Crane Q4 Earnings Call Highlights

COO and incoming CEO Alex Alcala said commercial aerospace conditions remained healthy as Boeing and Airbus continue to ramp production, while aftermarket demand remains elevated though year-over-year comparisons are becoming more challenging. On defense, he cited solid procurement spending and an increased emphasis on strengthening the defense industrial base amid “heightened global uncertainty.”

For Process Flow Technologies (PFT), Maue said fourth-quarter sales were $309 million, flat year over year, with core sales down 1.5% as anticipated. He said the decline was offset by a slight benefit from the Technifab acquisition and favorable foreign exchange. PFT backlog declined 7% on a core FX-neutral basis, while core orders fell 3%, which management attributed to weaker chemical end markets. Even with that softness, PFT adjusted operating margin expanded 170 basis points to 22% on productivity and pricing.

Alcala said PFT continued to see strength in pharmaceuticals, cryogenics, power generation, and water, while chemical markets remain “subdued at trough levels.” He highlighted strong cryogenics orders tied to space launch customers, additional pharmaceutical wins including an order supporting GLP-1 drug capacity expansion, and targeted chemical project wins in the Middle East despite broader industry sluggishness.

Acquisitions and portfolio expansion

Management emphasized portfolio activity, particularly the acquisition of the Druck, Panametrics, and Reuter-Stokes brands from Baker Hughes, which closed January 1, and the acquisition of Optek-Danulat, which also closed early in 2026. Mitchell said Optek-Danulat, headquartered in Essen, Germany, is a leader in inline process control optical sensing measurement solutions for biopharma, pharma, and other demanding markets, with annual sales of approximately $40 million.

Mitchell outlined how the businesses will be organized within Crane:

• Reuter-Stokes is being integrated into Crane’s nuclear business, which Mitchell said “doubles the size of our nuclear business” and adds radiation sensing and detection technologies for nuclear plant operations and homeland security applications.
• Panametrics will operate as a standalone unit in PFT, adding ultrasonic flow meters and precision moisture analyzers across applications including cryogenic gas storage, LNG transportation, wastewater treatment, and chemical markets.
• Druck will be maintained as a standalone unit in the newly renamed Aerospace and Advanced Technologies segment, strengthening Crane’s pressure sensing capabilities across aircraft engine monitoring, hydraulics, and test and calibration equipment.

Alcala said the integration process is “off to a strong start” and that Crane now expects these acquired businesses to be “slightly accretive to earnings in 2026,” compared with the original expectation of no year-one accretion. He described cost synergy levers driven by the Crane Business System, including organizational simplification, product line simplification via “80/20,” and productivity improvements in supply chain and lean processes. He also said growth synergies represent upside not embedded in the company’s model.

Leadership transition and 2026 guidance framework

Mitchell said Alcala will become CEO effective April 27, 2026, at the company’s annual shareholder meeting. Mitchell will move to Executive Chairman for a transition period expected to be no more than two years.

For 2026, Mitchell introduced initial adjusted EPS guidance of $6.55 to $6.75, noting the company has changed its non-GAAP presentation to exclude non-cash, tax-affected acquisition-related intangible amortization. Maue said management believes the change provides a better picture of free cash flow and makes results more comparable with peers that use the same convention.

Maue also noted several items affecting the year-over-year comparison and 2026 cadence:

• Crane received $5.2 million of insurance recoveries in Q4 related to Hurricane Helene, which benefited results by $0.07 in the quarter. Total 2025 recoveries benefited adjusted results by $0.16, which will not repeat in 2026.
• 2026 corporate expense is expected to be $80 million to $85 million, compared with $87 million in 2025 (which Maue said was modestly above prior expectations due to M&A activity).
• Full-year 2026 interest expense is expected to be approximately $58 million due to acquisition funding.
• The estimated 2026 tax rate is approximately 23%, slightly higher than 2025’s 22.9%.

Maue said the company expects Q1 2026 to be “seasonally soft,” roughly flat with Q1 2025, reflecting acquisition integration and increased interest expense. For the full year, management expects earnings to be weighted 45% to the first half and 55% to the second half.

Operational outlook: AAT growth, cautious PFT demand, and nuclear opportunity

Alcala said AAT is expected to post core sales growth at the “high end” of Crane’s 7% to 9% long-term growth assumption in 2026, with operating leverage of about 35% to 40% despite a less favorable mix as it normalizes. He said guidance assumes double-digit growth in OE sales, partially offset by decelerating commercial aftermarket growth. He added that Druck should be incremental to AAT growth in 2026 but dilutive to segment margin in the near term.

For PFT, Alcala said the company is taking a cautious view due to sluggish orders and expects 2026 core growth to be flat to low single digits, while still targeting 30% to 35% core leverage. He said recently acquired businesses should contribute to growth in 2026 but be dilutive to margin near term.

In Q&A, Alcala described nuclear as an increasingly attractive area, particularly after doubling exposure with Reuter-Stokes. He outlined several drivers, including nuclear plant restarts, new construction tied to AP1000 reactors, small modular reactor exposure (including a partnership connected to an SMR project in Darlington, Canada), and license extensions that require upgrades and investments.

Management also commented on M&A capacity, with Maue stating that Crane ended 2025 at 1.1x net leverage after the Baker Hughes-related acquisition and moved to 1.4x following the Optek-Danulat deal, which he said leaves the company “well-positioned for further M&A.” On leverage tolerance, executives said Crane could go to 3x or potentially above for the right strategic acquisition, provided there is a path back down over a relatively short period of time.

About Crane NYSE: CR

Crane Co, headquartered in Stamford, Connecticut, is a diversified manufacturer of engineered industrial products serving customers around the world. The company operates through two primary segments: Aerospace & Electronics and Engineered Materials. Its Aerospace & Electronics division designs and produces valves, fittings, manifolds, and filtration systems for aircraft fuel, hydraulics, and environmental control systems. The Engineered Materials segment focuses on advanced polymers, heat exchangers, and specialized composite solutions for industries including chemical processing, semiconductor manufacturing, and power generation.

With roots dating back to its founding in 1855 in Chicago by R.T.

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