CR - Earnings call transcript Q3 2017

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Operator

Good day everyone and welcome to Crane's Third Quarter 2017 Earnings Conference Call. Today's call is being recorded. At this time, I would now like to turn the call over to the Director of Investor Relations, Mr. Jason Feldman. Please go ahead sir.

Jason Feldman

good and operator you, morning, everyone. Thank our to third quarter call. conference release earnings XXXX Welcome Feldman, Investor Director Jason am I of Relations. Chief and On our President Maue, Officer; our Max have our Rich call this and morning, Chief we Financial Officer. Mitchell, Executive start remarks which prepared we a questions. after to our with respond We’ll off few call will

annual bottom make the some also reminder, refer and www.craneco.com, which on cautionary our reconciled tables the relations you we call are the will Form of earnings include slide and on report, press the release call, our numbers a our end are subsequent to available during investor Just to the accompanying we of comments some our and of be non-GAAP numbers, may in in to statements. section. language this both at forward-looking at GAAP website the filings forward-looking We XX-K at release, statements. pertaining using the comparable and which presentation, Also

turn to call me Now over Max. let the

Max Mitchell

Thank you, Jason.

our costs. the Fluid volumes year point program XX was performing improved year, better or handling percentage organic to than to electronics, decline. decline driven sales a comparisons operating benefit that primarily compared Crane's exchange and compared As outlined offset EPS and than lower partially higher of operating large organic million offsetting a XX an more by than slightly more report tax $XX a million $XXX and pleased which increased XX.X% to aerospace by million corporate with last business headwind. rate year X% by foreign quarter up Adjusted productivity. shipments Fence basis points segment to press am year-over-year I The from driven last expected. in Sales acquisition improved $X.XX substancial modestly performance was favorable year or was third is by to X.X% driven last Space lower last night, despite last release three margins for

through have quarter we we we believe and reflected gains. quarters half position. half we were the third bottomed attributed XXXX an the share with and second first discussed markets in and and end QX up consistent year-over-year improvement generally which also meaningfully to market in Orders previously, As improving sequential solid share saw while to

de-bottle Merchanding with technologies operating as comparisons. seeing record recovery, slow very in XX% had saw is At improvement challenging performing primarily we U.K. continued with & and productivity growth upgrades, quarter we core related and is well. market also U.S. in strong perform overall business to adjusted for extremely but our the Payment little very we the in MRO Last the quarter, consistent been saw quarter, the of While trends gains. more fairly we project the slower was project Orders over by order first by few grew during have pace the growth this In driven the share driven year. order changed part The half activity. improvement projects to modest a Greenfield in necking markets third in activity. has And capacity an are extremely of third activity markets fairly our last primarily stable somewhat. markets in our with with municipal quarters, activity Canada. our market commercial MRO another of Despite quarter, business mix X% at quarter, good a on our expected. margins than

initiatives executing productivity. as well is team growth on as Our

vertical good we large growth beyond outlook to retasil project upgrades more given in weaker addition also gaming business the retail, previously, quarter. adoption channel. and executing last At haven’t help project seek the unchanged. and the quarter demand business broadly, been Business any this the well. remains softer in can changes very can solutions continues There continue softening the this by than is continues to and margin we Aerospace to be vending jet The the since is in than market project originally difficult of electronics, major very As are vertical we discussed and the large retail timing working progress expected. from and and that we wide our the remains predict outlook partially body to well offset new team by project the aircraft. strong to across for demand impacted spiky More extending cabin positioned, products this the also we our for anticipated year demand be we remain [Indiscernible] be

remains From hit year, progressing. certain very resin little gain to a prices of the third is shipments. of We in the continue on I impacts strong operational demand hurricane Harvey. an because and materials to share track partly from are RVs still Engineered how for increased feel this were in good our quarter about year because we expectations the timing of At as the below perspective, for our commitments largely but margins quarter

sales Our guidance. businesses and Sentiment amount ahead inline very navigating remains with our fair of market uncertainty. performing broader our and environments orders but respective approximately handling market customers still margins among performing of releatively confidently. is our our original Fluid a are suppliers on stable and modestly all well expectations the there with both is

large shorter customers We the see and our from of in portions and electronics. spikeness cycle merchandising payment to demand continue aerospace lumpy and and

have is higher a performance input year-to-date fourth While net EPS offset raising asdn with be by currency considering account neutral. benefit current discussing narrowing usuaql any not commodity to Consistent will into our on January Based taking conditions are being we costs, abated call. gudiacne earnings in our headwinds to XXXX is detail until with market quarter the and guidance we approximately there result only our remaining further, our practise our $X.XX $X.XX. adjusted quarter one and

second acquisitions repurchased we our followed on million the quarter. XX allocation in cash shares quarter in which of the capital of of the Regarding XX deployment million two

of there is pipeline robust activity. lot M&A Our is a and

opportunities, a you to value We for are on to progress of be number of will potential some let me additional continue turn we both Rich, strategic disciplined on commentary. the financial acquisitions. pursuing over and it positioning making and however in

