CR - Earnings call transcript Q1 2018

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Operator

Good day, everyone and welcome to Crane’s First Quarter 2018 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, day, everyone. Thank our to first quarter call. conference release earnings XXXX Welcome Director Relations. of Feldman, Jason I’m Investor On our Maue, call our Officer. President this morning, we Chief Officer; have Executive and Rich our Financial and Chief Max Mitchell,

will after we remarks We few to which off with will our a start prepared questions. respond call

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

turn to call me Now, over Max. let the

Max Mitchell

Thank another solid everyone. you, to year. we’re this After XXXX results, Jason. our start off record-setting Good morning,

plan. shared at Day growth since execute been confident ability Day. with to a integration more plans further all various There ahead. on few months substantial in trajectory two and the free multiyear million. delivered year, of acquisition over the EPS may cash progress record story strong We free adjusted last And growth growth in for we are on initiatives, accelerated you $XXX in adjusted that changes on future Investor remain our which on deployment, of earlier from flow keep year, EPS we and of record And recall than outlook this to investments our for track flow years our record operating have we all growth and of margins EPS capital Investor year. XX%. adjusted of are us of last You a we will XX.X% also our cash that $X.XX, making repositioning that This and

little incrementally business last likelihood are That at partially of on by facing modest And repeat we we the Materials headwinds costs. expected. customers being from commodity softer some benefit greater largest offset our Crane is than receiving however, On sales of we are also XXXX RV some a year. Engineered positive one higher Specifically, from we are Currency’s that confidence in outlook. have balance,

it $X.XX is midpoint $X.XX raising Although items, early guidance, by our the still excluding to are at $X.XX. we of range a the special in year, EPS to

with a quarter last first of pleased The partially our $XXX from foreign discuss slight then this details. up million press core now financial decline. to night, cash raising are will a as excluding this our decline release to million sales increased to some year. highlights, X% $XXX two XX% and million Crane’s last additional I by outlined the in briefly $X.XX, that and by strong benefit the of guidance key Rich sales Record of also sales flow $XXX to was providing million. followed to quarter’s with XX% year’s results favorable prior a review free items, earnings of in We to items. report results million Starting reflects range compared compared quarter special first offset $XXX and XX% core of $XXX acquisitions EPS, exchange, our I’m

growth, with all XX% Merchandising in of core know, extremely we you which last year the challenging & strong in as comparisons. First, create does first an quarter result had Payment

the point, this end sell-through at growth year-over-year believe Second, Engineered RVs remains that we quarter. At for we sales the demand softer- solid our had market than-expected rates. vehicle retail to or mid-single-digit segment in this recreational Materials

to have strong appear manufacturers are and retail dealers demand. RV However, outpaced inventory levels, the which rebalancing production and

within lead in of reduction impact the production our our rates has Given volumes few turns best-in-class an weeks. any on quick inventory business, our matter a and in times

volumes. We this at margins the profit, impact to quarter, we at through have impact taken to of basis point, to least reflecting through short-lived, the with as acquisition. this million. end expect special but items, retail XX% Adjusted a points number softness of likely be of robust year lower Crane Operating $XXX of to Currency from most XX% XXXX. mitigate increased cost excluding expected, last And sales RV the XX actions operating the second continued the declined the

Currency On expected. I’ve and the been these Malta, Crane the And enthusiastic embracing each of largest date than United execution the the our is developing even visited extremely I’m from ahead Crane particular improvement. at Currency with visits And been Currency’s year, of smoother major continuous resulting Since personally opportunities us. States. roadmaps combined few culture the negotiations system more with left customers to Crane that delivery quarters. location. of Sweden impressed every overall, we rigorous a about cadence over report Currency I also the talent in a developing Crane next Day, in for and we business of has completed order to with integration on facilities the Investor last topic. emphasis pleased one and successfully for our a firm I

of also delivery rest place the segment. do guidance. of And on will a line still into & of that very and is order. year. lot is there We have terms commercial to sight we portion over exactly this Payment the Merchandising our full is about across out appropriate Technologies of project play course in of uncertainty mitigate the risk, how a of activity news good the our good fairly to incorporated exciting While have this portion There’s this now

