Crane Company

Welcome to the Crane Company first quarter 2025 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your headset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the conference over to Alison Poliniak, Vice President of Investor Relations.

Thank you, operator, and good day, everyone. Welcome to our first quarter 2025 earnings release conference call. I am Alison Poliniak, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our Chairman, President, and Chief Executive Officer, Alex Alcala, Executive Vice President and Chief Operating Officer, and Rich Maui, our Executive Vice President and Chief Financial Officer, along with Jason Feldman, Senior Vice President, Treasury, Tax, and Investor Relations, who is on for Q&A. We will start off our call with a few prepared remarks from Max, Alex, and Rich, after which we will respond to your questions. And just a reminder, the comments we make on this call will include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K, and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying side 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, Allison, and thanks, everyone, for joining the call today. May you live in interesting times. The origins of the phrase are unknown, but we've all heard it used as a Sarcastic euphemism for times of challenge and uncertainty. Some think it's intended more as a curse, but either way, it's times like these that we prepare for at Crane. As a leader of a global diversified manufacturer and for my entire team, what a fantastic time for us to continue to hone our strategic thinking, processes for reacting to fast-changing events, and our ability to execute in an environment that's in constant flux. and an experience the whole team embraces and relishes in this environment as we continue to have the opportunity to grow through adversity. There are many potential scenarios for how the current dislocation progresses over the course of 2025 and beyond. What's common across those scenarios is my strong belief that Crane will emerge in an even stronger competitive position than when we entered this year. and off to a very strong start to 2025. Adjusted EPS was $1.39, driven by an impressive 7.5% core sales growth, reflecting strength across both aerospace electronics and process flow technologies. Core orders were also solid, up 16% in the quarter, driven primarily by the ongoing strength in our aerospace electronics business and with process flow technologies also ahead of our expectations. As we exited 2024, We had a very positive outlook for 2025, given the expectation of executing successfully on our strategy and growth initiatives, along with favorable macroeconomic outlook. As the quarter progressed, we gained confidence in a path to exceed the guidance we provided in January. However, given recent economic developments, policy decisions outside of our control, the balance of the year is likely to unfold differently than we had anticipated. Despite that uncertainty, Based on the current inflationary pressures and demand and supply chain environment that we see today, along with our best analysis of the risks and opportunities ahead of the year for us, we are comfortable, comfortable reaffirming our full year 2025 adjusted EPS outlook in the range of $5.30 to $5.60. Our outlook reflects our views based on current economic conditions, And we will, of course, adjust that outlook if needed based on any updates or changes to trade policy or any incremental changes in the demand environment. The assumptions underlying this guidance range are based on the current conditions known and faced today, including tariffs, continuing throughout the balance of the year. If you believe the situation will improve faster, there is upside to the midpoint of our range. At this point, based on what we know, we believe that we can still achieve the low end of our guidance range with a modest deterioration in demand or slight worsening of the trade environment. While factors outside our control are dynamic, Crane remains extremely well positioned to outgrow our markets and deliver above market returns in the long run. And we are confident in our strategic direction and our execution capabilities. We last met with many of you in early March for an off-site investor day at our Fort Walton Beach Florida Defense Power Facility. That site delivers the most advanced high-power conversion technologies with industry-leading size, weight, and performance capabilities for defense applications, including ground-based AESA radars and more electric tactical military vehicles, among other applications. That business is winning every day with an 11% sales tagger expected for the decade from 2021 through During that visit, you heard and saw the power of the machine that Crane has built into our holistic business system, focused on strategic execution and innovation to support our customers, along with a rigorous cadence and discipline of delivering on results that touches every aspect of the business, from our intellectual capital processes to commercial excellence and operational continuous improvement, which you all saw firsthand. And our results in the quarter reflect what we conveyed. In addition, we described in detail a deeper understanding of our business system in the context of new acquisitions and how we add value to businesses we acquire and our very active and detailed integration process. And we are actively working on opportunities today. We have not slowed down in any way in the present environment. The strength of our underlying business, our strategy, and our capabilities in both operational execution and commercial excellence, coupled with an extremely strong balance sheet, positions us extremely well to continue driving above market growth, both organically and through acquisitions. I want to thank all of you for going out of your way to visit with us in Florida, and our team enjoyed welcoming you to the machine of being Crane, and hopefully encouraging some of you to listen to some classic Pink Floyd. Now, let me pass it over to our Chief Operating Officer, Mr. Alex Alcala, to provide some color on the current environment.