Crane (CR) Q4 2025 earnings call transcript

Thank you, Madison, and good day, everyone. Welcome to our fourth quarter 2025 earnings release conference call. I'm Allison Poliniak, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our Chairman, President, and Chief Executive Officer, Alex Akola, Executive Vice President and Chief Operating Officer and incoming CEO, 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. 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, 10K, 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 a company's 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, Allison. Thanks, everyone, for joining the call today. While we've got many exciting things to discuss today as we exit the fourth quarter, we're already off to a fantastic start for 2026. Our performance last year and our initial guidance for 2026 show that we are consistently and reliably delivering on our commitments and our long-term value creation thesis. 4% to 6% core sales growth, and we were just at the high end of that last year.

35% to 40% core operating leverage, an upside from capital deployment. And that's just the baseline. We're always working to over-deliver. All aspects of this thesis have continued to play out as expected and will continue. For the quarter, once again, we exceeded even our high expectations, underscoring the strength of our team's strategy, excellence in execution, and a relentless commitment to delivering shareholder value. The adjusted EPS of $1.53 was up 21% over the prior year, driven by an impressive 5.4% core sales growth, reflecting broad-based strength at aerospace and advanced technologies and continued strong execution of process flow technologies. For the full year, the adjusted EPS increased by 24%, driven by our outstanding teams delivering on customer expectations, enabled by our sustained investments in advanced technologies and innovative solutions.

In 2025, we also continued building on our strong track record of enhancing and shaping our portfolio by adding technologies and capabilities inorganically that will drive growth and support both existing and new customers. Having previously announced the signing with Baker Hughes on June 9th last year, we are excited to formally welcome the Druck, Panometrics, and Reuter-Stokes brands to the Crane portfolio, having closed on the acquisition of these brands on January 1st. As a reminder, Reuters-Stokes doubles the size of our nuclear business, adding industry-leading radiation sensing and detecting technologies for nuclear plant operations, as well as for homeland security applications.

Nuclear is an exciting market space today, and we see additional applications for the core Reuters-Stokes technology in a number of other high-growth adjacent markets. This business is being integrated into our crane nuclear business, which Chris Mitchell has successfully run for us over the last six years.

Panometrics will operate as a standalone business unit in our process flow technology segment, reporting directly to SVP Shenghaza-Dassan. This business adds advanced ultrasonic flow meters and precision moisture analyzers, a really incredible portfolio of solutions that enables accurate measurement of liquids and gases across applications such as cryogenic gas storage, LNG transportation, wastewater treatment, chemical, and petrochemical production. And lastly, Druck will be maintained as a standalone business unit reporting to SVP Jay Higgs under the newly renamed Aerospace and Advanced Technologies segment.

This new name better captures who we are today and our future strategic direction for this segment than the prior Aerospace and Electronics name. Still the same focus on proprietary, highly differentiated technologies with primarily sole source positions, but continuing to expand our range of technologies and offerings and looking at adjacent end markets where our capabilities are similarly valued.

We expect to selectively and carefully widen our aperture in this segment without losing focus on what differentiates us. Specifically, the addition of DRUCC's complimentary product line meaningfully strengthens our pressure sensing capabilities across critical applications, including aircraft engine monitoring and hydraulics with strong positions in both single aisle and wide-body aircraft platforms, as well as environmental control solutions. Druk also expands our presence into ground-based test and calibration equipment for aerospace and certain other end markets, leveraging the same best-in-class pressure sensing technology.

Another exciting news, in addition to Druk, Panometrics and Werner-Stokes business is closing January 1st. At the start of the year, we also closed on the acquisition of Optech Danielette, headquartered in Essen, Germany. Thank you. Fantastic addition. The teams have hit the ground running across all businesses. The integration process is well underway, and the machine is fully in motion. Further, M&A activity is robust, and we continue to execute and cultivate accelerated opportunities. We see many opportunities progressing through 2026, but at this time, nothing additional is imminent in Q1. Alex will provide more details on our core businesses as well as the recent acquisitions shortly, but let me touch on the planned succession timeline that we announced last night.

I want to congratulate Alex for being appointed as Crane's next CEO, effective April 27, 2026, at our next annual shareholder meeting. And at that time, at the request of the board, I will move to serve as executive chairman for a transitionary period expected to be no more than two years.