Innovations, retail base. Payment do merchandising At value across still connectivity strong We Merchandising and soft security. or payment have the is expect have and for customer the well solutions. are down This Demand as quarter, market attended gains business. about with our But including products our but we with And project strong previously I the the we data little backfilling across seeing really transactions, payment annual customers, National new advertising the operator resonating strength as self-checkout successfully across talked and full businesses we and retail to of market, large retail for management, our year. we our rest Automatic pay by share with market, this a bottler to tower traditional demand holistic Crane the products traction safes and suite wind are NAMA, good vertical of over continue proposition presence. connected a where services from Association, diagnostics, get solutions our is

retail in we level retail Within vertical, solutions. of rates to by very And the the encouraged improve. are customer continued automation interest adoption

with also doing successful bundling product upgrades is Our and solutions. gaming business well

And vertical China, cashless in automation overall adoption fairly to are UK is the banking rates we continue connectivity the in vending Asia, business, for initiatives. our we seeing is solutions. see are European branch While This we gaining Europe flattish, growth the share, and demand market Europe. services, payment India in Southeast and strength broad-based improving financial transformation good for the with in outgrowing our and In and market. across strong elsewhere

an are We few market. expect especially verticals pushouts over performing in in quarters. still that growth most longer-term have impact well, China. project the has and While a last slowed had But transportation bit, delays

sales operating expected had a were than better orders We Electronics. really and and strong & quarter. better. Aerospace first to profit on were modestly Moving even Overall we

military the strong have In Orders on last last the combined strongest the were both seen particularly years. fact, we the have quarters orders two and business, for of OE commercial businesses. five delivered the in our consecutively side

the recent Curran month’s years, For we aircraft continues Day. excess backlog Orders described for have expected. over at we in projections line the last by through, last we the has next Investor be The newest increasing forecasts to may increase Airline content. with benefit OEMs. it currently years. and profitability demand XX levels being business outlook the Brendan talked about in the platforms the platforms, And our take with are aircraft the remains the but reading at time, to Crane strong. as also up deliveries aircraft firming record XX,XXX rates build jet commercial provided some is where This expect aircraft with few position of

aftermarket, strength commercial and spending. to have strong we continue the utilization And factors. airlines in experienced in load budget are record maximize as and our with at aftermarket, line aircraft caps For we both OEM seeing demand business, military expanded

us Our Expo. areas in and energy, continues defense, position ground-based recently attended communications, the for radars, airborne-and Hamburg also I vehicles. processing, Interiors and and and including power signal microwave create missile technology investment electronic Aircraft electrified missiles to opportunities warfare, power directed space conversion in conditioning

actuators, would Fluid feedback segment off I and actuation the which industry. recovering expect be sluggish if further today, fastest, for demand And overall, didn’t Rich slowly. more new is well. to share While the with compact, remiss solution. still gain line the GX I this good Markets on mention But quietest great are Handling a provide our cabin-related of most in to efficient received in seat we products is will details. some XXXX. start as are I

we strong quarter are guidance. surprises, are we to our growth any was revised in we today gain progress productivity Overall, what teams know a our initiatives across Based new and share across and portfolio. making vertical and continue on barring markets. Our our it on our economic confident

Again, expected. a actions We’re end are most for our up attractive setting are as today growth trending very executing well multiyear us story. and markets

EBIT expect As acquisition, On to top next of several Crane a a of underlying reminder, start. growth X% that, great average X% Currency years. the off to an we for

of accretion continue EPS $X to by We expect XXXX.

across per for per by the And using projects exceed that starting next, from While accelerate to year well already underway. legislation $X.XX businesses. in our that will we contribute right This feel and we are we’re will however, year amount $X reform tax to growth this Tax benefits accretion the XXXX. our XXXX. EPS investments is number still through XX% fully reform year, share with target reading these

in been per to actions any share customer add remain we without on December cost. $X.XX good. is has Repositioning Progress always, initiated by XXXX. the And progressing will As repositioning disruption. disciplined we date

top over let several items, Crane flexibility should Currency, mid-teens All EBIT additional to have drive growth And significant we deployment me a financial should this, from substantial on Rich, of CAGR tax over investments, it EPS years. growth, some all of you commentary. capital for reform, through these next least the turn underlying for XXXX XXXX. at repositioning,