Rich Maue

conditions. turn unfavourable Thank excluding you, Fluid and as of acquisition, benefit the exchange, basis down at accompanying slide which September the items XXXX million for third includes a $XXX it growth growth of in up and on most hazardous of of the X% Handling compared tables. markets about After basis. of the foreign million slightly the X% Westlock on points. special to of was and half the a from of gains lot now in press favorable impact end improved Fluid backlog Handling Westlock XX.X% XX third $XXX for Max. year. to foreign $XX profit of corrosive focus compared improved filed foreign end XXXX with quarter erosive end prior attributable some presentation of our $XXX third orders where and the benefit outlined backlog process for and We that believe sequential X% sequentially. compare reflected million last In $XXX segment from million the margin core Fluid increased decline with sales non-GAAP release, was operating up last operating the which compared year XX% exchange. comments, our adjusting million, activity XXXX core X% sales our and The compared reflecting a I'll X%, X%to Handling X% quarter, increased to increased were the we point and the at last to harshest the a at applications of from share September year order margins a mix. exchange, year of quarter Adjusting of primarily to to

we lower full sequentially year fourth year margins approximately full with the our with For guidance expect consistent inline normal quarter with original XX%. of sales slightly seasonality,

last than and year. this up by given decline segment X% similar fourth with modestly. XX% were million. expect last approximately quarter strong now in compared sales to for after we third declinedXX% last year to end the digit compared compared more with operating of slight September margin Compared driven up modernization at of market at the payment to the to the quarter. electronics and XX% XX% productivity peak foreign million better acquisitions. favourable increased improved strong in basis a OE X% of operating was Moving declined The quarter XXXX divestitures shipments. $XXX sales operating by and OE improvement the primarily sales from the last for from Core a in single profit gains. to Fence $XXX to declined sales last quarter and increased by electronics XX% the offset OE high The sales military was spares million mix. expected end points higher Commercial XX% driven productivity and declined the was from in end impact and XXX volumes to Space range. sales of year. to million partially of technologies. we sales declined Defense margins After of net compared range, year $XXX sales OE slight the million to timing to merchandising increased Segment Those basis XX to quarter X% and the margins for at XXXX to margins headwinds business primarily $XXX Aerospace mix points and to low were Sales comparisons the to by the market compared up spares challenging and first Segment the driven $XXX the exchange very of quarter. improved commercial although mix. XX.X% backlog teens margins XX% prior year. XX% million Aerospace XX%. record a $XX and upgrade

of the to in on material million. basis substancial XX XX.X%, although than costs increased higher for by Operating ahead sales better anticipated. and result this benefit volumes. our levels points to increased to fourth expectations as this second the we been $XX and in than offset primarily higher the thought call, as has has X% we of growth at conference a the been we sales a sequential beginning business increased margins sales the margins Looking year, expect quarter quarter. mentioned Compared material we at approximately Engineered

results to our on company guidance. total now Turning and detail more

XX.X% XX.X tax the XXX quarter points. was basis rate down of On increased quarter, GAAP basis, basis last non-GAAP In year. an the free rate compared % third XXX to tax to Our cash was quarter basis, million million $XXX flow flow was $XX last free in million $XXX a year. to on a And compared compared last year-to-date third the $XXX cash million points year.

for are track on year. the cash guidance to our We free end

to For excluding $X.XX. to our $X.XX recent is $X.XX On are reaffirming guidance related up $X.XX are for to the range now year, reflecting take the Operator, $X.XX GAAP special range activity. year, questions. a EPS items to ready the of we M&A prior to one-time from our full we lower our items basis,