Having partnered with Alex for more than a decade, I can confidently say he is the right leader to accelerate Crane's strong momentum. His deep operational expertise, proven ability to develop and execute complex strategic initiatives, and unwavering commitment to our high-performance culture have been critical in shaping Crane into the market leader it is today and our proven performance across PFT and AAT. In my new role as Executive Chairman, I look forward to supporting Alex and the leadership team as we continue driving strategic growth and long-term value creation.

Coming off the incredibly strong performance in 2005 and turning to 2026, I remain highly confident in the strength and resilience of Crane's team and portfolio. Moving to 2026 guidance, I'd like to highlight that our guidance for 2026 includes a change to our non-GAAP presentation of adjusted EPS, which now excludes non-cash, tax-affected, acquisition-related intangible amortization. Rich will provide more on this during his remarks, but using this new convention for both 2025 and 2026, I am pleased to announce our initial 2026 adjusted EPS guidance of $6.55 to $6.75, a solid 10% adjusted EPS growth at the midpoint, when excluding the $0.16 benefit of one-time hurricane-related insurance recoveries that we received in 2025, As well as after-tax acquisition-related intangible amortization in both years.

Importantly, I'm excited to share that we estimate that the acquisitions will be slightly accretive to 2026 earnings results. As I started with, many exciting developments across the company, and our investment thesis is stronger than ever.

Now, let me pass it over to our Chief Operating Officer and incoming Chief Executive Officer, Mr. Alex Alcala, to provide some color on the current environment, segment performance, and recent acquisitions. Alex?

Thank you, Max. I'm truly honored to have been appointed the next Chief Executive Officer of Crane. I'm enormously grateful to the board, and in particular to Max for his trust and support over the years. I'm also thrilled that Max will continue as Executive Chairman, allowing me to keep benefiting from his tremendous experience and leadership. But this is not about me. It's about our leadership team and the 8,500 associates who execute every day, leaving the Crane culture of incredible intensity, focus, and accountability.

I've been fortunate to be part of the Crane journey for the past 13 years. We've transformed our portfolio, substantially improved our margins and our growth profile, and delivered significant shareholder value under Maxxis Leadership. But I can tell you, I've never been more excited about our future and the progress we will continue to make for our customers, our associates, our communities, and our shareholders.

Looking ahead, we will stay true to our journey, driving the Crane business system to deliver strong organic growth while also pursuing our strategy of accelerated inorganic growth.

Over the years, I have literally traveled more than a million miles as part of this incredible journey with Crane, and I'm ready for the next million with this extraordinary team. Now, some thoughts on the segments in the quarter as we look to 2026.

Let me start with aerospace and advanced technologies. These markets remain very strong. The backlog we've built, along with the new programs and opportunities our aerospace and electronics teams have secured, continues to provide us with great visibility into 2026 and beyond. On the commercial side, things continue to look healthy. Boeing and Airbus continue to ramp up production, and aftermarket demand is still running at elevated levels, although the year-over-year comparisons have become increasingly challenging.

On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remained solid, and there's a continued focus on strengthening the broader defense industrial base, given the heightened global uncertainty we continue to see. Given the level of activity we are seeing for 2026, we expect core sales growth for the year to be up at the high end of our 7% to 9% long-term growth assumption.

And importantly, that growth should leverage at about 35% to 40% for the full year, despite the less favorable mix, which is moving back to normal levels. Our guidance assumes OE sales will grow double digits year over year, partially offset by decelerating growth rate in commercial aftermarket.

We are excited for DRUG to join the AAT segment and expect over the next few years that it will be incremental to both the segment's growth and margin profile. However, while it will be incremental growth in 2026, we expect DRUK to be diluted to overall segment margin in the near term. Overall, we are on track for another outstanding year.

And 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. A few highlights for the quarter in AAT.

First, in our defense power business, we remain actively engaged and solidly positioned with defense vehicle OEMs collaborating on the common tactical truck and new combat vehicle programs.

Second, Crane also continues to win funded next-generation military demonstrator programs for our brake control systems. We will also begin production for the F-16 brake control project in 2026 and receive two more follow-on orders, one from the United States Air Force and the other from a foreign military customer.

And last, with elevated interest around air defense systems, we're actively tracking and pursuing new high-power AESA radar opportunities. Overall our aerospace and advanced technology segment is positioned to significantly outperform its markets over the next decade We extremely proud of what this team has accomplished and the momentum they built At Process Flow Technologies we remain well positioned to outgrow the cycle Over the past decade we have deliberately repositioned our portfolio towards technologies and end markets that are higher growth and where we maintain leading competitive advantages and clear differentiation We are now in the Crane Co, and we are now in the Crane Co. As evidenced by our Q4 performance, even given today's macro backdrop.