Rich Maue

March compared points basis higher million unfavorable reflecting was XX offset the increased acquisition Handling of Fluid with special million comments, March the $XXX the operating benefit and X% exchange, compare sequentially. Fluid compared exchange. favorable of last first the increased Good and end quarter X% our XXXX XXXX profit sales morning, foreign X%, and to margins to We’ll to volumes adjusted everyone. for Orders, move the productivity, million slide $XXX Max. both which foreign last excluding of last XX% in of year-over-year release at exchange, XX.X% at compared X% increased In of a operating Fluid foreign Thanks, million core quarter, of to X% that at $XX sequential and end from through year. end After Handling net basis. Handling X.X% and sales now segment of presentation. partially outlined improved growth the year, increased XXXX items, backlog and $XXX adjusting as first mix. XX%, million of $XXX also by on a a for backlog benefit from year to reflecting press

Day, recent we markets The the year, a in than early discussed improvement but that better we orders. saw steady a remained and XXXX, plateau, quarters order have trough, basically order relatively levels. solid in Investor In bottomed in at throughout still we believe last depressed new XXXX. at sequential As end rates

here, market, modestly end and improvement markets markets rates. But primarily the share are driven During project in of was the the of our with general activity a quarter, Middle do industrial solid saw like XXXX increased from we original quarter for still order expectations in in that China. first outperformance was last markets improvement we pickup growth MRO little East fairly refining were order in Overall, modest about they orders. look further the bit slowly. than a We by Compared believe outpaced expected across to and improving slightly see chemical, soft. orders from better. is better did refining half By but the order by order although levels, gains. a power slightly quarter,

pharmaceutical fairly However, flat by the growth sequentially quarter, capacity we debottlenecking projects and was booked were confined a with better facility. chemical sized driven a activity expansions Greenfield in order turnaround is In year. still projects pharmaceutical but Project were in the is orders plant seasonality. to fairly markets. modestly still limited and activity only primarily up to normal large new order good few activities. compared still for the line good- typically MRO projects. refinery activity the pharmaceutical primarily related saw there Greenfield than are to improving, a and but a year Refinery and expansion the sector. expected to compared in Americas, last first quarter in chemical up last in We overhauls. And

expect was growth project offset refinery flattish progresses. activity to by year pick We activity. as overall the softer with MRO up solid Europe

still particularly The believe most Greenfield and share, Middle been our improvement funnel with performing change the we order East, But orders in projects however, we expected, sluggish. for where continue turnarounds. chemical order stronger While two delayed, is overall, chemical ahead expectations. is Outside And over has primarily months, chemical, is gaining China, we the demand activity been we be than are markets. in China chemical Pharma and notable last facility of a slightly In has project the in activity further did of to book expansions plant markets. an that several for improving.

approximately believe to favorable On in quarter provided acquisition At foreign the & expectations. construction related operating and unusually year. Payment earlier sales, meet further year XX% driven it We of to comparison quarter by profit large first last year compared margins prior that U.S. was expectations the in million despite of sales to ahead margins do growth sequential The and year with is next this sales this last we X% a XX.X%, last in exchange. the improvement the half on volume course by $XXX from in Merchandising Segment Remember and And impact similar decline XX% slightly Technologies, our with segment was the margin project. were margins down segment of the Sales year, an Crane second We offset solid guidance commercial XX% improvement with the remainder both side in Canadian markets. of Currency expect acquisitions the segment our the decline from of performance driven increase increased consistent increased by sales million was of with XXXX. business, from track the $XX year core with growth of margin core municipal both with XX% expect segment levels of and core at modestly the sales the the this we operating do difficult integration. retail of core XXXX. sales. growth to increased over for of XX% margins nonresidential

million. expect with with products. year. the March the the engineering for XX and The to was $XXX Electronics and million We XX.X%, Total OE as margin business at to X% the we Aerospace end March expectations. to Total military with of jet sales of improvement of Electronics the and XX%, with ahead integration & $XXX stronger little a Aerospace $XXX further make to to year, million business by along last mix the in sales, prior & increased was on of aftermarket decline end comparable sales. of $XXX year, up spares a similar XX% softness next sales commercial X% our progress basis compared OE to activities. several end of military compared sales rates the offset at at launch, by other year. margins of million with Malta modernization and Segment improved year productivity backlog last cabin-related operating driven XXXX upgrade offset along continued sides from growth points commercial sales partially strong increased and transportation projects, aftermarket last increased by X%

for in to the levels. of as the primarily As million, fourth half X% a & remainder by XX.X% market. expect and the sales and progressively margins sales material is primarily second over quarter stronger Aerospace the result Electronics, half $XX Materials costs. a to XX decreased improve recreational Engineered typical higher declined years decline basis to Operating than the volumes driven margins much first lower vehicle the with of particular we in

