses, very well with resources. We have bandwidth to do more expected to do more in, in, in 26. I can tell you that. We're also, uh, building capabilities constantly. We, we improved our capabilities, not only to integrate, but also our strategic resources that are, uh, evaluating that Jason's is practically increasing. Uh, the the the potential targets. So we're only getting stronger on the m&a, front expect to accelerate that uh going forward. Uh, so Toronto strong, nothing imminent in q1.
But, you know, we expect to continue the momentum as we move forward.
[Analyst] (Wolfe Research): Great. Thanks. Good luck with everything.
Jeff Sprague: Great. Thanks. Good luck with everything.
Plenty of bandwidth on our time.
Alejandro Alcala: Thanks, Jeff. Thanks.
Alex Alcala: Thanks, Jeff.
Max Mitchell: Thanks.
Great. Uh thanks. Good luck with everything. Thanks Jeff thanks.
Operator: Thank you. Our next question is coming from Matt Somerville with DA Davidson.
Operator: Thank you. Our next question is coming from Matt Somerville with DA Davidson.
Thank you. And our next question is coming from Matt Somerville with da Davidson.
Richard Maue: Morning, Matt.
Alex Alcala: Morning, Matt.
[Analyst] (CJS Securities): Thanks. Morning. Couple of questions. First, can you talk about 2026 with respect to the aerospace segment, what you're expecting from an aftermarket volume standpoint for both OEM and military? And can you also sort of discuss whether there's any sort of government shutdown impact on any of the more material military programs for you guys? And then I have a follow-up.
Matt Summerville: Thanks. Morning. Couple of questions. First, can you talk about 2026 with respect to the aerospace segment, what you're expecting from an aftermarket volume standpoint for both OEM and military? And can you also sort of discuss whether there's any sort of government shutdown impact on any of the more material military programs for you guys? And then I have a follow-up.
Morning, Matt.
Thanks, um, morning couple questions first, can you talk about 2026 with respect to the Aerospace segment? What you're expecting from an aftermarket volume standpoint for both OEM and Military? And can you also sort of discuss whether there's any sort of government shutdown impact on any of the more material, uh, military programs for you guys and then have a follow-up?
Alejandro Alcala: Yeah, thank you, Matt. I'll comment on it. Let me walk you through all the assumptions here on aero on all the segments. So commercial OEM, as you would expect, will continue to be strong, high teens. Military OEM, mid-single digits. Then to your question of aftermarket, on the commercial side, we're anticipating mid-single digits. And on the military side, mid to high single digits. So continued momentum on all those fronts. As far as the government shutdown, the only thing that we've seen, no change in orders or programs or funding, but we did see the flight test of the F-16 program get delayed a few months. So instead of being complete in January, we expect that to be complete more in the early Q2.
Alex Alcala: Yeah, thank you, Matt. I'll comment on it. Let me walk you through all the assumptions here on aero on all the segments. So commercial OEM, as you would expect, will continue to be strong, high teens. Military OEM, mid-single digits. Then to your question of aftermarket, on the commercial side, we're anticipating mid-single digits. And on the military side, mid to high single digits. So continued momentum on all those fronts.
Yeah, thank you, Matt. Uh, I'll comment on it. Let me walk you through all the, uh, assumptions here on Arrow and all the segments. So, commercial OEM, as you would expect, will continue to be strong—high teens.
As far as the government shutdown, the only thing that we've seen, no change in orders or programs or funding, but we did see the flight test of the F-16 program get delayed a few months. So instead of being complete in January, we expect that to be complete more in the early Q2. So that will delay a few months the start of the shipments for the F-16, but that's all baked and factored into the guidance we've provided. No other real impact right now that we see related to government shutdown.
Uh, military OEM mid single digits then uh, to your question of aftermarket on the commercial side for anticipating mid single digits, and on the military side mid to high single digits. So you know continuing momentum on on on all those fronts.
Uh, as, as far as the government shutdown, you know, the the only thing that uh, we've seen no no change in orders or programs or funding, but we did see the flight test of the F-16 uh, program get delayed a few months.
Alejandro Alcala: So that will delay a few months the start of the shipments for the F-16, but that's all baked and factored into the guidance we've provided. No other real impact right now that we see related to government shutdown.
So, uh, instead of being complete in January, we expect that to be complete more in the early second quarter, uh, so that will delay a few months, the, the start of the shipments for the F-16. But the 12, uh, been factored into the guidance. We
We've, uh, we provided no other real impact right now that we see.
Related to the government shutdown.
[Analyst] (CJS Securities): So as it pertains to kind of that $30 million sort of per year beginning 2026 kind of target you laid out for F-16, is that lower than in 2026? Meaning, is your guidance assuming you don't fully capture that $30 million, yet there's an opportunity, albeit over a more compressed timeframe, for you to ultimately deliver that? And then can you just clarify for the PSI group of businesses what sort of your 3-year cost synergy target would be, if you can remind us? Thank you.
Matt Summerville: So as it pertains to kind of that $30 million sort of per year beginning 2026 kind of target you laid out for F-16, is that lower than in 2026? Meaning, is your guidance assuming you don't fully capture that $30 million, yet there's an opportunity, albeit over a more compressed timeframe, for you to ultimately deliver that? And then can you just clarify for the PSI group of businesses what sort of your 3-year cost synergy target would be, if you can remind us? Thank you.
So is it pertains to kind of that 30 million?
Sort of per year, beginning at 26, kind of target you laid out for us. 16 is the...
Is your guidance assuming you don't fully capture that 30? Yes, there's an opportunity.
Albeit over more compressed time frame for you to ultimately deliver that and then can you just clarify for the PSI Group of businesses? What sort of your free year cost? Synergy Target would be if you can remind us, thank you.