A few highlights from PST in the quarter. Our cryogenics business had another strong Q4, securing orders for a number of space launch customers. We continue to win and expand our share in this important vertical due to our excellence in engineering solutions, along with our ability to rapidly execute orders. Additionally, we continue to drive solid wins in pharma, securing another large order supporting capacity expansion to manufacture GLP-1 drugs.

Our ability to deliver high-performance solutions for a critical pharmaceutical application continues to set us apart in a competitive market and positions us for sustained growth in this segment. And lastly, despite the sluggish chemical industry, our teams continue to secure targeted opportunities within chemicals, securing key new project wins in the Middle East.

Looking ahead to 2026 for PFT, given our fourth quarter orders remain sluggish, we are adopting a cautious view of 2026 demand levels to start the year and expect that core growth to be flat to low single digits for 2026.

However, we do expect core leverage to still be within our targeted range of 30 to 35%. With the additions of Panometrics, Rotor Stokes, and Optic Dandelion joining the PFT family, we fully expect over the next couple of years that they will be incremental to both segment growth and margins. In 2026, while they will be incremental to growth, near term we expect them to be dilutive to overall segment margin. Overall, both businesses are strongly positioned for sustained success, with the resilience and strategic foundation needed to deliver outstanding results in 2026 and beyond.

Before I wrap up, I want to provide additional color on the acquisitions of Panometrics, Druck, and Motor Stokes. The integration process is off to a strong start, and our outlook for these businesses is already exceeding our initial expectations. As Max mentioned, we now anticipate these businesses to be slightly accretive to earnings in 2026, compared to our original expectation of no accretion in year one. We have been preparing for the last six months, and I personally spent a significant portion of this month visiting all these teams. And the CBS machine is already being deployed.

I'm extremely confident that these businesses will become some of our best performing and most profitable businesses within Crane in the years ahead. As I think about the levers of focus improvement, the cost synergies will come from three major areas, all driven by CBS.

Organizational simplification and focus. By operating these businesses as three independent entities, we're eliminating the top management cost layer. Product line simplification or 80-20, reducing complexity and eliminating work with limited return on investment. And traditional productivity improvements, driving efficiency through supply chain and lean tools and processes.

In addition, all growth synergies are fully incremental upside to our financial model. We have dedicated teams in place and are off to a great start. But I'm very confident we will meet or exceed our targets.

Now let me turn the call over to our CFO, Mr. Rich Maui, for more specifics on the quarter.

Thank you, Alex, and congratulations as well. Hey, I really look forward to having as much fun with you as I've had with Max over the last decade. Right. And Alex, I gave Max this same advice when he became CEO, borrowed from Michael Caine as Charlie Croker in the timeless movie classic, The Italian Job. It's a difficult job, and the only way to get through it is if we all work together as a team.

And that means you do everything I say. I'm kidding, of course. I don't remember that. Not really. And to Max, borrowing Humphrey Bogart's ever-famous line as Rick Blaine in the Academy Award-winning drama Casablanca, we'll always have Paris.

Good morning, everyone. I'm going to get choked up. Good morning, everyone. Let me start off with total company results. We drove 5.4% core sales growth in the quarter, reflecting the ongoing strength within the aerospace and advanced technology segment. Adjusted operating profit increased 16%, reflecting the impact of higher productivity and favorable pricing net of inflation. In the quarter, core FX neutral backlog was up 14% compared to last year. Again, continued strength at aerospace and advanced technologies, and core FX neutral orders were up 2%. From a balance sheet perspective, with the close of the acquisition of Druck, Panometrics, and Reuters-Stokes, We ended the year with net leverage of 1.1 times, which reflected 102% adjusted free cash conversion in 2025 and outstanding performance by our teams globally.

And as Max noted earlier in January, we also closed on the acquisition of Optech Danielat. That brought our net leverage to 1.4 times, leaving us well positioned for further M&A.

A few more details on the segments in the quarter. Starting with aerospace and advanced technologies, sales of 272 million increased 15% in the quarter, nearly all of that growth organic. And even with the continued high level of core sales growth, our record backlog of just over 1 billion was up 25% year over year and was up slightly sequentially. Core orders were up 8%. Again, no surprises and continued strong demand broadly.