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

tax expected XXXX. quarter the of first quarter first XX.X%, compared and to was rate Our in as XX.X%

The quarter first tax our reflects from recent rate the bill expected benefits earnings. tax mix and of reform

the that The the ability more payments. guidance. $XX quarter we as to cash We compared continue pleased In the the acquisition report tax $XXX Currency. also debt. at to the end was part the repay new Crane provide flow than to asbestos loan last to expect to of the quarter a end $X.X $XXX collections following our from and am first of used allowed Crane rate originally full million of million And free to debt our repatriated Currency approximately to year, Crane in deleverage We the with to well end I far three-year the year the original quarter, receivable short-term cash the flexibility billion, million first future. deploy of reflecting was law will due of us under repatriated XXXX, at XX%, a million more to nearly it million up subsequent cash. negative the of quickly the in $X $XXX consistent acquisition quarter, Total some we of in as capital tax of has us anticipated. timing repatriate Currency at term

of Max net a guidance referred headwinds inflation. Crane $X.XX guidance, guidance we special Engineered the Materials Currency from reflects XXXX by range our offset partially compared primarily contract material by softer and some to to increased $X.XX outlook to, a our EPS The to raising As of are items prior Max $X.XX mentioned, to excluding $X.XX $X.XX.

raised guidance million free also of cash range to We by our to $XX $XXX million flow $XXX million. a

that expect of EPS progresses pronounced normal, quarterly in project Merchandising slight as third Looking well at is substantial Fluid do and with and year expect Crane as which second be fourth the timing in repositioning increase We & accretion Aerospace now programs, the more increase little in Payment as are Operator, in sequentially to question. we quarters. Handling will seasonality. a quarter in Currency consistent given than the likely course second year cadence normal ramp-up progresses, first earnings and with sequential year. The of increases your To a productivity in continue more a take in earnings. reiterate, the only as slight the will Electronics we the EPS results benefits, also to the quarter. ready improve business’ to & the

Operator

Our comes line the Bank [Operator you. question from Thank Liwag America. Instructions] Kristine first of with of

Your go open. line Please is ahead.

Kristine Liwag

guys. morning, Good

Max Mitchell

morning. Good

Kristine Liwag

alluded Max, incorporated that for was order? and year, the full Can for I is is the opportunity your what you Crane give more you included only this wondering have that in also from outlook. and you outlook increase on details your Currency outlook this the partially into what’s

Max Mitchell

I including with we’re a arrangement that comfortable we portion our of our Yeah. would client. What Kristine, is say with have

If opportunity Engineered as Materials question But of and impact overall direction original it balance associated guidance input going material stay benefit our associated that as of you in put about our $X.XX around year. you with I of about additional level of guidance this costs. the or higher and the about bit at roughly in to maybe the other with guidance higher to expecting increase, think a have, to a would softness the think that, level, versus the somewhere we the little broader we’re From with $X.XX it the think opportunity. just earnings a $X.XX just

Kristine Liwag

what’s And to because that already that, your is deposits from timing? an need Okay. from partial this that order? it conservatism Or you’ve on of still And up it side? maybe only order driving do you’re the why following customers, in your of the factoring is I received? Is mean you get

Max Mitchell

about Yeah. speaking I in particular how want be – of order. to careful terms customer this

it. in As has very described, a some uncertainty order is customer that this we large

uncertain have So order. in that timing full yes, of order. it having we release said and Even is terms exact the the that, of

feel and some What of order. at We the year. is that have this firm tighter in There the we potential time. terms our related about guidance included is balance conditions to some upside what we’ve in

things of to see little We’re a not update that would you quarter. more certainly an this potential well. quarter’s to on I’d out And some – be to upside. maturity next call results we’ll there if progress, prepared kind yet. in this additional as quite give like But

Kristine Liwag

color. That’s you helpful Thank much. very

Max Mitchell

Kristine. Thanks

Rich Maue

Thank you.

