Crane Company Q1 2026 Earnings Call - Acquisitions Outperform Expectations, Driving Guidance Raise

Operator: I would like to now turn the call over to Allison Poliniak-Cusic, Vice President of Investor Relations. Please go ahead.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company: Thank you, operator, and good day everyone. Welcome to our first quarter 2026 earnings release conference call. I’m Allison Poliniak-Cusic, Vice President of Investor Relations. On our call this morning, we have Alex Alcala, President and Chief Executive Officer, and Rich Maue, our Executive Vice President and Chief Financial Officer, along with Jason Feldman, Senior Vice President, Investor Relations, Treasury and Tax, who’s on for Q&A. We will start off our call with a few prepared remarks from Alex and Rich, after which we’ll respond to questions. 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, Form 10-K, and subsequent filings pertaining to forward-looking statements.

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 accompany slide presentation, both of which are available on our website at www.craneco.com in the Investor Relations section. Let me turn the call over to Alex.

Alex Alcala, President and Chief Executive Officer, Crane Company: Thank you, Allison, and good morning, everyone. We appreciate you joining us today. As I step into the role of CEO, I’m energized by the opportunity to lead Crane at a time when strong leadership, disciplined execution, and agility truly matter. Much like this time a year ago, we’re operating in an environment that continues to evolve rapidly. Fortunately, our business system, the CBS machine, together with our global team’s relentless focus, resilience, and commitment to execution with a disciplined cadence, continues to differentiate Crane. We view periods of uncertainty and market dislocation not as obstacles, but as opportunities to elevate our performance. Time and again, Crane has emerged from challenging environments stronger than before and increasingly advantaged relative to our competitors.

We’re off to a strong start in 2026, with first quarter results reflecting excellent execution across the company, exceeding our expectations and underscoring the strength of our teams and our commitment to delivering shareholder value. Adjusted EPS of $1.65 was up 15% over the prior year, driven by 4% core sales growth, reflecting broad-based strength at Aerospace & Advanced Technologies and continued strong execution at Process Flow Technologies, including solid core order and backlog momentum. Also of note was the strong performance of our recent acquisitions that drove substantial amount of upside in the quarter relative to our expectations. Druck, Panametrics, Reuter-Stokes, and optek-Danulat all performed exceptionally well, with integration and deployment of CBS progressing ahead of plan and early benefits emerging faster than anticipated and ahead of what was reflected in our January guidance.

We entered the year with positive momentum at both AAT and PFT. As the first quarter progressed, our execution further strengthened our confidence in the underlying earnings trajectory for the year. At the same time, however, the external environment became more challenging. Geopolitical dynamics are evolving, and macroeconomic uncertainty is still very much part of that backdrop. Taking all of this into account, our performance to date and the range of scenarios, risks and opportunities we see ahead, we are raising our adjusted full-year outlook by $0.10 to a range of $6.65-$6.85. Our guidance reflects what we have clear line of sight to and high level of confidence in delivering, even against a more uncertain macro backdrop. It assumes continued elevated energy prices and inflation through the balance of the year, and already factors in potential decline in commercial aftermarket.

In addition, as you would expect, our teams have actions to get ahead of the increased inflation as we move through the year. We remain focused on execution, continuing to build on our momentum and finding potential opportunities to over-deliver. Across the organization, we continue to stay agile in a dynamic environment. Our deep management teams have been here before, and we will manage with the cadence and disciplined execution that you’ve all come to expect from Crane. Now, some thoughts on the performance of the recent acquisitions and the segments in the quarter, and as we look to the balance of 2026. As I mentioned, the acquisitions performed exceptionally well. I’m extremely pleased with the execution and pace of improvements.

Over the years, we have built tremendous organizational capability that has enabled us to integrate four businesses simultaneously at speed and with zero disruption to the core businesses. This performance reinforces the strength of CBS and the opportunity to create meaningful shareholder value through continued disciplined inorganic growth combined with the power of the CBS machine. The teams are energized, having fun, and are driving results better than our expectations at the start of the year. Strong operational execution, restructuring cost actions, and early commercial excellence momentum drove a majority of the upside relative to our January guidance, reinforcing our confidence in both the quality of the businesses and our integration playbook. Margins across the acquired businesses were substantially improved from last year and ahead of our plan. We see opportunity for continued progression in the quarters ahead.

More specifically, we now expect the margin and earnings contribution from the acquisitions to be more evenly weighted throughout the year compared to our prior expectation of back-half-weighted performance. Based on what we’re seeing today, we now expect accretion for the full year to be at least double what we communicated in January, or about $0.15 of EPS. My confidence in exceeding our target ROIC by year five has only increased over the last few months. I’m so proud of all our new associates that have joined Crane this year, and I’m excited to see where we will continue to take these outstanding brands in the future. We are already moving beyond just the tactical integration actions and are well on our way with strategy deployment, painting a very exciting future for everyone, including our shareholders.

Turning to Aerospace & Advanced Technologies, we continue to see strength across the aerospace and defense demand environment. The backlog we built, along with the new programs and opportunities our Aerospace & Advanced Technologies teams have secured, continue to provide us with great visibility well beyond 2026. Looking to the balance of the year, we continue to expect full-year core sales growth for the segment to land at the high end of our long-term set. On the commercial side, OE activity remains healthy, with Boeing continuing with strong production rates. Commercial aftermarket revenue was down as expected in the quarter due to unfavorable year-over-year comparisons, while commercial aftermarket orders were up 11.