Alejandro Alcala: Yeah. So Matt, on the F-16, yes, in our guidance, we're thinking more on F-16, although the annual rate is 30. This year, more like in the 20s, low 20s of revenue. There is an opportunity on a more compressed timeline. But in our guidance, we've pulled that back a bit due to the few months shifting to the right. Related to the cost synergies, right? So this year, as we're starting off, we're moving fast with the actions. The teams are actually impressed me with their ability to embrace the Crane Business System machine, but it takes some time to read through. So if you're trying to do the math, we'd expect mid-single digit growth and about 200 basis of improvement in the margin profile this year.
Alex Alcala: Yeah. So Matt, on the F-16, yes, in our guidance, we're thinking more on F-16, although the annual rate is 30. This year, more like in the 20s, low 20s of revenue. There is an opportunity on a more compressed timeline. But in our guidance, we've pulled that back a bit due to the few months shifting to the right. Related to the cost synergies, right? So this year, as we're starting off, we're moving fast with the actions. The teams are actually impressed me with their ability to embrace the Crane Business System machine, but it takes some time to read through.
Yeah, so Matt, on the F-16, yes, we're—in our guidance, we're thinking more on F-16. All the annual rate is 30? This year? More like in the 20s, low 20s a revenue. There is an opportunity and a more compressed timeline. But in our guidance, we've pulled that back a bit due to a few months shifting to the right.
So if you're trying to do the math, we'd expect mid-single digit growth and about 200 basis of improvement in the margin profile this year. And then in the coming years, it'll be a little bit higher than the 200 basis points on a CAGR basis that gets us in that 5-year mark to achieve or beat the 10% return on invested capital. So about 200 basis points and then a greater number in the years ahead.
Alejandro Alcala: And then in the coming years, it'll be a little bit higher than the 200 basis points on a CAGR basis that gets us in that 5-year mark to achieve or beat the 10% return on invested capital. So about 200 basis points and then a greater number in the years ahead.
Uh, related to the cost synergies, right? So this year, as we're starting off, we're moving fast with the actions that the teams are—actually, it impressed me with their ability to embrace the Crane Business System machine. Uh, but it takes some time to read through. So if you're trying to do the math, uh, would expect like mid-single digit growth and about 200 basis points of improvement in the margin profile this year. And then in the coming years, it'll be a little bit higher than the 200 basis points on a CAGR basis. That gets us in that 5-year mark to achieve or beat the 10% return on invested capital. So, about 200 basis points, and then a greater number in the years ahead,
[Analyst] (CJS Securities): Thanks, Alex.
Matt Summerville: Thanks, Alex.
Out.
Operator: Thank you. Our next question is coming from Amit Mehrotra, with UBS.
Operator: Thank you. Our next question is coming from Amit Mehrotra, with UBS.
Thank you. Our next question is coming from Ahmed, Mayor of Chaff, with UBS.
Richard Maue: Thanks, operator. Hi, everybody. I wanted to ask about the power, come back to the power generation market for a minute. I think you talked about power gen being 10% of the portfolio inside of PFT, but you're also adding nuclear exposure with PSI. And obviously, that's a pretty important place right now. So maybe you can just reset kind of the exposure to total power gen and then also talk about nuclear power gen and how that's changing.
Amit Mehrotra: Thanks, operator. Hi, everybody. I wanted to ask about the power, come back to the power generation market for a minute. I think you talked about power gen being 10% of the portfolio inside of PFT, but you're also adding nuclear exposure with PSI. And obviously, that's a pretty important place right now. So maybe you can just reset kind of the exposure to total power gen and then also talk about nuclear power gen and how that's changing.
Thanks, operator. Hi, everybody. Um, I wanted to ask about the power—come back to the power generation market for a minute. I think you talked about power gen being 10% of the portfolio inside the PST, but you're also adding nuclear exposure with PSI. And obviously, that's a pretty important place right now. So maybe you can just reset kind of the exposure to total power gen, and then also talk about nuclear power gen, and how that's changing.
Alejandro Alcala: Yeah. Thank you, Ahmet. So like you mentioned, the traditional power combined cycle power plants in our valve segment, that's what I've mentioned in 2025, significant, as you know, amount of new combined cycle power plants are being built in the United States. So that's driving our growth. As far as nuclear, as you stated, we're basically doubling our exposure in the nuclear with Reuter-Stokes. So we have our core business, legacy Crane Valve Services, and then now Reuter-Stokes, and then combined, we call it Crane Nuclear now. So the growth exposure there is pretty attractive. Think about it as four buckets. You've got the restarts of the various nuclear plants like Holtec or the Crane Clean Energy, formerly Three Mile Island. So that will drive upside.
Alex Alcala: Yeah. Thank you, Ahmet. So like you mentioned, the traditional power combined cycle power plants in our valve segment, that's what I've mentioned in 2025, significant, as you know, amount of new combined cycle power plants are being built in the United States. So that's driving our growth. As far as nuclear, as you stated, we're basically doubling our exposure in the nuclear with Reuter-Stokes. So we have our core business, legacy Crane Valve Services, and then now Reuter-Stokes, and then combined, we call it Crane Nuclear now. So the growth exposure there is pretty attractive. Think about it as four buckets. You've got the restarts of the various nuclear plants like Holtec or the Crane Clean Energy, formerly Three Mile Island. So that will drive upside.