Operator

Summerville And D.A. from of Davidson. our the question comes Thank line next with Matt you.

line is please Your ahead. open, go

Matt Summerville

follow-ups organically to on the standpoint Two from first, what you the seeing in what Crane customer, perhaps expected? can from That first Thanks. maybe Currency; about a being actually talk originally noise removing one the question. you’re relative you this business volume

The operations second that Currency. Max, you’ve know around you mentioned see Crane at major all been to question, the

that to ultimately seem that accretion? You conservative? you’re it upbeat. come in of Where Is Can you talk away way? more at going Is incrementally you feel you increasingly why looking the are forward? optimistic about terms looking more dollar

Max Mitchell

the I on a to Well, excellence. to I really location their together. that going knowledge, at with is guidance I expertise, from tell every whole that can very at combined think with our team the new engineering operational was the this teams And develop technology, you execute, ability impressed level

versus was are acquisitions very encouraged, embracing more some difficult culturally. So I resisting,

very I X leadership, generally. encouraged very a execution, project we’re in very, very, sales much any? for with do what just I of you expectations Rich, the our between tracking, with tune have fit the very very, the Malta what from the year. we’re was addition, working, companies, And funnel think in cultural impressive, up the both very already X startup, I’m pleased executive leadership lines – printing.

Rich Maue

Yeah.

Max Mitchell

the exactly that top growth, off know, have don’t sure Richard. the of I I’m on core not we Just that

Rich Maue

as sort in of full in on business performing, yes, as terms way dollar the the of the expected quarter. the – It’s Well, come and just circle well. Yes. just is not

But comfortable seeing. underlying we’re by are – things dollar the frankly the But that. quarter we’re what we itself, think quite this and is like on what planned. business whether of expected as with we we still in as customer, outside I encouraged feel we’re the moving

Matt Summerville

And dynamic sequencing of then year? talk that can through sort investments, of those you to the sort second investment I out understand year, towards of second of impacting we in Is the this again that heightened half of making specifically, those first made weighting? the growth rolls of first want sure comment. just how part about Rich, that the you’re half make half, weighting you of that twice overall the kind end level terms your the half, investments this point of the of mentioning pace of

Rich Maue

read about That’s repositioning of benefits profile the in that that the and Merchandising the about just and Yeah. fluid when Payment Electronics, we even matter. for reinvestments, orders & mentioned, businesses through I & more see sales Aerospace and entirely

Investor it’s just discussed I of themselves, here moving all anything, we it rolls progresses at that through quarter. up had really year bit if how end-weighted reinvestments first back more would just So and out. more different a pick nothing little that initiatives more say the outside Day the actually, as the the The norm, of versus they

great to later. a those of and happen planning starts But bit progress. initiatives, we’re So of ton a the of lot when a there’s pursuing kinds spend making frankly little

your answers So hopefully, that question.

Matt Summerville

guys. Thanks Yes.

Max Mitchell

Sure.

Operator

question Nathan next our comes line of the Stifel. Jones you. with from Thank And

Your go please open, is ahead. line

Nathan Jones

Good morning everyone.

Max Mitchell

Good morning, Nathan.

Rich Maue

Nathan. morning, Good

Nathan Jones

I’m going to to go Handling. Fluid

your are projects you more the increased think little Do out. projects? that had feel year a probably was the you of about in bit I And East. Can stepped bit what these you last up a market? of rates there? are sounded to the bullish level there. that like market certainly the a sounding clear one-offs are had more And had plateaued of Or kind bit guys come are a Middle they bullish just been kind talk order there most they sustainable little on little You but pretty have

Max Mitchell

primarily and modest Yeah. I we would we’re that, of little previously Crane, uptick, But a it’s to now East correcting being side would area it in that little investments of better an of business where our additional that Overall commercial bit It’s wanted to I all. East, primary And a our have commercial increased business do in just we color in seeing coming. gives you nature large a us are feel the – provide over the benefit the from Middle in bit Frankly, a those the in increasing Middle chemical, say say, additional we our of UK. we activity. terms than comfort. impact. not we’re the for also

a good just from an end-market So it’s us perspective. for overall indicator

things the of be Americas say. other felt be outside outside Middle point would would to just power, the to I The little of East would certainly everything stronger, a bit

segment. pretty that feel have you of look comps guidance wouldn’t rates the And and so feels point, feels just in order overall, just like feel expected. growth and the we sort the for bit we’re incrementally at at of a the year, that this tone seeing I good balance – we at we’re feels – pretty about what funnels our little still just modestly better And good. core now we the levels when we than at