While we haven’t seen an impact to orders at this time, given the geopolitical situation, elevated oil prices, and long-haul travel disruption through the Middle East, we could see an impact to commercial aftermarket as the year progresses. However, even factoring in a decline in commercial aftermarket, we remain confident in our 7%-9% sales growth range, leveraging at 35%-40%. Rich will provide more details on how we’re thinking about this. On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remains solid, and there’s a continued focus on strengthening the broader defense industrial base, given the heightened global uncertainty we continue to see.

We are seeing significant demand signals across both missile defense and radar applications, among other areas in our portfolio, further strengthening the long-term outlook, with the potential for some benefit this year, depending on order timing and lead times. In the quarter, we received strong orders for the PAC-3 program and remain under negotiations for similar wins. Additionally, we received incremental orders for LTAMDS and are currently under negotiations for additional contracts with other providers. We fully anticipate additional orders in these two defense growth areas as we move through the year. Beyond this, we continue to develop new technologies, win new business, and pursue additional opportunities across this segment that gives us confidence we’ll deliver above-market growth for the rest of the decade.

Particularly on the defense side, we expect replenishment of military aircraft spares and missiles, along with continued demand for ground-based radar systems, all extending the period of strong demand for years. Very confident for yet another outstanding year at Aerospace & Advanced Technologies. At Process Flow Technologies, another solid quarter, and we remain well positioned to consistently outgrow our markets across the cycles. We have deliberately repositioned the portfolio around our core end markets, pharmaceuticals, wastewater, cryogenics, chemicals, and nuclear power, where we hold strong competitive positions and differentiated capabilities that support sustainable market outperformance. Overall demand for the quarter came in slightly ahead of our expectations, and execution was strong, driving a 50 basis point improvement in adjusted margins, even with the dilutive impact of acquisitions. On the order side, power generation remained a key area of strength.

We also saw solid project activity in pharma tied to U.S. capacity expansions, continued momentum in cryogenics driven by capacity needs within the space launch segment, and strong orders in LNG. In nuclear, as part of the Holtec Palisades restart, we’re able to add value by extending contract terms. With respect to the ongoing conflict, note that only about 5% of PFT segment sales are directly exposed to the Middle East. While we’re continuing to ship today, and overall demand in the region in the quarter was on track, we do see projects moving to the right and potentially impacting the balance of 2026, along with some shipment lane disruptions. Notably, we’re not seeing cancellations.

Longer term, we do see incremental opportunities for rebuilding as the geopolitical environment stabilizes. Even with this uncertain backdrop, we continue to invest for long-term growth through disciplined execution of our multi-year technology and new product development roadmaps, along with ongoing commercial excellence initiatives, all supported by strong and consistent operational execution. Tactically, we have proven our ability to respond quickly to changes in demand. We will remain nimble during this period, taking appropriate pricing and cost actions as needed. For the full year, we still expect core growth to be consistent with our initial guidance of flat to low single digits, leveraging within our target range of 30%-35%. In summary, a really solid start. Our strategy is unchanged, and we remain focused on managing through any near-term demand variability without losing sight of our long-term objectives.

Taken together, our businesses remain exceptionally well-positioned to continue delivering strong results. We also continue to see significant opportunity to further enhance. Balance sheet remains exceptionally strong, with substantial available M&A capacity, and we continue to pursue a robust pipeline of potential opportunities. M&A activity has not slowed, and we are actively engaged on a number of opportunities across both Aerospace & Advanced Technologies and Process Flow Technologies. While there is nothing imminent at this point, our pipeline remains healthy, and we remain disciplined and selective as we evaluate potential transactions. Before turning the call over to Rich, I want to emphasize that while external conditions remain dynamic, our focus has not changed. We remain disciplined in the areas we control, execution, customer focus, cost improvement, development of our people, and continued investment in our growth initiatives and technology roadmaps.

We believe this approach positions Crane to outperform our end markets and create long-term shareholder value. Regardless of near-term volatility, over the long term, our approach remains consistent. We will deliver a 4%-6% long-term core sales growth through the cycles from resilient and durable businesses with solid aftermarket. Substantial operating leverage on top of already solid margins today that should lead to double-digit average annual core profit growth with significant upside from capital deployment. Let me turn the call over to our CFO, Mr. Rich Maue, for more specifics on the quarter.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Thank you, Alex, and good morning, everyone. Wow, what a start to the year. Let me start off with total company results. Total sales were up 25% in the quarter compared to last year, with 4% core growth driven primarily by the ongoing strength within the Aerospace & Advanced Technologies segment. Sales from acquisitions contributed 18% in the quarter, which was modestly above expectations, reflecting strong execution as these four new businesses become a part of the Crane Company. Adjusted operating profit increased 29%, reflecting the impact of the higher core sales, contribution from the acquisitions, and productivity and favorable price net of inflation. A truly outstanding result.