Yeah, thank you Ahmed. So like you mentioned, the traditional power combined cycle, power plants and our valve segment. Uh, that's what I've mentioned in 25. And as, you know, amount of of new combined cycle, power plants are being built in in the United States. So that's driving our growth as far as nuclear. As you stated, we're basically double A, our exposure and and the nuclear with regard to stoke. So we have our core, uh, business, uh, Legacy, crane Valve Services, and then now wrote a Stokes, and then combined, we call it create nuclear now, so the the growth exposure there is, uh, pretty attractive. Think about it as 4 buckets. You've got the, uh, the restarts of the various nuclear plants like, uh, Pollock or
Alejandro Alcala: You have the new construction with AP1000, Westinghouse, where we're very strong, have a very strong position with those reactors in our valve business, and there's some expected starts in Europe. The third area, really, which comes with Reuter-Stokes is we also have a very good exposure now to the small modular reactor. So we have a partnership with one of the leaders that's building the first SMR in Darlington, Canada. That's starting construction already or soon, one of the reactors. And there's three more on the plans, depending on how this one goes. This is boiling water reactors that Reuter-Stokes has the neutron sensing technology, which is used to gauge the power that's being generated. And then we're also benefiting on this fourth leg with the extension of licenses, right?
You have the new construction with AP1000, Westinghouse, where we're very strong, have a very strong position with those reactors in our valve business, and there's some expected starts in Europe. The third area, really, which comes with Reuter-Stokes is we also have a very good exposure now to the small modular reactor. So we have a partnership with one of the leaders that's building the first SMR in Darlington, Canada. That's starting construction already or soon, one of the reactors. And there's three more on the plans, depending on how this one goes.
The crane Clean Energy Formula 3—three miles—so that will drive upside. Uh, you have the new construction with AP1000, Westinghouse, where we're very strong, have a very strong position, uh, with those reactors in our valve business. And there's some expected starts in Europe. Uh, the third area really which comes with
Roto Stokes is
This is boiling water reactors that Reuter-Stokes has the neutron sensing technology, which is used to gauge the power that's being generated. And then we're also benefiting on this fourth leg with the extension of licenses, right? So five years ago, nuclear plants were decreasing or shutting down, and now we're seeing licenses being extended 50 years or so, and that requires upgrades and investments. So pretty good tailwind that will keep getting stronger as the decade progresses.
We also have a very good exposure now to the small modular reactor. So, uh, we have a, a, a partnership with 1 of the leaders that's building the, uh, the first SMR and Darlington Canada. Uh, that's starting construction already or soon 1 of the reactors and, uh, there's 3 more on the plans. Depending on how this 1 goes. This is a all water, boiled water reactors. That, uh, rotor Stokes has the neutron, uh, sensing technology which is used to, uh, gauge the the power that's being generated.
Alejandro Alcala: So five years ago, nuclear plants were decreasing or shutting down, and now we're seeing licenses being extended 50 years or so, and that requires upgrades and investments. So pretty good tailwind that will keep getting stronger as the decade progresses.
And then, you know, we also benefit on this fourth leg with the extension of licenses, right? So five years ago, nuclear plants were decreasing or shutting down, and now we're seeing licenses being extended 50 years or so, and that requires upgrades and investments.
Richard Maue: Okay. Thank you. And just as a follow-up, I want to revisit that 55% back half, I guess, obviously 45% first half. And then you've given us Q1. It looks like just the way the math works, there's not a lot of growth year-over-year in Q2 implied by those comments as well. I don't know if I'm doing my math wrong or maybe there's the hurricane dynamic in there in terms of the comp, but can you just talk about that?
Amit Mehrotra: Okay. Thank you. And just as a follow-up, I want to revisit that 55% back half, I guess, obviously 45% first half. And then you've given us Q1. It looks like just the way the math works, there's not a lot of growth year-over-year in Q2 implied by those comments as well. I don't know if I'm doing my math wrong or maybe there's the hurricane dynamic in there in terms of the comp, but can you just talk about that?
So pretty good tailwind that will keep getting stronger as the decade progresses.
Okay, thank you. And just as a follow-up, um,
Alejandro Alcala: Yeah. Jason and Allison will catch up with you, but I would say that yes, on the part of the headwind in Q1 and in Q2, clearly will be the insurance recovery. Those were included in our numbers, $0.16 on the year, and it was probably close to 50/50 in terms of Q2, first half, second half.
Rich Maue: Yeah. Jason and Allison will catch up with you, but I would say that yes, on the part of the headwind in Q1 and in Q2, clearly will be the insurance recovery. Those were included in our numbers, $0.16 on the year, and it was probably close to 50/50 in terms of Q2, first half, second half.
Yeah, you know, you know, um, Jason and Allison will, uh, will catch up with you. Uh, but I would say that yes, on the part of the headwind in Q1 and in Q2, clearly will be the insurance recovery. Uh, those were included in our numbers—16 cents on the year—and it was
uh,
Richard Maue: Yeah.
Amit Mehrotra: Yeah.
Probably close to 50-50, um, uh, in terms of few—few first half, second half.
Alejandro Alcala: Yeah. But from a growth perspective, I'd rather hold off on commentary on individual quarters from a core growth perspective, frankly, at this point.
Alex Alcala: Yeah. But from a growth perspective, I'd rather hold off on commentary on individual quarters from a core growth perspective, frankly, at this point.
Um, but yeah. Um, but from a, from a growth perspective, you know, I I'd rather hold off on commentary on individual quarters from a core growth perspective. Uh, frankly, uh, yeah,
Richard Maue: Yeah. That's fair. That's fair. Can I just ask one quick follow-up, if I don't mind, just on the synergies for PSI? Because you talked about PFT growth flat to up low single digits and then 35% to 40% incrementals. It doesn't feel in that number. There's a lot of synergies in there, but there's still 7, 8 points of margin gap. And so maybe this is just a timing thing or maybe it's conservatism, but it would just be helpful to understand maybe if there's an opportunity for EBIT and PFT to grow disproportionately from revenue in 2026, just given maybe some of that margin gap that you can close. Or is that maybe more of a late 2026, 2027 thing?
