Crane Company (CR) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal strong financial performance with raised earnings outlook, robust growth in key segments like Aerospace & Electronics, and strategic M&A activities. Despite some uncertainties in chemical markets, positive trends in nonchemical sectors and defense, along with effective margin management, support a positive sentiment. The raised guidance and strategic initiatives outweigh concerns, suggesting a positive stock price movement.
Key Financial Performance
Adjusted EPS $1.64, driven by an impressive 5.6% core sales growth, primarily reflecting broad-based strength at Aerospace & Electronics and continued strong execution at Process Flow Technologies.
Core Sales Growth 5.6%, driven primarily by the ongoing strength within Aerospace & Electronics.
Adjusted Operating Profit Increased 19%, driven by continued strong net price and solid productivity.
Core FX-neutral Backlog Up 16% compared to last year, reflecting continued strength at Aerospace & Electronics.
Core FX-neutral Orders Up 2% compared to last year.
Aerospace & Electronics Sales $270 million, increased 13% in the quarter, nearly all of that organic growth.
Aerospace & Electronics Backlog Just over $1 billion, up 27% year-over-year.
Aerospace & Electronics Core Orders Up 5%.
Total Aftermarket Sales Increased 20% with commercial aftermarket up 23% and military aftermarket up 12%.
OEM Sales Increased 10% in the quarter with both commercial and military up 10%.
Adjusted Segment Margin for Aerospace & Electronics 25.1%, expanded 160 basis points from 23.5% last year, primarily reflecting strong net price, solid productivity and the impact from the higher volumes.
Process Flow Technologies Sales $319 million, up 3% with flat core performance in the quarter, along with a 1.6% benefit from the Technifab acquisition and 1.5 points of favorable foreign exchange.
Process Flow Technologies Core FX-neutral Backlog Decreased 5% compared to last year.
Process Flow Technologies Core FX-neutral Orders Down slightly as expected.
Adjusted Operating Margin for Process Flow Technologies 22.4%, expanded 60 basis points higher than last year, driven by strong productivity, mix and net price inclusive of tariff headwinds in the quarter.
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Operating Highlights
200-kilowatt traction motor inverter generator controller: Launched at the AUSA trade show in October, aimed at defense vehicle OEMs for programs like the Common Tactical Truck and new combat vehicle programs.
SyFlo wastewater pump: Introduced at WEFTEC, featuring advanced non-clog and pellet technology with leading efficiency metrics. Shipments began in Q3.
Aerospace & Electronics: Strong backlog and new program wins provide visibility into 2026 and beyond. Growth driven by Boeing and Airbus production ramp-ups and elevated aftermarket activity.
Process Flow Technologies: Stable end markets with strength in wastewater, pharmaceuticals, cryogenics, and power. Chemical markets remain soft but stable.
Core sales growth: Achieved 5.6% growth in Q3, driven by Aerospace & Electronics.
Adjusted operating profit: Increased by 19%, supported by strong net pricing and productivity.
Backlog: Core FX-neutral backlog up 16% year-over-year, driven by Aerospace & Electronics.
Acquisition of Precision Sensors & Instrumentation (PSI): On track to close by year-end. Integration planning is progressing smoothly, expected to be accretive to margins and growth.
M&A pipeline: Active with opportunities in Aerospace & Electronics and Process Flow Technologies, with deal sizes ranging from $100 million to $500 million.
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Risk or Challenges
Tariff Impacts: The company expects gross cost increases of roughly $30 million for the year due to Section 232 tariffs. While they plan to offset these impacts through price and productivity, this remains a dynamic area that could pose challenges.
Chemical Market Conditions: The chemical markets remain soft, which could impact growth in the Process Flow Technologies segment. However, the company is focusing on targeted opportunities tied to preventative maintenance and technology upgrades.
Integration of PSI Acquisition: While the integration planning for the pending acquisition of Precision Sensors & Instrumentation (PSI) is progressing smoothly, there is always a risk of unforeseen challenges during the integration process that could impact strategic execution.
Commercial Aftermarket Deceleration: The company anticipates decelerating year-over-year growth rates in the commercial aftermarket in Q4, which could impact overall performance in the Aerospace & Electronics segment.