Total aftermarket sales increased 1% with commercial aftermarket sales up 3% and military aftermarket down 3%. And OEM sales increased 23% in the quarter with commercial sales up 27% and military sales up 18%, all in line with our expectations.

Adjusted segment margin of 23.6%, expanding 50 basis points from 23.1% last year, primarily due to strong productivity, Higher volumes and higher price net of inflation. At Process Flow Technologies, in Q4, we delivered sales of $309 million, flat relative to a year ago, with core sales down 1.5% as we anticipated, offset by a slight benefit from the TechnoFab acquisition and 1.6 points of favorable FX. Compared to the prior year, core FX neutral backlog at PFT decreased 7%, and core FX neutral orders remained soft, down 3%, driven by the weaker chemical end markets as expected.

However, adjusted operating margin of 22% expanded again, and in the quarter was 170 basis points higher. Despite the headwinds on the top line, productivity is reading through as well as price.

Moving to the non-operational items below the segments, along with some additional 2026 guidance matters. The start, as Max mentioned, beginning in 2026, we are excluding intangible amortization from our non-GAAP presentation of adjusted EPS. Following the significant increase in intangible amortization related to this month's acquisition activity, we believe that excluding it from adjusted EPS gives investors a better picture of Crane's free cash flow And also enables better comparison to the majority of our peer companies that use the same convention.

Reconciliations recasting last year are in the slide presentation accompanying this call. Now moving on to a few non-operational items. Corporate expense for the full year of 2025 was $87 million, modestly up above our prior view of $85 million, due primarily to M&A activity. For 2026, we anticipate corporate expense to be in the range of $80 to $85 million. In Q4, we received $5.2 million of insurance recoveries from the Hurricane Helene flood we had at one of our PFT sites, or a $0.07 benefit to results in the quarter. With this final payment, the matter is now fully resolved with our insurers. Remember that our full year 2025 guidance included $9 million of insurance recovery related to Hurricane Helene, with $6.7 million received through Q3.

So $2.3 million, or about $0.03 of the fourth quarter's insurance recovery, was in our latest October guidance. So the actual amount received was $2.9 million, or $0.04 per share, better than we had expected. Also, keep in mind that for the full year, total insurance recoveries benefited adjusted results by $0.16, a benefit that will not repeat in 2026.

Given the funding for the acquisitions of Panometrics, Drucker, Reuters, Stokes, and Optech Danielat, we now anticipate full year 2026 interest expense of approximately $58 million. And lastly, we estimate our tax rate for 2026 to approximate 23%, slightly higher than our 2025 rate of 22.9%. Looking at the cadence of quarterly results for the year, we expect Q1 2026 to be seasonally soft this quarter, coming in roughly flat with the first quarter of 2025, lower than historical patterns given acquisition integration and increased interest expense. For the full-year earnings split, we expect the first half of 2026 to represent about 45% of full-year earnings, with 55% weighted towards the second half.

Overall, another outstanding year at Crane planned for 2026. And with that, operator, we are now ready to take our first question.

Oh, I'm going to remain busy, Scott. Very, very busy. In addition to executive chair, I think you know I've become a very popular Gen X influencer. I have my podcast that started, and my only fan page is going well.

Yeah, thanks, Scott. So just pulling back on all three businesses, right, DROC, Panometrics, Roto-Stokes. In our financial model, we assume significant opportunity. I've been working with this team for six months, spent most of the months with them, so definitely validate our hypothesis on opportunities, potentially more than we even thought, so feeling very bullish about these acquisitions. All three businesses have significant opportunity to drive the Crane business system. I talked about the areas on product line simplification, restructuring, the business model, and just traditional operational excellence. As far as, you know, value pricing, as you know, in Crane, we do a good job standing up for our value, our differentiated technology. And, obviously, there's opportunity to do better in all three businesses.

And, Chuck, we would expect to see improvements starting this year, reading more into next year as it takes some time. Just like any aerospace business, there are contracts. Some expire naturally that need to be renewed, renegotiated. So everything, you know, no real obstacles to achieve our goals in that area, Scott.