Operator

And Thank of you.[Operator Wolfe the Instructions] our comes Mr. Josh from Research. first line from question Pokrzywinski

begin. may You

Max Mitchell

morning, Josh. Good

Breindy Goldring

Hi, on this Good is for Goldring Breindy Josh. morning. actually

Max Mitchell

Yeah, good How you? morning. are

Breindy Goldring

I payment could the what’s incremental the was the large wondering from timing left growth tell could On if and been XXXX just today, Good. what understand help you this if has XXXX? you in project of projects us at Sand for us

Max Mitchell

Sure.

end the is what XXXX. the of slowdown they conference I retail timing the our did range When growth take communicated say slightly that earnings I deployed just single think the be project communications largely number of end the would in to So is when consistent in There ultimately continue. that related first continuing of call. on a suggest lower movement push segment digit than the for any push any in units out that And I on overview. do say and to we cause of the business matter into of project the we high most to we or are the core summary no second out. the then the overall that quarter to We anticipated full and the and or We expectation second all deployed. that’s terms It’s down part for see was would would the the call with see the in quarter expect year the entered to attributable quarter large we answer segment. to that XX% that conference at

Breindy Goldring

this out, orders Okay. Thank what’s how about, the as to we margins And that that? driving think then and on like particular can talk And so quarter up Aerospace, it up in looks then grew just step backlog in XQ? materially playing you about blacklog should sequentially, it were you. relates and

Rich Maue

from tends backlog aerospace Sure. to timing. be business a second Again, in consistent we our impacted with quite had what bit said quarter, this the in

receive for from timing to times predict to occur programs. for And We’ll will difficult orders of those year. they the and We do also time received OEM time military particular are the programs. see, different orders blanket of at blanket

if it's about in electronics quarter. look the than In order that trajectory are background, that aerospace just The had bigger, the today more that of more we some ship I a our those good progression more with little necessarily periods about we orders would we you in backlog future year year else. a impact bit say and a the reflection fact ended of you that third quite did anything so fence comps at into saw feel the space Just of large I the we quarter, this blanket through expectation of remained line your that a that even see improvement the we would ago year-over-year wouldn't come orders quarter year. this because orders was be backlog. looking that fourth tell

Breindy Goldring

Thank Okay. you.

Rich Maue

You’re welcome.

Operator

And comes Brett Thank the line question next of Linzey you. from Vertical our Research. from

You may begin.

Max Mitchell

Brett. morning, Good

Brett Linzey

Hi. Good morning all.

fluid maybe on a put near the want encouraging there? slowness that finer Just OE little the point see come development of Did the in Harvey? bit have negative that? handling back Any order to there color headwind some side, side? the on MRO markets Are division, you from impacting development are the particular but on you to

Rich Maue

Sure.

and that rates I say So had maybe in quarter. I’ll the split project. similar would Both between growth MRO

investment projects to a of the projects. timing being indication third XXXX, projects, think to again and as see know the although all moved And were the we project solid, came refinery, they largely getting U.S. strong that quarter. projects driven than a little I from a conventional agriculture in order in versus first power. very that of have beginning not and to there’s space. the to are by are timing in we particular China grow Europe, MRO is still particular think power, frankly relates and growth or coal-fired in the third more the relates Petrochem of overall activity we remains Outside by these what's activity been slowed but strong historically, the growth new they and the with a de-bottlenecking chemical and and things Asia-Pacific substantially and narrowed I to environmental State, United of solid it Turnaround and primarily U.S. And rate would lesser For consistent in say necessarily investments in worse a then frankly a been have just I in also the decelerated that specifically feel productivity while saw refinery anything good has demand off a driven dynamic the better Europe did that but continues and MRO little of half the little China in up just year of If pick perspective, And pretty long, globally what soft orders bit just really weak than China those also but bit, project and in you been Europe projects. half, else. quarter about things scope first be delays the and compared extent the nature. around happening fertilizer as I on of projects, year. rates some the to been largely quarter

Max Mitchell

quarter at little calling project in strengthened in saw of we’re eased and growth the second a and that and growth first just MRO Brett, a project, pace MRO both bit. just out that solid the Still -- we

Rich Maue

handling. add core strength of just would just bit quite the the I process we did Outside fluid portion thing supplement nice valve here. a fluid of other board see across handling, The a of in

So perspective of we’ve quite we what we a in Orders the the revenues. in process maybe even area comments see in segment, both beyond corrosive very more provided bit in saw sales is been quarter solid were speaking from but here industrial largely that to the were that growth orders that encouraging. highly of general, And quarter. commercial, I which nice the to and in specific an just valve

Max Mitchell

want mention Canada? to Do you

Rich Maue

Yes.

