Crane Company

Greetings. Welcome to Crane's second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jason Feldman, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good day, everyone. Welcome to our second quarter 2022 earnings release conference call. I'm Jason Feldman, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our President and Chief Executive Officer, and Rich Maui, our Senior Vice President and Chief Financial Officer. We will start off our call with a few prepared remarks, after which we will respond to questions. Just a reminder that the comments we make on this call may include some forward-looking statements, We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers, and tables at the end of our press release and accompanying slide presentation, both of which are available on our website at www.craneco.com in the investor relations section. Now let me turn the call over to Max.

Thank you, Jason, and good morning, everyone. Thanks for joining the call today. Another strong quarter with solid results across the board. Second quarter adjusted EPS was $1.90, consistent with our expectations and our guidance commentary, and compared to $1.93 in the second quarter of 2021. Remember that the May divestiture of crane supply reduced EPS by approximately 5 cents, both sequentially and compared to the prior year. We also delivered core sales growth of 7%. with further strength in demand reflected in core order growth of 14% and core backlog growth of 21% compared to last year. Continued solid underlying trends in our primary end markets. Clearly, momentum continues with another quarter of strong results. Differentiated execution, despite a challenging operational environment, as well as further evidence of our success in driving accelerating growth. across all of our businesses, our commercial excellence, innovation, and investment in technology roadmaps, support our ability to drive outperformance compared to our peers across the cycle in an environment with continued supply chain constraints. In addition, everything is on track and progressing towards our early 2023 separation, which will unlock shareholder value and permit each post-separation company to optimize investment and capital allocation and further accelerate growth. Starting with the market environment, we continue to see robust demand across our end markets. We are carefully watching for any signs of softening, but order rates remain strong across our businesses. The supply chain, including material and component availability, remain challenging, but still fully consistent with the outlook we provided in January of this year. We've clearly planned appropriately for this environment. From a cost and inflation perspective, we continue to be assertive with pricing actions across all of our businesses, and we continue to fully offset the impact of inflation. Overall, we still believe that we planned appropriately when we entered 2022 and that our current guidance is consistent with the demand conditions and supply chain constraints we are seeing today, and we expect similar conditions to persist throughout the year. Consistently delivering on our commitments, the year is playing out as expected. And beyond execution for 2022, we remain intensely focused on all strategic initiatives, advancing technology to position our businesses for the future, and preparing for the next step of our journey, the April 2023 separation into Crane Company and Crane NXT. Each segment also continues to execute for growth. We remain highly confident in our ability to drive a 7% to 9% sales CAGR at Aerospace and Electronics, through the end of the decade. Process flow technologies continues to drive record levels of product vitality and innovation. And at Crane NXT we are aligned with secular trends and macro drivers in delivering solutions that enhance productivity and efficiency for our customers with leading technologies. So in summary, excellent execution and all efforts on track. An exciting set of opportunities for these businesses both before and after the separation At this point, I'll turn it over to Rich for some additional financial commentary.