Defense Market Fragmentation: Over the past two years, customer vehicle development efforts in the defense market were fragmented with numerous concepts in play and uncertainty around government funding. Although this has improved, it remains a potential risk area.
Economic and Market Uncertainty: The company acknowledges a dynamic macroeconomic backdrop and heightened global uncertainty, which could impact operations and strategic objectives.
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Guidance & Outlook
Full Year Adjusted Earnings Outlook: The company has raised and narrowed its full-year adjusted earnings outlook to a range of $5.75 to $5.95, reflecting 20% adjusted EPS growth at the midpoint compared to 2024.
2026 Organic Growth Assumptions: The company expects 4% to 6% organic growth in 2026, leveraging on average of 35%.
Pending Acquisition of Precision Sensors & Instrumentation (PSI): The acquisition is on track to close by January 1, 2026. PSI is expected to be accretive to financial profiles, including margins and growth, within the next few years.
Aerospace & Electronics Segment Outlook: The backlog and new program wins provide strong visibility into 2026 and beyond. Core sales growth for 2025 is anticipated to be up low double digits, with growth leveraged at 35% to 40% for the full year. The segment is expected to outperform its markets over the next decade.
Process Flow Technologies Segment Outlook: Core growth for 2025 is expected to fall at the lower end of the low to mid-single-digit growth range, with greater margin expansion as core volumes leverage at the higher end of the targeted range for the full year.
Defense and Aerospace Market Trends: The company anticipates growth from new emerging opportunities, including scaling and upgrades of radar, counter unmanned aerial systems, high-power energy, and space-based assets. The defense market is expected to benefit from government funding priorities and increased demand drivers.
Municipal Wastewater Pump Business: The business is on track for double-digit growth in 2025, driven by strong momentum in new product adoption.
Cryogenic Business: The business secured double-digit growth in new orders in Q3 2025, with continued growth expected in aerospace, defense, space launch, satellite production, and semiconductor investments.
Pharmaceutical Orders: The company won a $6 million large pharmaceutical order supporting capacity expansion for GLP-1 drug manufacturing, positioning it for future growth in this space.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the expectation for the PFT business being up organically low single digits for the year, and how the nonchemical and chemical portions compare to that?
A:The nonchemical markets like wastewater, cryogenics, pharma, and power in North America are seeing strong growth, with wastewater and cryogenics growing double digits. Chemical markets vary by region, with North America and the Middle East showing positive trends, while Europe and China are softer. The company is reshaping its portfolio to focus on higher-growth markets while maintaining its presence in chemicals.
Q:What were the key drivers of the margin upside in the PFT segment this quarter, and how should we think about these levers for next year?
A:The margin upside was driven by innovation, new product launches, commercial excellence, value pricing, and operational excellence. The company also managed tariff dynamics effectively. These factors are expected to continue contributing to margin expansion next year.
Q:Are you seeing signs of stabilization or return to growth in the chemical markets within PFT?
A:The chemical markets are stable with no signs of deterioration. Growth is expected to improve next year, but there is no clear inflection point yet.
Q:Can you discuss the margin expectations for the fourth quarter and why there might be a step down compared to earlier quarters?
A:The fourth quarter margins are expected to step down due to year-over-year headwinds in commercial aftermarket, lower production hours, and seasonality. However, the full-year margins are expected to be at the higher end of the targeted leverage range for A&E and exceed expectations for PFT.
Q:Are you seeing or expecting any impact from the U.S. government shutdown?
A:Currently, there is no impact from the U.S. government shutdown, and no issues are anticipated even into the first quarter.
Q:Can you provide more detail on the power and data center demand and how it benefits Crane?
A:The power market, primarily U.S.-based, is driven by investments in natural gas combined cycle plants. Crane participates with its valve portfolio and expects continued growth in this area. The funnel of projects is increasing.
Q:Are you investing organically at PFT to increase shipset content on AP1000?
A:Yes, investments are being made to increase content on AP1000, with a focus on pressurized water reactors. The company is identifying a 30% increase in content and bidding on additional share gains.
Q:What have you learned about the PSI business in the last three months that makes you more positive about its outlook?
A:The caliber of the PSI team, their openness, and strategic alignment have been impressive. Detailed plans and opportunities for collaboration have increased confidence in the business's potential.