particular was So solid. in Canada

So Canada was pipes, that you’re pretty of have margin the our fastest the nice business fittings. valves familiar with compression fact one the in in distribution a in lead we which and components within business That for handling growing some the quarter; fluid to quarter. did

are one we’re that markets expected we some in where we’re a by good down in we the staying So feel what of versus fact Canada. end encouraged about of little growth margins because that really was up it bit while our only

Max Mitchell

some a Specifically seems that little bit. to back mining coming to related be

Rich Maue

Correct, gold mining traction I’ll in second some really region really in MRO first and – in we’re half, see about projects for frankly seeing didn't taking some in some here solid half. that it excited diamond mines the call releasing on and of that place we smaller progress the the so

Brett Linzey

color. you good weakness the some seeing on some And aftermarket And just Could the And do distilled where return one the of be we in may here? program, Thanks. pressure? business? QX maybe to you by on really Aero. That’s growth of in product more are category then down just

Rich Maue

time to clip. the up of on bit a number prior commercial had market, retrofits it we opportunities were most M&U space that that a brake we’re We the that we our for airlines the a notably coming that as fluid dependent is of that to investment continue off different upon elements completed, space, carbon program backfill commercial or had the in us opportunities. in M&U sure to business particular headwinds. M&U think in make can after that airframer’s it headwinds years. was was to where a We difficult mentioned but we of battery I relates program space well, the to funnel upgrade in in those the Tri-Jet really charger comparisons. is that to in M&U be And as take I a or would M&U completed saw we say really perspective and a spares opportunities a margin commercial invest to important level do those, Where from So, some track which nice had and driver desire was continues

the think say in positive to we where of expect would that be we of would investments market being We in after trends quarter to those be I continue I that to some So would soft see side. aftermarket the on until were the M&U the outside place airlines. by generally made start

Brett Linzey

Thanks a lot. great. Okay,

Max Mitchell

You’re welcome.

Operator

of our line next the Karas And with comes question UBS. Damian from

You may begin.

Damian Karas

morning. Good

Max Mitchell

morning. Good

Damian Karas

parse handling, Back might've the perhaps third to given in year, with be fluid of touch further acquisition impacts the improvement and margin margin various price how materials should as expense? came to Is the margins raw for dynamics expected guided a you've to tracking I are thinking these out that thinking know other than mix what in slower way in the line such we the about volume there XXXX? quarter? but or any And ahead versus mix we

Rich Maue

Sure.

So we in side the we our growth of than to rate we the core quarter business but different business, business. that in core love mentioned leverage the in process Canadian itself as much a valve traditional manufacturing the see of and quite I our are pipe, see, fittings just valves business on the distribution have bit did which

elements it quarter of side. when lower we’re expect in sales on you moving what of level of a at a that little growth look lower our process business. from the the but margin as distribution process margins, much dilutes so leverages core would progression that those valve expected, In see particular, two from But trajectory we continued seeing in better-than-expected kind that differently. a growth, the business core advance sign bit in forward to side see of that So, on welcome growth, perspective demand that’s the but continued when from of in you

to elements Now related did margin we most important would be the deliver. two the that

and the XX something say like Now line And basis I when demand I core just margins I at with points what just on take highlighted were would've a growth conference or are seeing. bit prepared for when the the exchange in would the that quite that did we at looking substantially quarter, we solid in then expected, orders off remarks, that, call again which to reiterate the we in perhaps the that look deliver in overall in up that board. I'm and think but quarter the the we’re sales but orders we on across

and that fact have basis anyone the we’re year-over-year at not X% year-over-year So concentrated and business a that really looking in on drives the that’s diluted quarter services a business, in FX frankly I valve an its mutual by up negative comp. seasonality

growth parts across quarter all the in some handling. that So the seasonality here performance expected, pretty order be excited would in of business solid the about so excluding fluid

Damian Karas

sense. we first Make in capital whether expect more that looks XX forward to does repurchase really on the you the million going see regarding pipeline the allocation of alluded that or call? decision it's maybe the on years focus And comments earlier I could you Okay. the Could and M&A and briefly share drove the two remain that should here. what in like order, it but about wrong, on shares time be in buyback you've

Rich Maue

I quarter amount policy to amount our the maintain largely the was couch offset other to want I would perspective we we consistent third the of and I around dilution. a in say you that however forward us. was Yes. here front would that dollar what with it. have think in From go because things say to or did value that perspective long-standing see want we flexibility

Max Mitchell

looked at timing. opportunity the about good to felt to an and we the results that on as we look to the quarter’s frankly -- in overreaction last at an quite overreaction just considered was So be timing, what we pretty

Damian Karas

plus. are Okay. you cash guys target still One free of last, flow, tracking towards so XXX% the long-term

kind than should sort NYC Thanks. cash normal. on asbestos you have those mid-teens that expect maybe a payments solely and million, were than related settlement million closer run of the forward New of outlays basis we asbestos’s did higher that $X rate or to Was go $X York, You level?