Total core FX neutral backlog was up 9% compared to the first quarter last year, reflecting continued strength at Aerospace & Advanced Technologies, and core backlog was up 3% sequentially, driven primarily by Process Flow Technologies. Core orders were down 5% year-over-year but were modestly better than we expected. The decline was entirely driven by an unfavorable comparison within Aerospace & Advanced Technologies, where a 15% decline reflected the record first quarter orders last year in this business, which included several multiyear orders that we highlighted to you last April. Core orders in PFT increased 5% compared to last year, and core backlog in PFT was up 7% compared to December. Backlog and orders across the acquisitions were also solid, coming in modestly above our expectations and continuing to support a strong full-year outlook.

From a balance sheet perspective, we ended the quarter with pro forma net leverage at 1.4x, leaving us well-positioned for further M&A, as Alex Alcala noted. A few more details on the segments in the quarter. Starting with Aerospace & Advanced Technologies. Sales of $318 million increased 28% in the quarter, with core sales up 9.4%. Our backlog of nearly $1.2 billion increased 14% on a core basis and increased 24% including Druck. On a sequential basis, core backlog increased 2% with total backlog up 11%. Again, no surprises and at record levels. Demand remains strong. We are seeing increasing RFP and RFQ activities across several defense programs supporting missile defense and ground-based radar, some of which reflect recent wins at some of our defense customers, giving us further confidence in our multiyear outlook.

Let me spend a minute on the core business in the quarter. On the OEM side, sales were strong, up 16%, with commercial OEM up 20% and military up 10%. Total aftermarket was down 2% in the quarter, with military aftermarket posting a very strong increase, up 28% in the quarter, reflecting the breadth and strength of our portfolio. That military strength was offset by commercial aftermarket, which was down 13% as expected. Specific to commercial aftermarket, shipments were largely in line with what we expected for Q1, but with an unfavorable comparison against higher initial provisioning in the prior year first quarter. Even with that decline, we came in above our growth expectations for the quarter. Of note, commercial aftermarket orders in the quarter were up 11% year-over-year and 10% sequentially.

While we haven’t seen any impacts to orders so far resulting from the ongoing conflict, elevated oil prices and disruptions to long-haul travel through the Middle East could create pressure on commercial aftermarket as the year progresses. We are factoring into our guidance that commercial aftermarket could decline on a full year basis. Taken all together, though, we remain very confident in our full-year segment sales outlook. We continue to expect total core sales growth at the high end of our 7%-9% algorithm. While the mix across sub-segments may shift as the year plays out, our overall guidance is unchanged, and that really speaks to the diversity and durability of our Aerospace & Advanced Technologies portfolio. Adjusted segment margin of 24.6% compared to 26.2% last year, primarily reflecting the impact of the Druck acquisition.

This was an outstanding result and nearly 200 basis points better than we expected, given Druck outperformance in the quarter as well as continued strong performance in our core A&E business. At Process Flow Technologies, in Q1, we delivered sales of $378 million, up 23% compared to a year ago, with core sales down 0.6%, slightly better than we anticipated, with the acquisitions of Panametrics, Reuter-Stokes, and optek-Danulat adding 19 points of growth, and FX contributed 4 points of growth in the quarter. Compared to the prior year, FX neutral backlog at PFT decreased 2.5%, but on a sequential basis, improved a solid 7%. In addition, core FX neutral orders were up 5%, also modestly above our expectations.

Adjusted operating margin of 22.1% was approximately 50 basis points above the prior year, this was inclusive of the dilutive impact from the recent acquisitions. Like Aerospace & Advanced Technologies, results were above our expectations, given better performance across our core businesses and each acquired business. Productivity is reading through as well as price net cost. In the quarter, the impact from the conflict in the Middle East was nominal, as Alex Alcala mentioned. We have just under 5% of total exposure in region on a full year basis. We expect projects to move to the right, we do expect notable freight and other inflationary headwinds as we move through the balance of 2026. Our teams are already executing to ensure no net inflation risk to the P&L, inclusive of margin impacts.

In summary, we continue to expect core operating leverage for the segment between 30%-35% for the full year. Moving to the non-operational items below the segments. Corporate expense for the quarter was $24 million, slightly lower than our expectations. Recall, we anticipated corporate expense to be highest in Q1 due to accounting rules that require accelerated amortization of stock-based compensation expense for associates that are retirement eligible. For 2026, we continue to forecast corporate expense to be in the range of $80 million-$85 million. Given the funding for the acquisitions of Panametrics, Druck, Reuter-Stokes, and optek-Danulat, net non-operating expense in the quarter was $15 million. We continue to estimate full-year 2026 net non-operating expense of approximately $58 million. Lastly, we continue to expect our tax rate for 2026 to approximate 23%.

Taking all of this into account, our performance to date, as well as the risks and opportunities we see ahead, as Alex mentioned, we are raising our adjusted full-year guidance by $0.10 to a range of $6.65-$6.85, again, reflecting what we have clear line of sight to and a high level of confidence in delivering. Looking at the cadence of quarterly results for the year, we expect Q2 to be similar to Q1, and our full-year earnings split to now be more balanced at around 49%, 49%-51% between the first and second half, given the strong Q1 performance. The second half earnings performance is expected to be more evenly balanced relative to our historical quarterly cadence of a sequential decline from Q3 to Q4, given the expected performance of our recent acquisitions.

