• Adjusted EPS (Q4 2024): $1.26, driven by 8% core sales growth.
• Full-Year Adjusted EPS (2024): $4.88, up 28% over 2023.
• Sales Growth (2024): 14%, with 8% core growth and 6% from acquisitions.
• Adjusted Operating Profit (2024): $383 million, up 29% from the previous year.
• Adjusted Free Cash Flow (2024): $234 million, compared to $165 million in 2023.
• Total Debt (End of 2024): Approximately $247 million.
• Cash on Hand (End of 2024): $307 million.
• Core Orders (Q4 2024): Up 8% year-over-year.
• Core FX-Neutral Backlog (Q4 2024): Up 9% year-over-year.
• Adjusted Operating Margin (Aerospace & Electronics, Q4 2024): 23.1%, up 290 basis points from last year.
• Adjusted Operating Margin (Process Flow Technologies, Q4 2024): 20.3%, up 330 basis points from last year.
• 2025 Adjusted EPS Guidance: $5.30 to $5.60, reflecting 12% growth at the midpoint.
• 2025 Core Sales Growth Guidance: 4% to 6%.
• 2025 Adjusted Operating Profit Growth Guidance: Approximately 12% at the midpoint.

• Warning! GuruFocus has detected 4 Warning Sign with CR.

Release Date: January 28, 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 close to Q4 2024, with results outperforming expectations.
• The company achieved an 8% core sales growth in Q4, driven by strength in aerospace and electronics and process flow technologies.
• Full-year adjusted EPS increased by 28% over 2023, with sales for 2024 up 14%.
• Crane Co (NYSE:CR) announced a 12% dividend increase, reflecting confidence in future growth.
• The company has a strong M&A pipeline and substantial financial flexibility with approximately $1.5 billion of debt capacity for acquisitions.

Negative Points

• The impact of Hurricane Helene caused temporary challenges at the Marion, North Carolina facility, affecting production.
• The industrial demand signals remain mixed, with some regions like Europe and China showing stagnation.
• There is a potential headwind from foreign exchange, expected to impact sales by around 1% in 2025.
• The company faces challenges in maintaining the high growth and margin expansion seen in recent years.
• Concerns about geopolitical tensions, such as potential tariffs affecting operations in China, could pose risks.

Q & A Highlights

Q: Can you provide more color on the backlog dynamics for Process Flow Technologies (PFT) given the strong growth in Q4? A: Alejandro Alcala, Executive Vice President, explained that the backlog grew in the first half of the year due to project bookings and was reduced in the second half due to excellent execution. Despite this, the backlog remains strong, up about 40% compared to 2019, and the company is confident in achieving low to mid-single-digit growth for PFT in 2025.

Q: How far along is Crane Co in transitioning the PFT portfolio to higher growth and higher margin businesses? A: Alejandro Alcala noted that the portfolio mix in high-growth markets has increased from 30% in 2017 to over 60% now, with a mid-term goal of reaching 70%. The company aims for mid-20s operating profit margins and continues to execute its strategy through innovation, commercial excellence, and operational improvements.

Q: Can you elaborate on the mixed signals from the industrial economy and expectations for 2025? A: Max Mitchell, CEO, mentioned that while some projects are lumpy, leading indicators remain strong. The U.S. market is generally stronger, while Europe and China are stagnant. Alejandro Alcala added that no particular market or region is worsening, and some improvement is expected in 2025, with strong demand in cryogenics, chemical, and pharmaceutical markets.

Q: What is the outlook for Aerospace and Electronics (A&E) in terms of organic growth for 2025? A: Richard Maue, CFO, provided guidance with commercial OE expected to grow in low double digits, military OE in mid-single digits, and both commercial and military aftermarket in mid- to high-single digits. The guidance is based on achievable ramp rates for Boeing's MAX recovery.

Q: Are there any concerns about exposure to China in light of potential tariffs and retaliations? A: Max Mitchell expressed little concern, noting that Crane Co's localization content in China is not significant. The company is well-prepared to manage any inflationary measures and will not overreact to potential changes in tariffs.

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