Rich Maue

in terms and us I expect the continues a we not say to position overall our that So, would is to on would million to would an reason in insurance of quarter be say, you’re be little bit after higher in concerning overall it that be why that to somewhere the $XX range. I might the after basis tax, here million $XX right

We’re of but amount towards in the year, again was consistent in being it update end with did related of that made feel you outflow make at position the the we in our our did this we and specifically the associated to disclosures it look at quarter, higher that with pretty what to cash but previously. year, we’ve about terms last our some that when settlements reference, you we good

Max Mitchell

I think characterizing and framed it up you right Damian you’re it well, way. at the

So good question

Damian Karas

Okay, great. Thanks guys.

Max Mitchell

Sure.

Operator

next our America. of from from Liwag question line the comes Bank Kristine of And

begin. may You

Max Mitchell

Kristine. morning, Good

Kristine Liwag

guys. morning, Good Hi.

Max Mitchell

morning. Good

Kristine Liwag

gains. growth you from did you Max, share of you how what’s share much been? fluid is fluid? market the pricing gains driving recovery and share contribute to that in And that could in have quantify if perhaps half market mentioned describe half Can market gain, can the

Max Mitchell

handling specifically, so with teams fluid to our continues our Crane within what pleased activities Triple XXXX we’re from niche from driving Valve mostly actions. our across It’s solutions win engineered honestly and take the FKX Offset I’m and share. just our

some value some work. we’re significant areas growth out around engineering existing we’re channel channel seeing work to that us which taken some that. been partnering product the cases and decisions incredible winning, making share we’re with cost some of not in we in in team and compete some seeing historically taking The had and allows doing is great tough relining, doing We’re and work

growth. We’re investing for

a LNG. cryogenic in testing operation new putting facility to attack Duo-Chek Noz-Chek and We’re Belfast

out, around globe couple We’re cases could over expanding for see engineering geographic value gate, in diaphragm on, winning some aseptic expansion, quality in or India competitors focused is analysis, is working. activity significant the I impacted introduction, been at winning of specifically be channel valves, pharmaceutical on go I we in product and enhancement, historically Meanwhile of we have check of level cost that deliveries aimed and industry last we’re range are up just have refinery. India. specifically API taking there's a mode, might retrenched and and their and focused facilities years impacted, valves on mean because the opportunities on that value that. new which against XXX, closing

Kristine Liwag

with backlog the That’s up from seeing I helpful. mean, prevent X% single And what you growth then and that puts year? in should fluid fluid handling quarter, the digit takes next in are high

Rich Maue

High yet. a our about to talk single remain here little bit cautious – we just XXXX

just execute to-date terms we where of season I’d potentials going year We’re entering able here our plan We would to in on months both progression were said a commitment sure. call. I per backlog our a anticipate not say growth what and we here rather year and more ability provide would… little that we’re make be to of in to and the pleased on next – I orders we I love do. that to would in range just to seen of November December, broadly the speaking, Kristine, bit the with we’ve that

Max Mitchell

we market the going I how market, just I is be the well. very – High mean, single going think digit its think where to to uncertainty to to market is? strong is around going be be? execute we do The continue very,

Rich Maue

confident going think, say market outgrow little a to the to I we’re that bit. we’re

outpace then And there expect we I be market to so, that. if that thus to would going determine is if -- market that

Kristine Liwag

last one maybe And helpful. That’s follow-on.

about you guys when that’s talked going higher and million next margins. So, fluid $XXX recovery the to incremental have much

that you with new next book are far have on that you’ve million so introductions With on in the and pipeline, that the product revenue? incremental business the of higher that margin track $XXX you for

Rich Maue

Yes.

Kristine Liwag

Great. very much. Thank you

Rich Maue

You’re welcome.

Max Mitchell

Thanks, Kristine.

Operator

comes question next from line Robert from of our Susquehanna. And the Barry

You may begin.