Yeah, I think no change to what we've previously discussed. You know, there's a few buckets. I think they're the same buckets that Alex mentioned, so the cost element is going to – or productivity element, And then however you want to categorize it it clearly going to be one of them on the commercial side being another and then leveraging the growth at rates that we would expect to leveraging you know our operating cadence So across all three and I would say no difference versus what we previously had communicated All right I leave it there Thank you Thanks Scott Thank you Our next question is coming from Myles Walton with Wolf Research Please go ahead Hi.

Thank you.

Yeah, Greg, this is Alex. So just a reminder, you know, our business unit, Aerospace and Electronics, was both business unit name and segment name. So last year we announced a promotion of Jay Higgs as Senior Vice President of the segment, and it's really positioning us to do more deals like DRUX. So DRUK would be a perfect example of the technology that we would expand in, where it has a foot in traditional aerospace, but also gets us into land-based calibration and even some high-growth industrial applications that are combined with the technology. So I think DRUK would be a good reference of what you expect to see in that segment.

And, you know, the model that we have right now in the structure allows us to keep adding not only bolt-ons, but standalone units to keep building out that segment, similar to what we've done in PFT. You recall that when we changed the name from fluid handling to process flow technologies, We were thinking about expanding our aperture, moving up the technology stack, having more differentiated products, and those have been the acquisitions we've done on that side as well with the sensing applications and now Optech as well adding to that.

And that's what you would expect to see, high technology differentiated, improving our growth and margin profiles on both sides of the segments, Growing both segments, doubling the size here in the next coming years is our goal that continues to create shareholder value and also optionality for the future.

Yeah, great. So let me pull back just on PFT because we service various segments, right? So first, culminating on the areas and businesses markets that grew in 2025 strongly, and we expect to continue in 2026. So wastewater, which is primarily North America-based businesses, we saw high single-digit growth. We expect strong growth also in 2026. Cryogenics as well, double-digit growth in 2025. That will continue. Pharma, there's global growth that we're seeing also, in particular in North America, some increased investments and reshoring from pharma customers that we expect power. Again, North America-based power generation where we've seen momentum in 2025. Expect that to move on. So a lot of our segments and verticals of our businesses continue with strong momentum.

You did mention chemical, which has been sluggish. You know, just to pull back also, we expect to see similar to what we saw in 2025, which has been buried by region. You can't lump it all together. So, Americas and Middle East, we saw growth year over year on orders. In 25, we expect, you know, the sort of modest growth to continue in that area. Our teams are doing an excellent job winning. Again, those two regions have this feedstock energy advantage. So customers see good return on investment on taking action on capacity expansions or increases brownfields, in particular in the Middle East.

So those will continue at a moderate pace. On a negative or sluggish, Europe, China, the rest of Asia-Pac, that's been down. We don't expect those to change. So, Annette, our assumption for 2026 is continuing to see working through the trough, not deteriorating, stable, but not planning for a strong uptick in the year.

But we're ready for it. If it happens, we'll take advantage of it, but not built into our guidance right now.

Yeah, Jeff. So, I mean, there is some cost in and cost out on an end basis. It will be a cost out. The improvements in the margins will increase in 27-28, as a lot of our actions take a few quarters to materialize and read through to the P&L.

You know, I've mentioned before, Baker Hughes operated these businesses as PSI, so they had that high-level PSI headquarters structure, which we're dissolving. We're doing shared services in finance, HR, and IT. So that goes away, replaced by standalone business unit resources that we're adding. Overall, on that basis, we expect once we're done to operate leaner and more profitable with all these ins and outs from our cost standpoint. And then driving improvements on top of that.

So Legacy Crane Organic, you know, will be clearly up in A&E and likely down a bit in PFT in Q1. That would be part of that dynamic in addition to, you know, the incremental interest expense that we have compared to last year in the first quarter. It's sort of the, I would say, the big drivers, Jeff. There's also, within Panamaterics, Reuters, Stokes, there is seasonality, and they tend to be stronger in the second half than the first half historically.

Yeah, Jeff, so the machine is working, right, at CBS or Funnel. You know, we're integrating these four different businesses very well with resources. We have bandwidth to do more. I expect to do more in 26. I can tell you that we're also building capabilities constantly. We improved our capabilities not only to integrate but also our strategic resources that are evaluating We're seeing that Jason's is practically increasing the potential targets. So we're only getting stronger on the M&A front. Expect to accelerate that going forward. So the front is strong. Nothing imminent in Q1, but expect to continue the momentum as we move forward. Plenty of bandwidth on our front.

Thanks, Jeff. Thanks.