Amit Mehrotra: Yeah. That's fair. That's fair. Can I just ask one quick follow-up, if I don't mind, just on the synergies for PSI? Because you talked about PFT growth flat to up low single digits and then 35% to 40% incrementals. It doesn't feel in that number. There's a lot of synergies in there, but there's still 7, 8 points of margin gap. And so maybe this is just a timing thing or maybe it's conservatism, but it would just be helpful to understand maybe if there's an opportunity for EBIT and PFT to grow disproportionately from revenue in 2026, just given maybe some of that margin gap that you can close. Or is that maybe more of a late 2026, 2027 thing?
Uh at this point that's fair, that's fair. Can I just ask 1 quick quick? Follow up? If I don't mind just on the synergies for PSI because you talked about bft growth um flat to upload single digits. And then 35 to 40% incremental. It doesn't feel in that number. There's a lot of synergies in there and and and but there's still, you know, up 7, 8 points of margin Gap. And so maybe this is just a timing thing or maybe it's conservatism but it would just be helpful to understand maybe if there's an opportunity for ebit and PFT to grow disproportionately from revenue. This in 26, just given maybe some of that margin Gap that you can close or is that maybe more of a late 26/27 thing.
Alejandro Alcala: Yeah. I would probably err towards what you closed there with on your question. The 30% to 35% is on the legacy. And then as we continue to integrate the Druck, Panametrics, Reuter-Stokes, we'll start to see some of that incremental coming in more so in the second half versus the first half. So that would absolutely be the case for 2026.
Rich Maue: Yeah. I would probably err towards what you closed there with on your question. The 30% to 35% is on the legacy. And then as we continue to integrate the Druck, Panametrics, Reuter-Stokes, we'll start to see some of that incremental coming in more so in the second half versus the first half. So that would absolutely be the case for 2026.
Yeah, I I would I would probably err towards what you what you close there with on your question. Um, you know, the 30 to 35% is on the Legacy and then as we continue to integrate the
Drug Panametrics order Stokes, we'll start to see some of that incremental coming in more, so in the second half versus the first half.
Richard Maue: Got it. Thank you very much. Appreciate it.
Amit Mehrotra: Got it. Thank you very much. Appreciate it.
So, that would be—uh, that would absolutely be the case for '26.
Got it. Thank you very much. Appreciate it.
Operator: Thank you. Our next question is coming from Nathan Jones with Stifel.
Operator: Thank you. Our next question is coming from Nathan Jones with Stifel.
Thank you. Our next question, is coming from Nathan Jones with people.
[Analyst] (Deutsche Bank): Good morning, everyone.
Nathan Jones: Good morning, everyone.
Richard Maue: Morning, Alex.
Rich Maue: Morning, Alex.
Good morning, everyone.
[Analyst] (Deutsche Bank): Alex, my congratulations to Alex. And unfortunately, Max, I can't unsee you're on the fan page.
Scott Deuschle: Alex, my congratulations to Alex. And unfortunately, Max, I can't unsee you're on the fan page.
Good morning. My congratulations to Alex, and unfortunately, Max, I can't unsee your OnlyFans page.
Richard Maue: I'm not taking your requests anymore.
Max Mitchell: I'm not taking your requests anymore.
[Analyst] (Deutsche Bank): I guess first on the acquisitions, I know you guys didn't include any revenue synergies in the deal model and in that kind of 10% ROIC target by year five. But I also know that you anticipate getting some. So I'd be interested in getting some color around kind of where the most right areas for you to generate revenue synergies are, if you can put any kind of financial framework around that of like, "We'll generate 100 basis points of revenue synergies or 200 or whatever the expectation might be over the next several years," understanding that those are a little more squishy and maybe a little harder to track. But just any color you can give us on how you'll approach that and if you can give any financial framework around it. Thanks.
Nathan Jones: I guess first on the acquisitions, I know you guys didn't include any revenue synergies in the deal model and in that kind of 10% ROIC target by year five. But I also know that you anticipate getting some. So I'd be interested in getting some color around kind of where the most right areas for you to generate revenue synergies are, if you can put any kind of financial framework around that of like, "We'll generate 100 basis points of revenue synergies or 200 or whatever the expectation might be over the next several years," understanding that those are a little more squishy and maybe a little harder to track. But just any color you can give us on how you'll approach that and if you can give any financial framework around it. Thanks.
I'm not I'm not taking your requests anymore.
I guess first on the acquisitions, I know you guys, uh, didn't include any revenues images in the deal model, and in that kind of 10% ROIC target by year five.
I'd be, but I also know that you are anticipating getting some. Uh, so I'd be interested in getting some color around kind of where the most, the most right areas for you to generate revenue synergies are, if you can put any kind of financial framework around that of, you know, like we’ll generate 100 basis points of revenues or 200 or whatever the expectation might be over the next several years.
Alejandro Alcala: Yeah. Nathan, so let me try to answer the first part. You're right. We expect some growth synergies in these areas, different for each of these businesses. For example, in Druck, very strong, very strong position on the commercial side, not as much on the military side. So with our legacy core A&E, as you know, we have an outstanding position there. So there'll be some synergies opportunities to grow the businesses there. Traditional CBS, commercial excellence, driving key accounts, channel management, project pursuit, funnel management, etc. That will drive as well within the core business improved performance. Similar for Panametrics, Reuter-Stokes, incredible position in the power generation. We're looking at these adjacencies where they also play in homeland security, other industrial applications where there's a lot of room for growth with the right focus. So none of that is baked into our model or our guidance.
Alex Alcala: Yeah. Nathan, so let me try to answer the first part. You're right. We expect some growth synergies in these areas, different for each of these businesses. For example, in Druck, very strong, very strong position on the commercial side, not as much on the military side. So with our legacy core A&E, as you know, we have an outstanding position there. So there'll be some synergies opportunities to grow the businesses there. Traditional CBS, commercial excellence, driving key accounts, channel management, project pursuit, funnel management, etc. That will drive as well within the core business improved performance. Similar for Panametrics, Reuter-Stokes, incredible position in the power generation.