Max Mitchell

Good Rob. morning,

Robert Barry

a couple things. follow-up on I of just to wanted

been refiner in out a there? So, scope talked refiner just concern some on still what's slower or process little there? some pushed MRO there's that of specifically pace about you in at the narrowing. give And just in a some MRO, the Can story any hurricanes improving color maybe the you refiner valves U.S. comments Is that more that?

Max Mitchell

don’t I say… did – recall we

Robert Barry

I did. yes I Max, think I I said did. that

Rich Maue

what around in have -- calculation and solutions Rob, we the we see the think I turnarounds. specific and wins it meant, HF where was we that’s

referring was narrow what HF. so is And I you’re of that think scope to

Max Mitchell

perhaps side. Correct, on it’s the niche more

Robert Barry

I and question there with impact? hurricane happening what’s in the specifically refiner just mean, MRO, maybe U.S. any broader the was is whether

Max Mitchell

you, which trying not For is degree others, portray would tell to a we the we’re we’re this characterize not again tying be same as so as the is to we’re did hurricane. I – We here. think what I think us to no, our what I’ll see from do broad-based describe. unfair where refinery impact That’s not see not the -- market. it to trying significant description directly We’ve

Robert Barry

then, in for you. being from still have you mean, message of kind wanted margins And on Aero plan the there? as on to XQ you’re XQ would I be stronger, margin are the about to mid-XXs to clarify track you talk the Got also Aero get that think concern much far as I because for

Rich Maue

still in at core in XX.X% not so surprise on did me. target a it bit, would if miss would revenue. year it last if say better to that called the be we points little come on-track, decline That’s target full-year was on-track. margin say a XXX year, I last good largely we’re X.X% We was to question. our by that XX.X X%, basis margin I a going We’ll XX, probably than

quarter. a come uptick still we yes we've able the that to been your question, because proud off that of there. nice do to answer just fourth to do in But expect we’re hit XX. what bit, But pretty sizable a here So we’ll probably pretty

Robert Barry

Yes.

on I Aero, swings in with mean, of pretty the dramatic Just the its comp. years last project lastly couple picture big been

of to to base year the should kind back start microwave you we points next couple at we plus kind target three XQ. think to As kind be Is five case award in maybe frame cycle of the of out that point? a I this of the -- be should got thinking through your what

Max Mitchell

give we are not guidance. trying Well,

as Rob. we see did, wouldn't we’ll say, to is some it growth. First definitely single-digit just parse I finally

Rich Maue

I’m your projects, the makes hearing we around if convey question ask, difficult it message had revenues. it little But of right, bit I think if some to these I’m big

quarter This the not example term long to I but think X% a our X% of is target. off comp, difficult we’re perfect coming over

Robert Barry

of Right. of And be then normal it a next year? kind year more would

Rich Maue

little bit year. five hurt normal we’re next expected not to of us kind have did comp down this going mix adverse to of really be it as would yes, element the or – a a We some year and an

Robert Barry

Yes. right. lot. a All Thanks

Max Mitchell

Rob. Thanks

You’re welcome.

Operator

of Alembic next from line Summerville comes our question And the Global. Matt from

may begin. You

Max Mitchell

morning, Good Matt.

Matt Summerville

hit what out of active. your speak costs transaction Hey, Max, of to ability you morning. action some you're doing pipeline Good you're actually what called the looking being or quarter. think in Thanks. pretty M&A in more had is you kind the as I at? seeing in Can little in detail the prepared a You maybe

decided ended You deals from. time out, was or price walking to sort that a on away either of up one you missed

ability? action point segments Just kind Just see of talk you put please? on stuff to at. What looking business finer the you're most through M&A the a of size

Max Mitchell

what away activity. few game, activities the can, as opportunity our each we been there's on decided There we’re all discipline significant acquisition. I've that have us. various to well that reasons. had the years from last we quarter. very value, it’s particular I a an relates current has stage We some addition to with on walk in that discipline in our our payment also as cost And aerospace did late opportunity from late Fluid in targeted I seen in handling fluid it segments the Well, discipline, been for to working a is again, I of what that think across stronger handling, There the think are & for are been actionable. merchandising than this

I'm So, focus we the in across what discipline. pipeline very with remain three I strategically. each pleased think but segments very of that and on what we we’ll keep major our process, working we the