Max Mitchell

Just Rich the add just East on just to added specifically give to – you said color flavor. a to what a Middle little to

So particular, fertilizer and some just sense, in gasfield give development Nathan. to a you

Nathan Jones

And then there. and projects turnarounds like in for some looking in U.S. improved maybe maybe some improved the you’re refining it sounds

feel is XXXX, I you of probably XXXX? through reset you increase? plateauing do year? is bigger this the that’s Are improve the way level higher in you it that did in a like the the on same continue slightly a Or again to orders up feel than U.S. little think that’s Or the to expecting to that like trajectory do you market for

Rich Maue

we – the don’t was last this we were happen the to it trend of yet. nice feel the second wouldn’t continue that a should bump year. we’ve I see the year suggest the that we’re us any expecting in we in to pretty improvement running happening the Americas. year we’re about say rate half to good. I at just of that in that prepared year from that not balance into meaningful that seen feels of But balance say Yes, of for good through this as kind kind move It really an of would

Nathan Jones

Okay.

quick one firming the as a cabin talked soft. being most products years. in products going Why cabin you parts the Just about on they talked would last aerospace, growing have good you things other well? But when orders of be of about as are five business the soft here,

Max Mitchell

stronger has from It the to shift single versus… aisle with do

Rich Maue

we content rates more aircraft, in build XXX some Yes, in just the that where have and the particular of larger area.

message the along like us, otherwise not just we come in through sluggish the of a was We did just the strength lines remains it worse than for rest – see there thought. the more business. we necessarily have incrementally bit the think of it would didn’t remains I

Nathan Jones

business class Less in Gotcha. narrowbody.

Rich Maue

Correct.

Nathan Jones

thank you. Okay,

Rich Maue

Thanks, Nathan.

Operator

from And Canaccord. comes you. the line our Thank next question Ken of Herbert with

ahead. Please is open. line Your go

Ken Herbert

Hi, good everybody. morning,

Max Mitchell

Good morning.

Ken Herbert

I cash like a to think follow shareholder standpoint and opportunity expectations from deleveraging Can a just most potential advantage and and low repatriate now balance you’ve standpoint. sounds But the you’re relative what a priorities maybe how it from on maybe to should acquisition, about from an wanted the there with again you’re fairly to put to you reset sheet. relatively or we Max, some of obviously allocation just you’re M&A seeing to It leverage return perspective? comment the taken with the Rich. up even quickly and recent growth

Max Mitchell

now, our our our you I is nothing that each of the major growth prioritize there are working investments right internal inorganic. imminent. But we Well, we’ll we than tell activity funnel. in can to continue prioritize segments

each activity Fluid our Technologies. We’re is segments. There of Handling, A&E three working those in of major & some in We opportunities. stay focused Payment and platforms Merchandising

Rich Maue

would of where the know, you ended last year, as model of terms of add, year that I X.X. together, at we you file the when the everything just way is you’re rating in year year, X, Ken, last agency capacity the where debt-to-EBITDA. year. ended X.X north believe in I Roughly and put we And a end all last of we

benefit point which we X And turn did level then would say otherwise of if with my and you the to we end repatriating be out But end opportunities year from to – being nice even with the confidence some thought. expect almost frankly the opportunities. look you to it close to kudos or would do expect was year year the we doing delever. what where X.X for versus opportunities have fantastic, look And us able get have otherwise at is greater to this we as we even that here and to that the we So of what by M&A better, X.X that down this in team EBITDA I acquiring, I be, we fantastic, sure. through an have of the to get to did course, of here. extent at in you’d which at on would

Ken Herbert

be you opportunities? see? obviously of look you’d just And to are prioritizing a you follow- Or Okay, each of set Crane within able as than core to – on you thanks. now inorganic got up at that, that would like are others market platforms Currency, level any you – to potentially X more there you’ve the is

Max Mitchell

any but prioritizing beyond three, around to No, those prioritizing – certainly those three. going of one It’s be not actionability.

Ken Herbert

Yes, all there, one finally appreciate Fluid up given. just follow on back Handling the okay. And you’ve detail then

up headwind. related helpful. that versus to or on of follow mix You more in the MRO the any mention prepared and just if to the was sort project headwind cover particular was would that the a region I in impact slower if did there of or more be mix remarks bit And growth that wanted the was ready quarter a

Rich Maue

Yes.

continue some business. our in growth commercial to nice relative We core see

that And in up versus the was – delivered part MRO then – mix it’s in the across it’s of one- being project business commercial frankly. off one was solid really the was business And issue. the I quite Our business just – the quarter rest but business that really a with say of would our say primarily, quarter. mix I strong Ken, would Canada

Ken Herbert

you thank Okay, much. very

Max Mitchell

Thanks Ken.