Understanding that those are a little more squishy and and maybe a little harder to track but just any color you can give us on on how you'll approach that. And and if you can give any Financial framework around effects.
We're looking at these adjacencies where they also play in homeland security, other industrial applications where there's a lot of room for growth with the right focus. So none of that is baked into our model or our guidance. I'm not yet ready to provide you with the financial number as much as I would like on what those growth opportunities would be, but they'll be there and you'll see them eventually read through in the P&L, Nathan.
Yeah, uh Nathan. So let me try to answer the first part of you're right. We expect some growth synergies in in these areas, uh, different for each of these businesses, uh, for example, in drug, very strong, very strong position on the commercial side, uh, not as much on the military side. So, uh, with our with our Legacy core A&E, as, you know, we have an outstanding position there. So, there'll be some synergies opportunities to grow the businesses, uh, their, uh, traditional CBS commercial excellence and driving key accounts Channel management, uh, project Pursuit, uh, uh, frontal management, Etc, that will drive as well within the Core Business. Uh, improved, uh, performance similar for panametrics. Uh rotor Stokes incredible position in the power generation. Uh, we're looking at, uh, these uh, adjacencies where they also play in Homeland Security on the other industrial applications where they are.
Alejandro Alcala: I'm not yet ready to provide you with the financial number as much as I would like on what those growth opportunities would be, but they'll be there and you'll see them eventually read through in the P&L, Nathan.
There's a lot of room for growth with the right focus. So, uh, none of that is baked into our motto, our guidance. Uh, I'm not yet ready to provide you with the financial number, as much as I would like, on what those, uh, growth opportunities would be.
Richard Maue: Yeah. I think the confidence in, I forget if it was Max's comments or Alex's on the 4 to 6 and these businesses taking us towards the higher end of that range, part of that confidence level comes from these adjacencies and other opportunities that we already see. So I think we expect to be at that high end or even slightly above it when you look out a couple of years.
Rich Maue: Yeah. I think the confidence in, I forget if it was Max's comments or Alex's on the 4 to 6 and these businesses taking us towards the higher end of that range, part of that confidence level comes from these adjacencies and other opportunities that we already see. So I think we expect to be at that high end or even slightly above it when you look out a couple of years.
But uh, they'll be there and you'll see them eventually read through in the piano. And, yeah, I think, I think the the confidence in, um, I forget if it was Max's comments or Alex's on the, um, you know, the 4 to 6. And these businesses taking us towards the higher, end of that range, part of that confidence, level comes from these adjacencies and other opportunities that we already see. So, you know, I think we expect to be at that high end or even even even a even slightly uh when you look out uh, a couple of years.
[Analyst] (Deutsche Bank): This is probably just a housekeeping one. I think it was maybe Jeff earlier on was talking about integration costs and the impact that might have on your reported numbers. Are you eating those in the reported results or are they adjusted out of the reported results?
Nathan Jones: This is probably just a housekeeping one. I think it was maybe Jeff earlier on was talking about integration costs and the impact that might have on your reported numbers. Are you eating those in the reported results or are they adjusted out of the reported results?
Richard Maue: Yeah. So I think in our response to Jeff's question, clearly, if they are directly associated with the integration, we will be excluding them and keeping them visible for everybody. But there are other investments that we'll be needing to make just as part of bringing the business to where in certain areas where we need to be. So in finance, for example, if I have to hire people or in HR have to hire people in IT, those are continuing costs of the business and I can't exclude those. So that's really what we were referring to in the response to Jeff's question.
Rich Maue: Yeah. So I think in our response to Jeff's question, clearly, if they are directly associated with the integration, we will be excluding them and keeping them visible for everybody. But there are other investments that we'll be needing to make just as part of bringing the business to where in certain areas where we need to be. So in finance, for example, if I have to hire people or in HR have to hire people in IT, those are continuing costs of the business and I can't exclude those. So that's really what we were referring to in the response to Jeff's question.
Are they adjusted out of the reported results? Yeah, yeah. So I think, uh, in our response to Jeff's question, uh, you know, clearly if they are directly associated with the integration, uh, we will be excluding them and keeping them visible for everybody. But there are other investments that we'll be needing to make just, uh,
you know, as just part of uh, uh,
Bringing the business to where, you know, in the certain certain areas where we need to be. So in finance, for example, if I have to hire people or an HR have to hire people in it, those are continuing costs of the business and I, I can't exclude. Those
so um, that that that's really uh,
what we were referring to in in the response to the Jeff's question,
[Analyst] (Deutsche Bank): Makes sense. Yeah, I understand. Can you just give us an idea of what the impact to free cash flow will be in 2026 from these expenses, not from the hiring, but from the costs to achieve synergies? Just to level set that for us. Thanks for taking my questions.
Nathan Jones: Makes sense. Yeah, I understand. Can you just give us an idea of what the impact to free cash flow will be in 2026 from these expenses, not from the hiring, but from the costs to achieve synergies? Just to level set that for us. Thanks for taking my questions.
Mentioned, and yeah, I—I understand. Um, can you just give us an idea of what the impact to free cash flow will be in 2026 from these expenses, not from the home, but from the—you know, the costs to achieve synergies.
Uh, just a level set that for us. Uh, thanks for taking my questions.
Richard Maue: Yeah. I don't have that off the top of my head here, Nathan. So we'll look to provide more color on that at the right time. I would expect our free cash flow, though, overall, just stepping back, we had an outstanding performance here in 2025 in our business, 102% on an adjusted basis. If we didn't adjust for it for certain items, we were at 98%. So it's not like we pulled a whole heck of a lot out to adjust. Our core business will continue in that 100% range is our view right now. In next year, I would say, including the acquisitions, it'll be down a little bit, but we'll be within that 90% to 100% range without a doubt, if that helps.