Matt Summerville

in done you you've bearing the markets, back today, improve your margin? the a run you then market revenue that fluid what in end horizon time can last you would towards And the et level feel look revenue years given rate the Or getting kind cetera. handling order currently just of handling kind to if to business need in what of to mid-teens conditions need my get for something of seeing second, fluid the over several activity over business again current rate of look run you you back operating at you're at structurally and the

you the speak I can rate that place? imagine So maybe run would less years what you to if would've but need today than is needed ago, you five

Rich Maue

come the happen some at margin to within that to margin. so see it to next several to this the starting or quarters us, look the to we’re mid-teens and years or But the that expected of we’re over growth quarter, core three X% rate growth hit at take could last as X% certainly most. years. us to that proxy over looking would for as a the core to to not XX% that several need see a that in at XX%, Yes. couple can expect able X%, If pleasing target XX% to years If I X% going at that’s get We to run what be this through. here, we’re the next try

Matt Summerville

Great. Thanks, guys.

Operator

Thank our Stifel. from from you. next And Nathan Jones comes question

begin. may You

Nathan Jones

Good everyone. morning

Max Mitchell

Nathan. Good morning,

Nathan Jones

dynamic Guys, drag I and the about that far from wonder if talk lot more a rising price prices a talking so companies the We've just about could across had cost steel little businesses. through. bit to pass of inability you

impact that a little just detail on you maybe segments? the more of could If bit the us across give

Max Mitchell

Sure.

obviously us. headwind yes, for it’s of all been a So,

or our various net-net we the all against costs liked, than rest price our in putting driven. in the business, net the less impact raises programs of to I As If fluid a do bit little bit Crane, & able the segments within across quite successful probably putting nominal. we those at price elements but would of in of – material Electronics, increases what commodity handling business, Aerospace would've after a increases offsetting look cascade been say in cost it’s I through is increase. probably we’ve through at that particular segment

to You our margins & tied And programs look Merchandising Payment that it sort that long payment pull you our in have agreements given we to are. from and yourself durations. place have where with left specific then mean, of in for is away I and

value We’re pushing not we’re kind needs to concerned where in really increases any any be withstanding increase, have. about of of the to not might fact the it given cost products inability to price increases we

across big I price us would elements of feel the those pretty where say good. we Crane and So impacts

in not seeing exchange sort offset foreign little of we’re bit. The perhaps, it other us where a cases we’re is it of side some help getting

net-net time the some exchange And where pricing has depending headwind, exchange the over costs. would overall be… feel foreign I And we sorry, good about commodity own and question, its changes – that from. right, foreign balance on exchange pretty But time, creates answer to foreign cost buying between you’re commodity

Nathan Jones

Okay.

On the…

Max Mitchell

be… And I would

Nathan Jones

Go ahead.

Max Mitchell

And that think as about I was year. next way going to we say feel we

Nathan Jones

Okay.

the On pretty Payment you business outperforming Where start year. margin are think business your light Merchandising the goals out at & that level margins time we long the well of the of attain? that should can about

Rich Maue

Yes.

range about we XX% to and the good of to-date XX.X%. clearly high with at comfortable target today. feel XX% pretty end still that We’re we’re Year

that’s basis overall. I XX points about guidance our higher think than

mix little finish we earlier bit see, better bit just come likely expect our that the guidance. fourth the in segment in in basis -- to of a off and points mix year than little we a some elements mention given XX that full quarter the we’ll do I As the about

our would of points but guidance XX overall nice, out and range So, we’re I so, its be say. not is basis not going terribly way

Max Mitchell

no continue growth focus we’re long-term teams the well. work that it's on target change planned new significant growth the introductions to continuing all and and on focused But to product that business models and with on as the

Nathan Jones

Okay.

year. full in bit lines a Its start of margins anticipated the at going end you at more, the end year? than give little the in think the A&E of help Rich a year. the little anticipated any year, helped coming will a the like at us than the the little one lower probably come that Just to you bit look top you’d start lower with with you Can probably up of where

Rich Maue

X.X% X%, X% in the At expect on to Yes. year the guided the end of I Yes, we this sure. down down to fall year. range probably to would

Nathan Jones

That's helpful. Thanks very much.

Max Mitchell

welcome. You’re

Operator

Ken [Operator Instructions] Our the line Herbert next question Canaccord. from comes of from

may You begin.