Q:What is the growth outlook for 2026, and how does it compare to this year?
A:The growth outlook for 2026 is expected to align with the 4%-6% target range, with potential for being at the higher end. Organic growth has slowed slightly but remains strong.
Q:How should we think about the opportunity in defense and aero, particularly with F/A-XX CCA and larger drones?
A:Crane is well-positioned on NGAD platforms and CCA activity, with secured positions in emerging players. The company participates in medium and larger drones and expects to benefit as the market grows.
Q:How are you preparing to meet the demand in Aerospace & Electronics given the strong book-to-bill ratio?
A:The company is well-prepared to meet demand with inventory buffers and capacity to support OEM ramp-up rates.
Q:What is your view on automation and its impact on margins and growth?
A:Automation is focused on specific tasks like welding and areas where skilled labor is difficult to find. Full factory automation is not planned, but targeted automation is expected to improve reliability and address workforce gaps.
Q:Is the F-16 brake retrofit program still on track to hit the $30 million revenue target for 2026?
A:Yes, the program is on track to hit the $30 million revenue target for 2026, with no revenue expected in 2025.
Q:Will A&E organic growth accelerate next year?
A:A&E organic growth is expected to be at the high end of the 7%-9% long-term range, with commercial OE being a positive driver.
Q:Will corporate costs grow next year with the PSI acquisition?
A:Corporate costs are not expected to grow next year and are anticipated to leverage growth, reducing as a percentage of revenue.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear timeline or specific details on when chemical markets would recover, stating only that stabilization is expected and growth might improve next year. Additionally, while discussing automation, management did not provide specific numerical impacts on margins or growth, focusing instead on general benefits.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AUSA landscape
AUSA trade
Airbus production
Army AUSA
Association United
CTT shift
Chief Officer
Common Tactical
Day culture
DoD position
GLP drug
Instrumentation track
LTAMDS radar
Mr color
Mr specific
OE sale
OEMs
Officer Executive
PSI acquisition
System
ability
efficiency
effort
expansion
funnel
government funding
industry
integration planning
launch
momentum
opportunity Aerospace
outlook
radar system
vehicle
wastewater pump
year
CR Transcript
Camden National Corporation (CAC) Q4 2025 Earnings Call Transcript
Unknown1-27
The earnings call summary presents a mixed picture: basic financial performance is stable with some positive elements like increased interest checking balances, but noninterest income is flat. The Q&A reveals potential for modest loan growth and deposit cost improvements, but also highlights uncertainties in M&A and future tax rates. The strategic plan outlines raised earnings outlook and growth potential in various segments, yet lacks a strong catalyst for a significant stock price change. Thus, the overall sentiment leans towards neutral, with no major factors indicating a strong price movement.
Crane Company (CR) Q4 2025 Earnings Call Transcript
Positive1-27
The earnings call presents a positive outlook with raised earnings guidance, strong growth in aerospace, and new acquisitions expected to enhance margins. The Q&A reinforces this with opportunities in pricing and acquisitions, while integration costs are managed. The company's strategic focus on expanding technology and market segments further supports a positive sentiment. Despite some uncertainty in specific financial targets, the overall positive guidance and growth prospects outweigh these concerns, suggesting a likely stock price increase.
Crane Company (CR) Q3 2025 Earnings Call Transcript
Positive10-28
The earnings call summary and Q&A reveal strong financial performance with raised earnings outlook, robust growth in key segments like Aerospace & Electronics, and strategic M&A activities. Despite some uncertainties in chemical markets, positive trends in nonchemical sectors and defense, along with effective margin management, support a positive sentiment. The raised guidance and strategic initiatives outweigh concerns, suggesting a positive stock price movement.
Crane Company (CR) Q2 2025 Earnings Call Transcript
Unknown7-29
The earnings call presents a mixed picture. Strong core sales and order growth in Aerospace & Electronics, along with a robust M&A pipeline, are positive indicators. However, concerns about declining margins in A&E, cautious management outlook, and unclear guidance on cash EPS and margin expansion for PSI offset these positives. The Q&A section highlights management's cautious stance and lack of specificity in certain areas, leading to a neutral sentiment overall.
CR Slides
CR Report
Frequently Asked Questions
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