Rich Maue: Yeah. I don't have that off the top of my head here, Nathan. So we'll look to provide more color on that at the right time. I would expect our free cash flow, though, overall, just stepping back, we had an outstanding performance here in 2025 in our business, 102% on an adjusted basis. If we didn't adjust for it for certain items, we were at 98%. So it's not like we pulled a whole heck of a lot out to adjust. Our core business will continue in that 100% range is our view right now. In next year, I would say, including the acquisitions, it'll be down a little bit, but we'll be within that 90% to 100% range without a doubt, if that helps.
Yeah, I don't have that off the top of my head here and, uh, Nathan. Um, so we'll look to provide more color on that, uh, at the right time. Um, I would expect our free cash flow though. Overall, uh, just stepping back in, we had an outstanding performance here in 2025 and, and, uh, in our business,
Uh 102 percent on adjusted basis if you if we didn't adjust for it. Uh for certain items, we were at 98%. So it's not like we pulled a whole heck of a lot out to adjust.
Um, our core business will continue in that 100% range, is our view right now. Um, in next year, I would say, uh, including the acquisitions, it'll be— it’ll be down a little bit, but we'll be within that 90% to 100% range, uh, without a doubt.
[Analyst] (Deutsche Bank): Thanks for taking my questions.
Nathan Jones: Thanks for taking my questions.
Richard Maue: Yep.
Rich Maue: Yep.
If that helps thanks for taking my questions.
Yeah.
Operator: Thank you. Our next question is coming from Justin Ages with CJS Securities.
Operator: Thank you. Our next question is coming from Justin Ages with CJS Securities.
Thank you. Our next question is coming from Justin Ages with CJS Securities.
[Analyst] (CJS Securities): Hi, morning.
Justin Ages: Hi, morning.
Richard Maue: Morning, Justin.
Rich Maue: Morning, Justin.
[Analyst] (CJS Securities): Morning. Morning. Congrats to Max and Alex on this new chapter. A question on the F-16, you know you noted some of the wins additional in the US and international partners. Is that layered on top or is the international after the US orders get filled to maybe not into 2027? Will we see the benefit of the F-16 from international orders?
Max Mitchell: Morning.
Hi morning.
Justin Ages: Morning. Congrats to Max and Alex on this new chapter. A question on the F-16, you know you noted some of the wins additional in the US and international partners. Is that layered on top or is the international after the US orders get filled to maybe not into 2027? Will we see the benefit of the F-16 from international orders?
Morning, Justin morning.
morning congrats to Max and Alex on this uh new chapter uh a question on the F-16 you know you noted as some of the Winds additional in the US and and international Partners is that
Alejandro Alcala: Yeah, Justin. So on F-16, the way we think about it is this $30 million annual sales doesn't really change much. As we get more of these foreign orders, what it does is it extends the whole program length. So it goes out further. That will continue to see the benefit. We will ship first to the United States Air Force and then complement that with foreign military sales. At that $30 million or so rate per year.
Alex Alcala: Yeah, Justin. So on F-16, the way we think about it is this $30 million annual sales doesn't really change much. As we get more of these foreign orders, what it does is it extends the whole program length. So it goes out further. That will continue to see the benefit. We will ship first to the United States Air Force and then complement that with foreign military sales. At that $30 million or so rate per year.
Layered on top, or is it the international—you know, after the U.S. orders get filled, so maybe not into '27—will we see, you know, the benefit of that, of the F-16 from international orders?
Yeah, I just and so on that 16 the the way we think about it is this 30 million annual uh sales doesn't really change much. What a as we get more of these foreign uh orders what it does. Is it extends the whole program link. So it go, it goes out further that will continue to see the benefits. Uh, we
Richard Maue: Yeah. Maybe just to add, so we have orders that are in excess of that annual rate today. So it's not like we have to wait for the orders. We have them in backlog today, Justin. So anything incremental to that, just to Alex's point, extends.
Rich Maue: Yeah. Maybe just to add, so we have orders that are in excess of that annual rate today. So it's not like we have to wait for the orders. We have them in backlog today, Justin. So anything incremental to that, just to Alex's point, extends.
[Analyst] (CJS Securities): All right. That's helpful. And then you guys have done a bunch of acquisitions. You talk about your M&A capacity. You're levered now at 1.4. Can you discuss a little more what your target leverage is? What would you be willing to go to if the right acquisition is out there?
Justin Ages: All right. That's helpful. And then you guys have done a bunch of acquisitions. You talk about your M&A capacity. You're levered now at 1.4. Can you discuss a little more what your target leverage is? What would you be willing to go to if the right acquisition is out there?
Okay, that 30 mil at that 30 million dollar or so rate per year, maybe just just to add you know. So we have orders that are in excess of that annual rate today. So it's not like we have to wait for the orders. It's uh we have them in backlog today, Justin. So anything incremental to that just Alex's Point extends.
All right, that's helpful. Uh, and then
You know, you guys have you know, done a bunch of Acquisitions. Uh you talk about your m&a capacity, you're levered now at you know 1.4 can you you know discuss a little more with your target? Leverages you know, what would you would be willing to go to if the you know the right acquisition uh is out there?
Richard Maue: Yeah. So with the right acquisition, we don't have a problem going to 3x. Even strategically, if it made a lot of sense, even going beyond, as long as there was a path to come back down within a pretty short period of time to be in between, I don't know, call it 2x, 2.5x, something like that from a target perspective. But we have no problem going up as high as 3x or even above that for the right deal.
Rich Maue: Yeah. So with the right acquisition, we don't have a problem going to 3x. Even strategically, if it made a lot of sense, even going beyond, as long as there was a path to come back down within a pretty short period of time to be in between, I don't know, call it 2x, 2.5x, something like that from a target perspective. But we have no problem going up as high as 3x or even above that for the right deal.