We began the year with performance that exceeded our expectations, underscoring the strength of our teams, our strategic direction, and our execution. We remain committed to building on that momentum and consistently delivering results. You know, Alex, all the uncertainty that everyone is talking about this earnings season reminded me of a notable quote from the Academy Award-winning actor, Ryan Reynolds, from the timeless movie classic, National Lampoon’s Van Wilder. "Worrying is like a rocking chair. It gives you something to do, but it doesn’t get you anywhere." At Crane, leveraging our CBS machine, we are very intentional and focused on what’s in our control no matter what the environment, and we always view periods of uncertainty as periods of opportunity. With that, operator, we are now ready to take our first question.

Operator: Thank you. The floor is now open for questions. Again, we ask you pick up your handset when posing your questions to provide optimal sound quality. Thank you. We’ll take our first question from Amit Mehrotra. Please go ahead. Your line is open.

Amit Mehrotra, Equity Research Analyst, Unknown: Thanks, operator. Good morning. I wish I had a good movie quote, but I’ll have to come up with one next quarter. maybe start PSI, which is obviously very strong and clear. maybe just unpack where the upside’s coming from across Druck, Panametrics, Reuter-Stokes. obviously, you’ve had this target of getting from $60 million to 150 over five years to hit that ROI target. it seems like you’re achieving that greater or even faster. Maybe you can just update us on timing with respect to that progression.

Alex Alcala, President and Chief Executive Officer, Crane Company: Good morning, Amit. Thank you for that question. Related to PSI, the quarter upside, I mentioned three areas. First, the execution of the three businesses was stronger than expected, just as from a volume standpoint, demand is stronger, execution has been very solid, so that created some upside. The cost actions. You may recall that we’re taking two types of cost actions in the short term. One is eliminated the overall PSI layer, management layer. We’re really operating these as three businesses, so that was executed very well. Within the businesses, as we’re executing product line simplification, there’s realignment also of resources and restructuring. Teams moved quite quickly in the quarter, and we started to see some of that upside.

The third element is the beginnings of value pricing and commercial excellence that are starting to read through as we moved also at great speed. I expect that to improve during the year. Related to timing overall, this year we came in thinking on the top line, the PSI set of businesses would be in the range of 4%-6% on the growth. We’re now thinking closer to the higher side of that range. We were thinking we would improve 200 basis points of margin, and now we’re thinking at least 300 basis points of margin. Ahead of schedule of our plan, which, you know, puts us overall in that 5-year timeline really gaining ground. Very confident and over-delivering to those benchmarks.

Amit Mehrotra, Equity Research Analyst, Unknown: Great. Great. Thank you for that. Just maybe as a follow-up, can we talk about PFT core order improvement? Obviously very, very strong sequentially. Is it enough to sort of call an inflection in the, you know, the Process Flow cycle where you’re seeing the strongest momentum across obviously your various regions and various end markets? Maybe you could just double-click on that in terms of where you’re seeing that momentum.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah. On the question of orders for PFT, the strength has come in some markets that we’ve been highlighting in the past, that’s continued. I think that will continue through the year. Power generation in Americas, pharmaceuticals, cryogenics, wastewater in particular, gave us the upside. That’s been pretty consistent. Interestingly, we don’t see those segments impacted by the higher energy prices, we think demand will remain solid through the year. Chemical has continued to be sluggish, at a trough holding, I wouldn’t call it an inflection point yet until we see that piece of the business changing.

Historically, higher energy prices has led to increased demand in that chemical segment, but it takes a while to read through, and particularly in the Gulf, where the customers see that benefit of feedstock between gas and oil. Even though end customer demand for their customers may be slower, it still makes sense to invest and expand capacity, debottlenecking and so forth. I think solid, not quite calling an inflection, especially on the chemical, but definitely better than we expected going into the year and feel better about the prospects that we did three months ago.

Amit Mehrotra, Equity Research Analyst, Unknown: Great. All right. Thank you very much. Congrats on their good results. Appreciate it.

Operator: Thank you.

Alex Alcala, President and Chief Executive Officer, Crane Company: Thank you, Amit.

Operator: Thank you. We’ll take our next question from Matt Summerville of D.A. Davidson. Please go ahead. Your line is open.

Matt Summerville, Equity Research Analyst, D.A. Davidson: Thanks. Couple questions. Can you maybe comment on the magnitude of EPS accretion you witnessed as it pertained to the acquisitions, and specifically what you’ve done to drive near immediate linearity in those businesses, which, you know, last conference call were sort of deemed to be quite second half load, you know, back half loaded overall? Then I have a follow-up.

Alex Alcala, President and Chief Executive Officer, Crane Company: Rich.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. We obviously did see some accretion in the quarter, as Alex Alcala mentioned. We felt, just given the results that we feel like we’re gonna see at least double what we thought on a full year basis. Coming into the year, we had in our minds about an $0.08 number in mind and, you know, we felt comfortable today saying that we would see a full year of $0.15. We did see a portion of that here in the first quarter. You know, I wouldn’t say it’s necessarily linear, but, you know, perhaps close. That would be the overall impact and how we’re feeling about the business. If that helps.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah, I think to add, Matt, on the cost actions that we took, we were able to execute faster than we had originally planned. That creates not only upside for the year, but also more balanced earnings through the year. Now that said, as some of this backlog with improved pricing reads through, we’ll still expect to see some gradual improvements from the acquisition as the year progresses.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: The only other thing I would add is that we saw more, a little bit more in the way of, I think as we think about the cadence, the volumes have been a bit stronger as well, in particular for Druck.