Yeah, thank you, Matt. I'll comment on it. Let me walk you through all the assumptions here on Arrow and all the segments. So commercial OEM, as you would expect, will continue to be strong, high teens, military OEM, mid-single digits. Then to your question of aftermarket, on the commercial side, we're anticipating mid-single digits, and on the military side, mid to high single digits.

So, you know, continuing momentum on all those fronts. As far as the government shutdown, you know, the only thing that we've seen, no change in orders or programs or funding, but we did see the flight test of the F-16 program get delayed a few months. So, instead of being complete in January, we expect that to be complete more in the early second quarter.

So, that will delay a few months, the start of the shipments for the F-16, but that's all baked and factored into the guidance we've provided. No other real impact right now that we see related to government shutdown.

Yeah, so, Matt, on the F-16, yes, in our guidance we're thinking more on F-16, although the annual rate is 30. This year, more like in the 20s, low 20s of revenue, there is an opportunity and a more compressed timeline. But in our guidance, we've pulled that back a bit due to the few months shifting to the right.

Related to the cost synergies, right, so this year as we're starting off, we're moving fast with the actions. The teams are actually impressed me with their ability to embrace the Crane Business System machine, but it takes some time to read through. So if you're trying to do the math, I would expect like mid-single-digit growth and about 200 basis of improvement in the margin profile this year. And then in the coming years, it will be a little bit higher than the 200 basis points on a CAGR basis that gets us in that five-year mark to achieve or beat the 10% return on invested capital. So about 200 basis points and then a greater number in the years ahead.

Yeah, thank you, Ahmed. So like you mentioned, the traditional power combined cycle power plants in our valve segment, that's what I've mentioned in 25. We have a significant, as you know, amount of new combined cycle power plants that are being built in the United States, so that's driving our growth. As far as nuclear, as you stated, we're basically doubling our exposure in the nuclear with Rotor Stokes. So we have our core business legacy, Crane Valve Services, and then now Rotor Stokes, and then combined we call it Crane Nuclear now. So the growth exposure there is pretty attractive. Think about it as four buckets. You've got the restarts of the various nuclear plants like Holic or the Crane Clean Energy, formerly three miles, so that will drive upside.

You have the new construction with AP1000, Westinghouse, where we're very strong, have a very strong position with those reactors in our valve business, and there's some expected starts in Europe. The third area, really, which comes with rotostosis, we also have very good exposure now to the small modular reactors. So we have a partnership with one of the leaders that's building the first SMR in Darlington, Canada.

That's starting construction already or soon, one of the reactors, and there's three more on the plan, depending on how this one goes. This is a boiled water reactors that Reuters has the neutron sensing technology which is used to gauge the power that being generated And then you know we also benefit on this fourth leg with the extension of licenses right So five years ago nuclear plants were decreasing or shutting down and now we seeing licenses being extended 50 years or so and that requires upgrades and investments So pretty good tailwind that will keep getting stronger as the decade progresses Okay, thank you.

Jason and Allison will catch up with you, but I would say that yes, on the part of the headwind in Q1 and in Q2, clearly will be the insurance recovery. Those were included in our numbers, 16 cents on the year, and it was probably close to 50-50 in terms of Q2, first half, second half.

But from a growth perspective, you know, I'd rather hold off on commentary on individual quarters from a core growth perspective, frankly, at this point.

Yeah, I would probably err towards what you closed there with on your question. You know, the 30 to 35 percent is on the legacy, and then as we continue to integrate the drug panometrics, Reuters-Stokes, we'll start to see some of that incremental coming in more so in the second half versus the first half. So that would absolutely be the case for 26.

Yeah, Nathan, so let me try to answer the first part. You're right, we expect some growth synergies in these areas, different for each of these businesses. For example, in Druck, very strong, very strong position on the commercial side, not as much on the military side. So with our legacy core A&E, as you know, we have an outstanding position there, so there will be some synergies, opportunities to grow the businesses there.

Traditional CBS commercial excellence in driving key accounts, channel management, project pursuit, funnel management, et cetera, That will drive as well, just in the core business, improved performance. Similar for Panometrics, Rotor Stokes, incredible position in the power generation. We're looking at these adjacencies where they also play in homeland security, other industrial applications where there's a lot of room for growth with the right focus. So none of that is baked into our model or our guidance. I'm not yet ready to provide you with a financial number as much as I would like on what those growth opportunities would be, but they'll be there, and you'll see them eventually read through in the P&L, Nathan.