Operator

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

Your line is open. Please ahead. go

Max Mitchell

Rob. morning, Good

Robert Barry

everyone, Hi, morning. good

Max Mitchell

Morning.

Robert Barry

It something costs wanted half lower? that less maybe explained guidance to Is change. with even free the cash earnings with flow Or capital? start outlook. also are working than there in seems a happening Just change financing the of by like is

Rich Maue

then there, Rob. the seeing And the half just it About – from the working capital, nailed you change. just guidance Yes, rest progress is the of by enough, raise of of couple the in it good we’re see right have, we it coming those But other to in segments. felt we we just comfortable really it’s But what in outlook given the $XX components. million. two some

Robert Barry

this business. were you’ve you won causing everyone’s about the pushed cadence? got step step-down I you revenue now expectations that in the big that, then year? Got just that Does one make how on talked that out absence actually, clear this know it. the we And sure thinking that when should just order currency bought lumpiness about to gets I be Is mean year. it, down that, a of wanted

Max Mitchell

that’s That’s a fair. to it. characterize think way I fair

Rich Maue

that look everything be Rob. at for way – the Yes the that’s now, know it, that would to way we right

Robert Barry

of Got it. then mentioned schedule. that you were And ahead things going

even far in I I’m you’d of just schedule kind there that to kick thought ahead of in more I’m was the other going Crane progress curious, say I curious at that said printing too, how Currency of on a similar just think, out you early Malta. was shifting the in Max, is. a line Because legacy expedited there’s kind footprint. parts production of XXXX. if of of some And

Max Mitchell

facility on course on at the say be would I the it’s work lot done progress. of that but of still schedule. a to schedule XXXX There’s through

again? The of it what Rob, second the question, part was

Robert Barry

of thought ramping dynamic reduction elsewhere. in I but up kind this there Yeah. curtailing was dual Malta of maybe it

in elsewhere? it ahead ahead was schedule, was so curtailing of also I is schedule Malta, of And it if curious

Max Mitchell

We well we’re arrangements have outside insourcing. some as with that actually suppliers

from comes of that insourcing volume So outside some suppliers. of

Robert Barry

of offline it’s of want. wondering we guess that relatively I’m or follow cost question in near- if mean, if of bottom-line I that all-in Okay. is, the positive ahead fact -- kind from can or mid-term up my I neutral. pacing kind it’s perspective the you if is the

Rich Maue

path it’s element would just important trying dollar. the I overall an neutral, growth And to profile to moving us being – when comments Day And we benefit, see The basically Investor mainly – about we’re I relatively not of on at would are say Rob. I is it’s inefficiencies. Yeah. that that any our we think that’s earnings material expecting plan. communicate we’re things a to that wanted the to to it’s that provide that made XXXX color

see have the So far. I up we we line going notwithstanding accomplished and to have we’re still fact to what inefficiencies, one so got running, that whether continue

tracking. still and this headwind we’re a of going to kind year that So it’s see

comments wouldn’t because of were that ahead things that our you I towards So expect we stuff. geared telling say are schedule of accretion that and way incremental

Robert Barry

Got it, got it.

Okay, that’s helpful. Thank you.

Rich Maue

You’re welcome.

Operator

with line comes our from Seaport the you. Thank And Walter Liptak next of Global. question

Your line open, ahead. please go is

Walter Liptak

Hi. Thanks. morning guys. good

Max Mitchell

Good morning.