Matt Summerville, Equity Research Analyst, D.A. Davidson: Understood. Thank you for that. Maybe, Alex Alcala or Rich Maue, if you can expand just on kind of the actionability you’re seeing in the M&A pipeline, you know, maybe handicap a bit whether you see more deals getting over the finish line, you know, before the end of the year into the early part of 2027. If the average deal size you’re looking at is starting to kind of melt higher, maybe more similar in nature to, you know, the size of PSI, as an example.

Alex Alcala, President and Chief Executive Officer, Crane Company: Matt. Deal activity or M&A opportunities continues to be quite strong. There’s a lot happening. We’re involved in several processes on both sides of the segment. It’s a range of sizes. I think we’ve commented before that our sweet spot is around that $500 million of value. There’s deals that are smaller than that that we’re looking at that seem quite interesting as bolt-ons. There’s some deals that are a little bit bigger than that that also look interesting. It’s a bit opportunistic. We’ll remain disciplined. We’ll see how the year plays out. As far as activity and focus, there’s quite a bit happening. You have anything, Rich?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: No, I think that sums it up. You know, the nature of the transactions too, I would say, you know, from a, from a complexity and bandwidth perspective, everything we’re looking at is, you know, nothing is gonna cause us to hesitate in the way of resource constraints.

Matt Summerville, Equity Research Analyst, D.A. Davidson: Understood. Thank you, guys.

Operator: Thank you. We’ll take our next question from Jeff Sprague with Vertical Research. Please go ahead.

Jeff Sprague, Equity Research Analyst, Vertical Research: Hey, thanks. Good morning, everyone. Hey, just wanted to come back to the comments about aero aftermarket and completely understand it could sort of fade as the year progresses given what’s going on. It’s a little unclear what you’re actually doing. It could be weaker, but we can make it up elsewhere, or have you actually dialed in a decline in aftermarket in the way you’ve guided the year here?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. Jeff.

Jeff Sprague, Equity Research Analyst, Vertical Research: Understand the range hasn’t changed, right? Yeah.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. You know, thanks, Jeff. I think maybe a little perspective to start as well on this. If you remember when we came into the year and we initiated, initially issued our guidance for commercial aftermarket, we were, I would say, on the lower end of projecting, right? We were saying something like in the mid-single digit range coming in. You know, we did get a lot of questions back on that. You know, here we are a quarter later and we see the headwinds in the marketplace potentially from the Middle East, the conflict and so forth. We’re basically saying here, you know, we’re gonna guide down.

Our guidance reflects a down number for commercial aftermarket. When you consider what our initial guide was, the move, and you guys can all do the math, right? It isn’t a big number overall. In terms of offset, what we are seeing is a pretty considerable demand increase in our view, I would say we are seeing in military, in particular in spares. Aftermarket, you saw in the quarter, we were up 28%. We have the incremental benefit that comes in the second quarter through the balance of the year in the F-16 brake control upgrade program I think you’re aware of.

Jeff Sprague, Equity Research Analyst, Vertical Research: Yeah.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: When you step back and you just look at the overall complexion of our aftermarket and where we’re coming from off the first, you know, guidance number that we put out in January, you know, we feel highly confident that we’re gonna offset even in this revised down outlook for commercial aftermarket.

Alex Alcala, President and Chief Executive Officer, Crane Company: If it plays out differently, Jeff, right? Because aftermarket demand has been resilient post-COVID, as you know, to higher energy and travel has been resilient. If it plays better than our assumption, then that’s an opportunity for us, an upside. We felt comfortable assuming a more conservative view because we have the offsets already line of sight in our backlog.

Jeff Sprague, Equity Research Analyst, Vertical Research: Yeah. No, great. was just unclear if you had formally dialed it in or you were just saying you had contingency to deal with if it happens. Rich, very clear answer there. I appreciate it.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah.

Jeff Sprague, Equity Research Analyst, Vertical Research: Just back to PSI, to what degree have you seen the commercial front end of the business change? In other words, you know, very good businesses, right? Orphans, so to speak, inside a larger organization. Maybe just a little bit of color on what’s happening on the customer side. Are you seeing, you know, better order intake or inquiries in some of those businesses than you might have otherwise expected? Again, is the upside more about accounts obviously, but it’s more about the, you know, the pricing and some of the cost actions that you already elaborated on?

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah, Jeff. What we’re seeing right now on the commercial side, there’s been significant changes on how we operate, which projects we go after, how we go after them. I would say we’re being more successful in winning the target projects that are more interesting and more profitable for us very quickly. Also around just our pricing practices, value pricing, those would be the primary areas where we’re starting to see differences. We have this long period, as you recall, 6 months to really prepare, ramp up.

Jeff Sprague, Equity Research Analyst, Vertical Research: Yeah

Alex Alcala, President and Chief Executive Officer, Crane Company: Those are the areas we’ve been able to impact, shortly. Now, we’re starting to work the strategies of longer term growth, which were never baked into our model. Now we’re shifting focus into that, and, we think there’s upside even to the numbers that we talked about as those initiatives develop.

