Adjusted EPS: $1.39, driven by 7.5% core sales growth. Core Orders Growth: Up 16% in the quarter. Full Year 2025 Adjusted EPS Outlook: Reaffirmed in the range of $5.30 to $5.60. Aerospace and Electronics Sales: $249 million, a 10% increase, all organic growth. Aerospace and Electronics Backlog: Record high of $960 million, up 21% year-over-year. Adjusted Segment Margin for Aerospace and Electronics: 26%, a record high, up 360 basis points from last year. Process Flow Technologies Sales: $309 million, up 9%, with 5% core sales growth. Adjusted Operating Margin for Process Flow Technologies: 20.9%, expanded by 10 basis points. Core Operating Leverage for Process Flow Technologies: 35%, at the high end of the targeted range. Corporate Expense: $25 million in the quarter, with an expectation of $80 million for the full year.

Warning! GuruFocus has detected 3 Warning Sign with CR.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Crane Co (NYSE:CR) reported a strong start to 2025 with an adjusted EPS of $1.39, driven by a 7.5% core sales growth. Core orders increased by 16% in the quarter, primarily due to strong performance in the Aerospace and Electronics segment. The company reaffirmed its full-year 2025 adjusted EPS outlook in the range of $5.30 to $5.60, indicating confidence in its strategic direction. Crane Co (NYSE:CR) has a robust pipeline of potential acquisitions and a strong balance sheet with $1.5 billion in M&A capacity. The Aerospace and Electronics segment achieved a record backlog of $960 million, with a 21% year-over-year increase.

Negative Points

Recent economic developments and policy decisions have introduced uncertainty, potentially affecting the company's outlook for the remainder of the year. The company faces tariff exposure, with about 7% to 8% of its cost of goods sold affected by direct imports into the United States. There is a potential risk of demand fluctuations in the chemical sector, with some project activities expected to shift to the right. The company anticipates a deceleration in year-over-year growth rate in the commercial aftermarket segment as comparisons become more challenging. Supply chain disruptions, particularly in the Aerospace segment, could lead to extended lead times as companies adjust their supply chains.

Q & A Highlights

Q: Can you provide more clarity on the updated guidance, particularly regarding the contribution of price to your sales guidance and the nature of the backlog? A: Richard Maue, CFO, explained that they expect about a 3% contribution from price, more heavily weighted towards Process Flow Technologies (PFT). The backlog, particularly in Aerospace and Electronics, includes longer lead-time orders, extending into 2026 and beyond, providing confidence in future growth.

Story Continues

Q: Are there any specific defense programs or growth drivers within the $150 billion defense package that stand out for Crane? A: Richard Maue, CFO, noted Crane's broad exposure across defense platforms, including munitions, aircraft, and radar applications. Max Mitchell, CEO, highlighted themes like munitions replenishment, aging military upgrades, and electrification as key growth drivers.

Q: Can you discuss the growth split between volume and price in Aerospace and Electronics this quarter? A: Richard Maue, CFO, stated that the growth was roughly 50/50 between volume and price. There was healthy progress in commercial areas, with indexed increases and contract adjustments contributing to pricing gains.

Q: How is the supply chain situation affecting your business, particularly in relation to potential disruptions from other suppliers? A: Alejandro Alcala, COO, mentioned that the supply chain for Process Flow Technologies has stabilized, while Aerospace and Electronics might see some lead time extensions due to adjustments in supply chains. However, no major disruptions are expected.

Q: Have you seen any slowdown in M&A activity due to macroeconomic conditions? A: Max Mitchell, CEO, confirmed that M&A activity remains very active for Crane, with no slowdown observed. They are engaged in due diligence across multiple potential acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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