Yeah, so with the right acquisition, we don't have a problem going to 3 times, even, you know, strategically if it made a lot of sense, even going Beyond as long as there was a path to come back down within a pretty short period of time to be, uh, you know, in between, I don't know, I'll call it 2 times. 2, 2 and a half times. Something like that on a
From a Target perspective but we have no problem going up as high as 3 or even above that for the right deal.
[Analyst] (CJS Securities): All right. Thanks for taking the question.
Justin Ages: All right. Thanks for taking the question.
Richard Maue: Thank you.
Rich Maue: Thank you.
All right, thanks for taking the questions.
Thank you.
Operator: Thank you. And our next question is coming from Jordan Lyonnais with Bank of America.
Operator: Thank you. And our next question is coming from Jordan Lyonnais with Bank of America.
Thank you. And our next question is coming from Jordan Leonas with Bank of America.
Richard Maue: Morning, Jordan.
Rich Maue: Morning, Jordan.
[Analyst] (Deutsche Bank): Hey, good morning. Thanks for taking the question. You, Max, and Alex.
Jordan Lyonnais: Hey, good morning. Thanks for taking the question. You, Max, and Alex.
Morning, Jordan. Hey, good morning, thanks for taking the question.
Richard Maue: Thank you.
Max Mitchell: Thank you.
[Analyst] (CJS Securities): Thank you.
Alex Alcala: Thank you.
[Analyst] (Deutsche Bank): On Arrow and the name change, how are you thinking about adjacencies or opportunities into IGT or Arrow derivatives? And then, two, for Arrow, on the military side, is there any changes to your thinking on CCAs with the new group of conflict on the tranche 2?
Scott Deuschle: On Arrow and the name change, how are you thinking about adjacencies or opportunities into IGT or Arrow derivatives? And then, two, for Arrow, on the military side, is there any changes to your thinking on CCAs with the new group of conflict on the tranche 2?
On the arrow in, uh, the name change.
I already thinking about Jason C's or opportunities into IGT for aeroderivative and then 2 for
Arrow.
Richard Maue: Can you repeat that last piece of your question?
Rich Maue: Can you repeat that last piece of your question?
[Analyst] (CJS Securities): You're breaking up just a little bit, Jordan. If you can say that again.
Max Mitchell: You're breaking up just a little bit, Jordan. If you can say that again.
Richard Maue: Apologies.
Jordan Lyonnais: Apologies. Yeah. Sorry. Is this better?
[Analyst] (CJS Securities): Yeah. Sorry. Is this better?
Richard Maue: No, that's much better.
Rich Maue: No, that's much better.
[Analyst] (CJS Securities): Much better.
Alex Alcala: Much better.
Richard Maue: Awesome. On CCAs, has that opportunity changed at all for how you're thinking about the program with tranche 2 now coming online with a batch of 9 new contractors? Thanks.
Rich Maue: Awesome. On CCAs, has that opportunity changed at all for how you're thinking about the program with tranche 2 now coming online with a batch of 9 new contractors? Thanks.
[Analyst] (CJS Securities): You're opening as well because it was asked repeated again. That'd be great.
Apologies. Yeah. Sorry. Is this better? That's much better. Much better. Awesome on. Cca's has that opportunity changed at all? For how you're thinking about the program with trunch to. Now coming online with a batch of 9 new contractors. Thanks.
Alex Alcala: You're opening as well because it was asked repeated again. That'd be great.
Richard Maue: Yeah. For Aero and Advanced Tech now with the name change, the adjacencies that you're looking into, are you thinking about opportunities in IGT or Aero derivatives?
Jordan Lyonnais: Yeah. For Aero and Advanced Tech now with the name change, the adjacencies that you're looking into, are you thinking about opportunities in IGT or Aero derivatives?
And oh you're opening as well because it it was asked repeat it again, that'd be great.
Yeah. Uh for Arrow and advanced techno with the name, change the adjacencies that you're looking into. Are you thinking about opportunities in IGT or error? Derivatives
Alejandro Alcala: I think on the first piece of the questions on the AAT, again, we are exploring many different types of adjacencies. Traditionally, right, our core business has been in fluid power control. So expanding beyond that in aerospace, just like we did in sensing many different avenues, land-based, we're thinking about, I don't want to call out specific adjacencies at this point, but many, many other adjacencies that complement both military and aerospace technologies and also play in other high-growth markets at the same time. And the second part of your question with CCAs, do you mean collaborative combat aircraft?
Alex Alcala: I think on the first piece of the questions on the AAT, again, we are exploring many different types of adjacencies. Traditionally, right, our core business has been in fluid power control. So expanding beyond that in aerospace, just like we did in sensing many different avenues, land-based, we're thinking about, I don't want to call out specific adjacencies at this point, but many, many other adjacencies that complement both military and aerospace technologies and also play in other high-growth markets at the same time. And the second part of your question with CCAs, do you mean collaborative combat aircraft?
[Analyst] (CJS Securities): Yes.
Justin Ages: Yes.
Alejandro Alcala: So I mean, we're definitely playing in that space. We think we're very, very well positioned both with the, I guess, the traditional primes and the new entrants. In fact, in past quarters, Jordan, you may recall that we have this great position in one of the new programs, Fury, to call it out, where we expect significant growth in the future. So in this different cycle, different sales cycle, different type of speed that is required, but all the demonstrators, we have won our position there. And also with the new entrants, we have excellent content. So we feel very, very bullish about that segment and our ability to benefit from that.