Jeff Sprague, Equity Research Analyst, Vertical Research: Maybe just a quick unrelated one. Plenty of capacity in your defense businesses for these missile-related ramps and the like, or we should expect, you know, some more capacity in the ground to ride this wave?

Alex Alcala, President and Chief Executive Officer, Crane Company: We have plenty of capacity. Actually, Rich and I just did a deep dive review with the team a few weeks ago. We’re very well-positioned for that. I think the pacing item in the industry will be more the primes. We can significantly outpace the ramp-ups of the manufacturers of the actual missile, so we’re in pretty good shape there.

Jeff Sprague, Equity Research Analyst, Vertical Research: Great. Thank you.

Alex Alcala, President and Chief Executive Officer, Crane Company: Jeff.

Operator: Thank you. We’ll take our next question from Justin Ages with CJS Securities. Please go ahead. Your line is open.

Alex Alcala, President and Chief Executive Officer, Crane Company: Hi, Justin.

Justin Ages, Equity Research Analyst, CJS Securities: Hi, morning all. You know, you mentioned chemical still sluggish, holding at trough levels, and you know, just wanna know how that fits into the broader commentary that you gave about seeing some PFT projects being pushed out. Is that chemical being pushed out, or those have already been pushed out, so no change in the timeline there?

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah, the pushouts that we commented on were specific to the Middle East dynamic, and it’s really related to the conflict where some of the petrochemical areas or refineries have been shut down temporarily. Some of that activity has pushed out to the right, no cancellations. That’s very unique to that region and that conflict. Here as we started Q2, we started seeing those things starting to move a little bit faster than I thought they would. That said, in our guidance, we did factor in some delays in projects in that region, the Middle East, in our guide from a conservative standpoint. If it moves faster, again, it’ll be a positive for us. More broadly, you know, in chemical, again, higher oil prices.

We expect the Gulf at some point to see some momentum and projects that’ll take several quarters. We are starting to see a little bit of MRO activity pick up, particularly in the Americas, which usually precedes project investments later in the year going into next year would be our expectation.

Justin Ages, Equity Research Analyst, CJS Securities: Okay, thanks for that, Alex. Staying in PFT, you mentioned good, you know, performance in cryo. Can you just remind us or give us some color on the size of that space and the market opportunity there?

Alex Alcala, President and Chief Executive Officer, Crane Company: Our cryo business today is about 4% or 5% of total PFT, but it’s growing at mid-teens, 15%, 16%, 17%. It’s growing quite fast. It’s mainly Americas-based, servicing very high-growing markets like space launch. Commercial space launch, as you know, is increasing significantly. Supporting that launch platform, not on the actual rockets or aircraft, but on the launch is where we’re seeing a lot of demand, supporting general aerospace environmental testing. As aerospace keeps ramping up the investments in infrastructure for testing, pharmaceuticals and other areas, semiconductors as well. Very, very interesting markets, high growth, and growing at a fast pace. This is an area that has been part of our transformation. We basically went from 0 a few years ago to 4% to 5% now, combination organic and inorganic actions.

Justin Ages, Equity Research Analyst, CJS Securities: That’s great. I appreciate you taking the question. Thank you.

Alex Alcala, President and Chief Executive Officer, Crane Company: Thanks.

Operator: Thank you. We’ll go next to Scott DesChamps with Deutsche Bank. Please go ahead. Your line is open.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Hi. Good morning. Alex Alcala, what are the most PMI-sensitive parts of PFT? Are you seeing any uptick in demand in those PMI-sensitive businesses, or is it more just areas like pharma and cryo and nuclear?

Alex Alcala, President and Chief Executive Officer, Crane Company: I mean, our biggest uptick has been, you know, power generation, which is right now driven obviously by the investment in data centers. That has not, I think, been PMI-related pharma, cryo, wastewater. We did see pretty solid just industrial.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Yeah

Alex Alcala, President and Chief Executive Officer, Crane Company: activity in the quarter. We didn’t call it out, but it was a little bit stronger than we expected going into the year.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. I would’ve said general industrial portion as well of the market where, you know, we are seeing a little bit of improvement, Scott, if that helps.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Okay. I think you all have described PFT as being pretty early cycle. If the broader industrial cycle is turning as the PMI data suggests, I guess why would it just be a small benefit to your general industrial business?

Alex Alcala, President and Chief Executive Officer, Crane Company: Well, I mean, it was low, it was mid-single digit type activity that we saw there, right? In the industrial spaces, that’s a pretty healthy activity. We’ll see how things progress. We’re pretty pleased with how it started the year.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Okay. Alex, how large is the PAC-3 product line for Crane today? If it’s not material now, I guess could it become material if it grows 200%?

Alex Alcala, President and Chief Executive Officer, Crane Company: I mean, we look at the whole missile platform, right? Which is a number I have in my head. It’s around that $30 million-$40 million range of microwave and modular power.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Modular power.