Yeah, I think the confidence in – I forget if it was Max's comments or Alex's on the four to six and these businesses taking us towards the higher end of that range, part of that confidence level comes from these adjacencies and other opportunities that we already see. So, you know, I think we expect to be at that high end or even slightly above it when you look out a couple of years.

Yeah, so I think in our response to Jeff's question, you know, clearly if they are directly associated with the integration, we will be excluding them and keeping them visible for everybody. But there are other investments that we'll be needing to make just, you know, as just part of bringing the business to where, you know, in the certain areas where we need to be. So in finance, for example, if I have to hire people or in HR, have to hire people in IT, those are continuing costs of the business, and I can't exclude those.

So that's really what we were referring to in the response to Jeff's question.

Yeah, I don't have that off the top of my head here, Nathan, so we'll look to provide more color on that at the right time. I would expect our free cash flow, though, overall, just stepping back. We had an outstanding performance here in 2025 in our business, 102% on an adjusted basis. If we didn't adjust for it for certain items, we were at 98%, so it's not like we pulled a whole heck of a lot out to adjust. Our core business will continue in that 100% range is our view right now.

In next year, I would say, including the acquisitions, it will be down a little bit, but we'll be within that 90 to 100% range without a doubt, if that helps.

Yep.

Good morning, Justin. Good morning.

Yeah, Justin, so on that 16, the way we think about it is this 30 million annual sales doesn't really change much. As we get more of these foreign orders, what it does is it extends the whole program length. So it goes out further. That will continue to see the benefit. We will ship first to the United States Air Force and then complement that with foreign military sales.

Maybe just to add, you know, so we have orders that are in excess of that annual rate today. So it's not like we have to wait for the orders. We have them in backlog today, Justin. So anything incremental to that, just to Alex's point, extends.

Yeah, so with the right acquisition, we don't have a problem going to three times, even, you know, strategically, if it made a lot of sense, even going beyond, as long as there was a path to come back down within a pretty short period of time We have no problem going up as high as three or even above that for the right deal.

Good morning, Jordan.

Thanks, Alex. Thank you.

Can we repeat that last piece of your question? You're breaking up just a little bit, Jordan, if you can say that again.

No, that's much better. That's better.

I think on the first piece of the questions on the AAT, again, we are exploring many different types of adjacencies. Traditionally, right, our core business has been in fluid power control. So expanding beyond that in aerospace, just like we did in sensing many different avenues, land-based, we're thinking about, I don't want to call out specific adjacencies at this point, But many, many other adjacencies that complement both military and aerospace technologies and also play in other high-growth markets at the same time.

And the second part of your question with CCAs, do you mean collaborative combat aircraft?

I mean, we're definitely playing in that space. And we think we're very, very well positioned both with the, I guess, the traditional primes and the new entrants. In fact, in prior quarters, Jordan, you may recall that we have this great position in one of the new programs, Fury, to call it out, where we expect significant growth in the future. So in this, you know, different cycle, different sales cycle, different type of speed that is required. But all the demonstrators, we have won our position there.

And also with the new entrance, we have excellent content. So we feel very, very bullish about that segment and our ability to benefit from that.

Thanks, Jordan.

Fantastic. Alex, congratulations again.

Thank you.

Thank you all for joining us today. Great call, great team, great performance. There's a great deal of momentum here at Crane. We delivered an exceptional 2025, and I couldn't be proud of our teams. We continue to innovate, win critical projects, and execute and deliver exceptional results. We also accelerated and delivered on our M&A efforts, adding differentiated technologies that further strengthen the Crane portfolio.

And we're set up for an even stronger 2026 with a leadership transition that will drive a continued focus on transformation, execution, and the relentless pursuit of improvement, relentlessly driving towards perfection while accepting the reality we will always fall short. But that is what pushes us forward, driving change. As a late great performer, Diane Keaton once said, what is perfection anyway? It's the depth of creativity. That's what I think. While change, on the other hand, is the cornerstone of new ideas. As always, change at Crane is constant, and it remains the catalyst for fresh ideas, strategic evolution, and continued outperformance. With our excellent strategy, exceptional talent, strong momentum, our progress speaks for itself. And truly, there's no limit to what we will accomplish in 2026 and beyond under Alex's leadership and the team.

Thank you all for your interest in Crane and your time and attention this morning. Have a great day.