Alex Alcala: So I mean, we're definitely playing in that space. We think we're very, very well positioned both with the, I guess, the traditional primes and the new entrants. In fact, in past quarters, Jordan, you may recall that we have this great position in one of the new programs, Fury, to call it out, where we expect significant growth in the future. So in this different cycle, different sales cycle, different type of speed that is required, but all the demonstrators, we have won our position there. And also with the new entrants, we have excellent content. So we feel very, very bullish about that segment and our ability to benefit from that.
I think, um, on the first piece of the questions on the aat, uh, again, what we are exploring many different types of adjacencies, traditionally, right? The our Core Business have been in in fluid power control. Uh, so expanding beyond that in Aerospace, just like we did in in sensing many, many different Avenues lambaste, uh, we're we're thinking about, I I don't want to call out specific, uh, adjacencies at this point. But, uh, many, many other adjacencies that complement both military and Aerospace, uh, Technologies and also play. And, and other high growth markets uh, at the same time. Uh, and on the second part of your question with CCA, do you mean a collaborative combat aircraft?
so yes, uh
I mean, we we, we're definitely, uh, playing in that space. Uh, we think we're very, very well positioned both with the, I guess the traditional primes and the new entrance in fact, uh, Empire quarters, Jordan. You may recall, uh, that we have this, this great position in 1 of the new, uh, programs Theory, uh, to to call it out where we expect significant growth in, in the future. So in this, you know, different different cycle, different sales cycle, different type of speed that is required. But, uh, all the demonstrators, uh, we have won our position there. And, uh, also with the new entrance, we have excellent content, so we feel very, very bullish about, uh, that segment, and our ability to to benefit from that.
[Analyst] (CJS Securities): Got it. Thanks. And congrats again.
Justin Ages: Got it. Thanks. And congrats again.
Richard Maue: Thanks, Jordan.
Alex Alcala: Thanks, Jordan.
Got it. Thanks and congrats again.
Thanks, Jordan.
Operator: Thank you. And once again, if you do have a question, you may press star one on your telephone keypad at this time. 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.
Operator: Thank you. And once again, if you do have a question, you may press star one on your telephone keypad at this time. 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. And once again, if you do have a question, you may press star 1 on your telephone keypad at this time.
Max Mitchell: Fantastic. Alex, congratulations again.
Richard Maue: Thank you. Thank you all for joining us today. Great call, great team, great performance. There's a great deal of momentum here at Crane. We delivered an exceptional 2025, and I couldn't be proud of our teams. We continue to innovate, win critical projects, and execute and deliver exceptional results. We also accelerated and delivered on our M&A efforts, adding differentiated technologies that further strengthen the Crane portfolio. We're set up for an even stronger 2026 with a leadership transition that will drive a continued focus on transformation, execution, and the relentless pursuit of improvement, relentlessly driving towards perfection while accepting the reality we will always fall short, but that is what pushes us forward, driving change. As the late great performer Diane Keaton once said, "What is perfection anyway? It's the death of creativity.
Alex Alcala: Thank you.
Max Mitchell: Thank you all for joining us today. Great call, great team, great performance. There's a great deal of momentum here at Crane. We delivered an exceptional 2025, and I couldn't be proud of our teams. We continue to innovate, win critical projects, and execute and deliver exceptional results. We also accelerated and delivered on our M&A efforts, adding differentiated technologies that further strengthen the Crane portfolio. We're set up for an even stronger 2026 with a leadership transition that will drive a continued focus on transformation, execution, and the relentless pursuit of improvement, relentlessly driving towards perfection while accepting the reality we will always fall short, but that is what pushes us forward, driving change. As the late great performer Diane Keaton once said, "What is perfection anyway? It's the death of creativity.
Fantastic, Alex. Congratulations again. Thank you. Thank you all for joining us today. Great call, great team, great performance. There's a great deal of momentum here at Crane. We delivered an exceptional 2025, and I couldn't be prouder of our teams.
We continue to innovate when critical projects and execute and deliver exceptional results.
Richard Maue: That's what I think." While change, on the other hand, is the cornerstone of new ideas. As always, change at Crane is constant, and it remains the catalyst for fresh ideas, strategic evolution, and continued outperformance. With our excellent strategy, exceptional talent, strong momentum, our progress speaks for itself. And truly, there's no limit to what we will accomplish in 2026 and beyond under Alex's leadership and the team. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.
That's what I think." While change, on the other hand, is the cornerstone of new ideas. As always, change at Crane is constant, and it remains the catalyst for fresh ideas, strategic evolution, and continued outperformance. With our excellent strategy, exceptional talent, strong momentum, our progress speaks for itself. And truly, there's no limit to what we will accomplish in 2026 and beyond under Alex's leadership and the team. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.
We also accelerated and delivered on our M&A efforts, adding differentiated technologies that further strengthen the Crane portfolio, and we're set up for an even stronger 2026. With a leadership transition that will drive a continued focus on transformation execution and the relentless pursuit of improvement—relentlessly driving towards perfection while accepting the reality we will always fall short, but that is what pushes us forward. Driving change, as the late, great performer Diane Keaton once said, 'What is perfection anyway? It's the depth of creativity. That's what I think.' While change, on the other hand, is the cornerstone of new ideas.
As always change a crane is constant and it Remains The Catalyst for fresh ideas, strategic Evolution and continued outperformance with our excellent strategy, exceptional Talent, strong momentum.
Our progress speaks for itself.
And truly there's no limit to what we will accomplish in 2026 and Beyond under, Alex's leadership and the team. Thank you all for your interest in Crane and your time and attention this morning, have a great day.
Operator: Thank you. This concludes today's Crane Company Q4 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.
Operator: Thank you. This concludes today's Crane Company Q4 2025 earnings conference call. Please disconnect your line at this time and have a wonderful day.
Thank you. This concludes today's Crane Company fourth quarter 2025 earnings conference. Call please disconnect your line at this time and have a wonderful day.