Alex Alcala, President and Chief Executive Officer, Crane Company: -product lines. I would use that $30 million or $40 million as a jump off point, and the projections are from 2x to 4x or 5x growth from now to.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Okay.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Last question?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: And I’d say-

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Oh, go ahead.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. PAC-3 would be towards the top end of the programs. You know, we have maybe 12 or so programs that we’re watching closely. That would be one of the ones that are at the top, Scott.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Okay. Thank you. Alex, can you give us a sense as to how much of PFT’s cryo sales are related to the space market? Will that space growth within cryo, is that gonna correlate with SpaceX’s launch cadence over the coming years?

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah. On the space launch, it’s about 35%. Then you put in aerospace in general, now you’re looking more like 45%, and the balance is other industrials, like I said, pharma and so forth. The growth does correlate with the launch activity, which is increasing. Not only SpaceX, but the other companies like Blue Origin and so forth. We service, I think there’s six or seven key customers of ours in that space launch. It’s growing exponentially in line with the space launch activity.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company1: Thank you.

Operator: Thank you. We’ll take our next question from Myles Walton with Wolfe Research. Please go ahead. Your line is open.

Myles Walton, Equity Research Analyst, Wolfe Research: Thanks. Good morning. I was wondering if on the commercial aftermarket, you comment whether or not you are reducing the outlook there because of what you’re seeing or because of what you anticipate seeing, and if you can give us any clarity or color as it relates to recent bookings trends. The, you know, the 11% growth in orders versus the 13% declines in the quarter wouldn’t suggest you’re seeing much. Maybe just add color if, again, you’re doing this based on what you’re seeing or what you anticipate you’ll see.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah. I’ll comment first and then Rich can add. I mean, if you look historically, right over the last 15 years, high energy prices, pre-COVID and post-COVID are two different stories. Pre-COVID, it was a pretty strong correlation. Higher energy prices, higher airfare, lower activity demand. Post-COVID, we saw a big spike in energy prices in 2022 with the Ukraine conflict, and it was very resilient. There was no slowdown from there. We’re not sure what is going to happen. We have not seen any decline. As Rich mentioned, 11% up, and we’re also sequentially up. However, as we look forward and considering the industry general concerns, we wanted to think through a range of scenarios that would give us a lot of confidence in our guide.

Based on that, we assume the decline in our guide to have really high confidence. It could maintain, it could sustain, and that would just be upside for us. You add to Rich?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: No, I think that sums it up, Myles.

Myles Walton, Equity Research Analyst, Wolfe Research: Okay. Relative to the decline, you’re thinking like mid-single-digit positive was before, and now you’re sort of conceptually thinking mid-single-digit decline is what you’re baking in from a conservative viewpoint. Is that right?

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah, I think that’s fair.

Myles Walton, Equity Research Analyst, Wolfe Research: Okay. All right, great. On PFT, just as it relates to core growth as you look to the rest of the year, given the strong orders in the first quarter, are you able to see the turning to get to low single-digit positive organic growth or core growth for PFT in the second quarter?

Alex Alcala, President and Chief Executive Officer, Crane Company: I think for the year, you know, we’re still expecting flat to low single digits.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah.

Alex Alcala, President and Chief Executive Officer, Crane Company: I would think we’re, second quarter may be a little bit consistent with Q1, right?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: I would think-

Alex Alcala, President and Chief Executive Officer, Crane Company: About it.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. I would think if you’re looking at just sequentially, think of it as a, you know, not that different from Q1 into Q2 sequentially, Myles, without having the FX in front of me. But that’s the way we’re thinking about the overall absolute number.

Myles Walton, Equity Research Analyst, Wolfe Research: Okay. Just one last one. What is the downward pressure on margins for the rest of the year versus the 23.2% you did in the first quarter?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: The downward pressure? You know, we mentioned on the call the increased, we’re definitely gonna be seeing and are starting to see the inflation on commodities as well as freight. You know, earlier in the year, you have a backlog that you’re getting through. Just from a timing perspective, we see the opportunity to get more price to offset as we move through the balance of the year and we get through that backlog. That pressure, you know, is, I would say it’s modest, but something that we’re working through and comfortable with overall and suggesting a an increase net to the margins.

Alex Alcala, President and Chief Executive Officer, Crane Company: For the full year, improved margins versus.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: About a half. Yeah, we’re saying about a half a point improved overall margin profile.

Myles Walton, Equity Research Analyst, Wolfe Research: Yeah, sorry. I was just comparing the first quarter versus the implied next three quarters is, you know, the next three quarters are obviously slightly down versus the first quarter on the 23%. That’s all.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. Well, I think again, it does get to some of that. It’s basically the same answer, right? I’m gonna see some inflationary pressure. I’m gonna cover some of it, net, I’ll be at up 50 basis, you know, the 50 basis points. Yeah, it’s gonna be that inflationary pressure, Myles.

Myles Walton, Equity Research Analyst, Wolfe Research: Got it. All right. Thank you.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yep.

Operator: Thank you. We’ll take our next question from Nathan Jones with Stifel. Please go ahead. Your line is open.

Nathan Jones, Equity Research Analyst, Stifel: Good morning, everyone.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Morning. Hey, hey, Nathan.