Walter Liptak

that quarter? and how you And I growth of Fluid the volume pricing, the wonder, about And yet? you’re you you the ask wanted mid-single-digit price was Can to feeling pretty during are pricing I well getting. also as get about Handling consistent product? the

Rich Maue

Yeah. Good questions.

as look we the at January profile pickup that from some order we the seasonal, quarter did March. As look this could but be a through through you and occurred of see itself

it good. felt nice we But was that that. it pickup see So did. see would we But the to typically

had better, say, material as the perspective. guess, much were we only a we’re a we’re to any the offsetting plans only -- anything, plan price momentum, about according we’re for From to from -- pricing doing a are experiencing. in this is profile cost think So if put would and guidance year We that tracking we’ve And things perspective, headwinds I I it. way little plan. bit was our of

Walter Liptak

price/mix the are guess little then, these out worse those are guidance. other Okay, were did seeing you any in bit problems? okay. you when along sort guidance, you initially of lines called cost/mix you segments? than that the there else thought I that a price there’s issues some Because Where

Rich Maue

the Not well. other in of doing businesses, very we’re any really

I about bit core decline. the improved notwithstanding there profile think payment business, that expected, little slight a better our is the – a we we year, actually than margin made comment underlying over sales better last

Engineered solid. materials. payment, other I price say only and guess, one, and little some would that higher pressure. resin right, it So I very relates the costs with Materials surprising, between But to bit a relationship nothing be as would

as Electronics, & really Aerospace in that, very well, Max performing prepared Beyond his mentioned remarks.

and higher some resin headwinds notable mix but in Engineered Materials as So all in expected. Fluid Handling increases

Walter Liptak

our or Okay. throughout the year? the should a get year? it factor thing a Wit is models, where like from going that is there quarter if be said, into one we’re throughout this? more Or price problem Like you we persists second the this a hit cost, that to think quarter it

Rich Maue

No.

business seeing. half to demand Materials, So more we Fluid in so Engineered that it cost reiterate, just at exposures. of Material Handling, second the it mix wouldn’t of materials improve any see real say changes this make the QX point, expect to would in profile we’re kind to and I in do was But the year. I mix the any as of relates to significant price

Walter Liptak

Okay. great. Thank All you. right,

Rich Maue

helps? That

Walter Liptak

you. Thank Okay. Yeah.

Operator

from of with Our line question Thank UBS. you. Instructions] Karas [Operator Damian the comes next

is please open, go line Your ahead.

Damian Karas

Hi, everyone. good morning

Max Mitchell

morning, Good David.

Rich Maue

Good morning.

Damian Karas

with boost point pass quarter, defense much too did increase this the start since expect on this And you this U.S. it last large is at exposure? Wondering orders the a see seeing So, to to budget how company’s would we pretty front? increase. early defense resulting

Max Mitchell

longer-term early, surfacing that opportunities yeah, even too the and some think, see is beyond it’s funnel honestly. – are definitely think of encouraging. XXXX But this I well it’s I quite we

– a as we’re generally think playing I where think it’s you positive. should seeing what general very we’re about and

and we is been with but what budget – increased with opportunities, have think as with I to over our just have very winning core many, on honestly. that pleased are opportunities only many budget not the technology been development providing increased I’m chasing related well defense years the teams quite that the that

Damian Karas

Makes quarter this you comes here what as down past have the And Engineered years. nice this demand year channel retail of remain a get but segment, And than perhaps gives the confidence some a Okay. smaller first just run Materials, sense. in But you here obviously you had correction? that last later strong few the balance curious, had expected. should through short-term RVs

Max Mitchell

There’s few continue solid here. is research publications to that industry very indices quite XXXX and indicate a to well-tracked very, be would going that

market and our team. the have we from from the estimates that own So that’s best

Damian Karas

on guys. for the here improving Okay, outlook the And great. Thanks year. congrats

Max Mitchell

Thanks, Damian.

Rich Maue

you. Thank

Operator

would Thank to over back CEO, no Mitchell the at to this conference I remarks. like for President further time. you. And I’m showing closing questions And Max turn any and

Max Mitchell

operator. much, so you Thank Super.

for technology-driven who of remain has markets. I ahead with excited and a a at a continued that many discussed is toward, wrote, to journey made. And the and niche I’m to Le journey we enterprise journey value a the science-fiction writer, target we recently our of operating into Investor As looking once end forward is the good have to our strong and company diversified, the end.” words in years Thank position outlook Crane on progress for team Guin, opportunities have day. interest ahead. continuing years, about I’m as you me integrated to of Day that it Crane us. current in to we the that we’ve very reminds evolve our proud of the a great path further in deliver Ursula shareholder Crane’s positive but deceased in matters your an and “It our move have global, journey

Operator

disconnect. conclude have great Ladies and today’s program this a day. Everyone, participating conference. may does the you and in for all you gentlemen, thank

Crane NXT (CXT) 24 Apr 182018 Q1 Earnings call transcript