Jamaine Aggrey

Hello. Aggrey This calling Ken. is Good in Jamaine morning. for

Max Mitchell

morning. Good

Jamaine Aggrey

Most the have – you along of segment, kind had guess – a quarter the forward? but I same I questions one Or saw some going on opportunities those you lines trends in question Aero been talk new little was about of could in saw terms in asked, my the business I any you guess quarter? the of foresee you forward? And retrofit bit going

Rich Maue

number a both existing. there’s look, Well, opportunities of

on our we we’re times numerous Day, really described feel we’ve As Investor well-balance.

We’re working programs. our existing

for significant development product XXX, EX, working content, and single programs We’re Cessna XXXx. new COMAC,

and team power, opportunities activity So, all solutions; of insertion chasing. within our continue is each to Meanwhile that a continues. we fluid, look and technology the landing, quarter across cabin at that sensing,

Some missile modular high-voltage, our we as get now that some participating of on power. high-energy. next-gen well business its looking programs on particularly programs strong of high-power we programs, military programs, are some in some which segment releases may is is We've funding in in, right around some at, next-gen of space it military engine had as

we’re industry, which and for and on. continuing single-aisle already How how plans of Electronics. positioning Aerospace broad So that That's thinking that at ourselves next-gen very team and about Aerospace ahead is development immediate very, thinking and chase, some technology Electronics opportunities least long we’re have And executes in already strategically breadth cycle then, we far in aimed opportunities, we’re -- of in strategically to some within even how the longer-term. away. terms I'm there’s that resulting a excited that's the strategically and a at this this we’re long decade positioned long-term planning is our long execution aircraft,

go more we to opportunities So it's the quarter immediate than just a It after. just that multiyear plan is of highlight that opportunity. really

Jamaine Aggrey

All right. Thank for color. you. the Thank you

Rich Maue

you. Thank

Operator

from comes Oppenheimer. the of question line Jim next our Giannakouros And you. from Thank

You may begin.

Jim Giannakouros

Hi. Good morning, everyone.

Rich Maue

Hi, Jim.

Jim Giannakouros

in Doing for letting me here. well. sneak Thanks

exactly finer what's and growth sure years, couple but think and but do with it's last market there softer it quite us in You it what points thinking maybe there if We the established that cited update vending it, missed I entered against temporary? can Thanks. an on sorry, working there. not the some you’re year seeing could you give sustain

Max Mitchell

Thanks, Jim.

some some programs. of of part our have business, last some year, talked with some major this We've with more major of seen number its – strong we customers. spikiness So, comps about we the one,

that the is of there it's back. Sometimes customers believe and full will down we’re on will term. the spending come and short the the movements good decisions value but connected it come up, it slowed understand media, we spending major solution, some back that believe some really and incremental see are do with only our that impact still and we positioned sales pick where customers proposition decisions that deferred about We couple that some capital allocation we made will that feel driving volume, machines

Jim Giannakouros

I one another And you. if Thank may.

portfolio considering three You rationalizing? the there mentioned acquisition there Are should and thinking of are there that a out term? divestiture the the working that lines? be pretty we pretty standpoint sub-segments you’re Or segments, any segments? from much. Or four pipeline is within How the are your is that for you’re business full about certain areas intermediate but it product

Max Mitchell

time. divestiture Yes. this and no We at discussions portfolio like

Jim Giannakouros

you. Thank

Max Mitchell

Thanks Jim.

Operator

the time. now to President Mitchell, turn to remarks and for closing I CEO would And Max Mr. like further call questions now showing I'm this at

Max Mitchell

you, Thank operator.

pleased are our We performance. with

how we across in are improvement. on of growth differentiators about prescriptive operated before company. key management a Our focus execution consistency This results rigorous extremely discipline cadence businesses initiatives. and of well our and focused activities is a That our teams of continuous Crane the executing talked are on with our focused I’ve cycle. as one

teams engineering Our excellence. freeze-up and drive accelerate consistency of execution to innovation our and

Lewis explanation differentiation for no don't who wise this the reminded once late those who of is understand none to investor great the will recently base. commented We those who will I communicate our of But continue for do. Jerry was words needed, to

next and City. Thank speaking on March highlight then our makes to call our Event in to for an late continue Crane early and Day quarter fourth you us will differentiates New year interest scheduled and day. forward we at X what Investor in organization. have look your fantastic January, in as for Crane, York with However, earnings Annual I special

Operator

today’s for thank participating This conference. gentlemen, and in program. the Ladies does conclude

all You great have Everyone day. disconnect. a may

Crane NXT (CXT) 24 Oct 172017 Q3 Earnings call transcript