Nathan Jones, Equity Research Analyst, Stifel: I’ll do a couple on the acquisitions. Alex, you talked about moving to the strategy deployment phase on the acquisitions. I think you talked a little bit about shifting the focus to growth initiatives. I’m hoping you could maybe provide a little bit more color on what that involves for each business.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah. When you think about... Again, just to be clear, Nathan, none of this was baked into our model. It’s all upside. If you think about Druck, some of the opportunities we saw were, you know, military defense, Druck has a pretty good position in Europe and not really any position of note in the U.S. defense, where our legacy aerospace and defense business has strength. We’re building up the strategies of how to create those synergies and create growth. There’s various regional differences in penetration and share, also in Druck in the business, Europe, U.S. differences, channel, non-channel, that we are working through. Those are a couple examples of where there’s potential growth upside. Panametrics, in that business, we think about really, also regional.

I think, we see a lot more opportunity in Americas to grow. They have a lower share in Americas than average. There’s opportunity there in aligning those efforts from a commercial standpoint. Then, you know, Reuter-Stokes, we’ve been, we have a very strong position on power generation piece of nuclear, but we also have some product lines around radiation monitoring and homeland security. We plan to build on those platforms as well and grow. Those are some of the things we’re thinking about from a strategy deployment standpoint.

Nathan Jones, Equity Research Analyst, Stifel: That’s great. Thanks. My second question was going to be on the value-based pricing that you’re already beginning to realize. I think that’s, you know, very rapid benefit there. I know some of these businesses have longer term contracts. Maybe you can talk a little bit about where you’re seeing value-based pricing, where you’ll see it in the future. I mean, it’s obviously it’s very early in the piece so far, just any color you could give us around that stuff.

Alex Alcala, President and Chief Executive Officer, Crane Company: Yeah. The longer term contract length are probably less than you would think. If you, if you think about Druck, about 30% of the business is on longer term contracts. There’s a lot of areas where we can move more quickly. On the Reuter-Stokes part of the business, it’s about 40%. Some of these are naturally coming up and renegotiated. The Panametrics is very, very, very low on longer term contracts. All in all, there’s a lot of opportunities within the year, and then as we continue to work the longer term contracts. Very confident in our ability to keep improving these margins through the year and going into next year.

Nathan Jones, Equity Research Analyst, Stifel: Thanks very much for taking the questions.

Operator: Thank you. Once again, if you do have a question, you may press star one on your telephone keypad at this time. We’ll take our next question from Ronald Epstein with Bank of America. Please go ahead. Your line is open.

Jordan Lyonnais, Equity Research Analyst, Bank of America: Hey, good morning. This is Jordan Lyonnais on for Ron. Thanks for taking the question.

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Hi, Jordan.

Jordan Lyonnais, Equity Research Analyst, Bank of America: Good to see you, hear you guys. On the balance of the year, for commercial aero, if we’re going to see aftermarket decline in the guide, how should we be thinking about margins for the segment? For PFT, are you guys factoring in or have any concerns on the new tariffs that are going through on raw materials?

Allison Poliniak-Cusic, Vice President of Investor Relations, Crane Company0: Yeah. A good question. On the margins overall, Jordan, when you look at the mix differential, I would say, I’d step back and say, first of all, you know, our portfolio in Aerospace & Advanced Technologies, when we say commercial OE, we make money on commercial OE, right? It’s our model, as you know, is very or perhaps different from others in the industry. When we do mix up and down, yes, there is some impact, but it’s not as perhaps drastic as maybe in others, in other companies. Specific to the commercial aftermarket, as we have that coming down in our forecast or in our guidance, when we look at what we’re seeing in military, moving in the opposite direction, the margin profiles are not that far off, frankly.

They’re quite similar. That mix change is not gonna be as significant, if at all, from a margin pressure point of view.

Alex Alcala, President and Chief Executive Officer, Crane Company: In PFT with respect to tariffs, I would say the overall tariff change has not been all that material to us so far in the year, or it won’t be in the year. The one area that I would point to is, you know, with the refund process to the extent that, you know, we’re successful there, we’ll of course call that out in balance a year. None of that is factored into our guidance. No upside is factored into our guidance.

Jordan Lyonnais, Equity Research Analyst, Bank of America: Got it. Thank you.

Alex Alcala, President and Chief Executive Officer, Crane Company: You’re welcome.

Operator: Thank you. This concludes the Q&A portion of today’s call. I’d like to now turn the floor back over to Alex Alcala for closing remarks.

Alex Alcala, President and Chief Executive Officer, Crane Company: Thank you all for joining us today. Over the past 13 years, Crane has undergone a meaningful transformation, reshaping the portfolio, significantly improving margins and growth, and delivering strong shareholder value under Max’s leadership. That foundation positions us exceptionally well for what comes next. This transition is not a change in direction, it’s the next phase of the same journey. It’s about acceleration of profitable growth. Looking ahead, I am more excited than ever about Crane’s future and the opportunity to continue delivering for our customers, our associates, our communities, and our shareholders. We will remain focused on executing our strategy, leveraging the Crane business system to drive strong organic growth while continuing to pursue our disciplined approach to accelerating inorganic growth. I’ve had the privilege of working alongside an extraordinary team across the globe, and I’m energized by the path ahead.

With this team, this strategy, and this portfolio, I’m confident that the best chapters of Crane are still in front of us. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

Operator: Thank you. This concludes today’s Crane Company first quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.