CR - Earnings call transcript Q3 2019

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Operator

Greetings and welcome to Crane Company’s Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. At this time, I will turn the conference over to Jason Feldman, Director, Investor Relations. Jason, you may now begin.

Jason Feldman

Thank you, operator and good day everyone. quarter release third call. our to XXXX conference earnings Welcome Relations. Director I Feldman, Investor am Jason of On morning, Maue, call Chief President our this Chief Executive President Mitchell, and Officer and our and Officer. Rich Financial our Vice we Senior have Max

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

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

me Now, turn to Max. let call over the

Max Mitchell

Jason. you, Thank

exchange a the let government to shortfall what in points XX in all customer there. me margins exception, quarter profit, decreased X% divestiture operating Adjusted slight to X% declined year demand Execution lower release million one our performed of core of third $XXX special at basis items decline Crane’s unfavorable The XX% all foreign Crane XX% our EPS As with items, line $X.XX with Operating declined in and excluding XX.X%. shipments quarter with the across impact revenue quarter an solid outlined and businesses better. of of sales, reported we a special was or last compared from Sales $XXX explain the was happened headwind. year. night, Currency and our third excluding million. last the to to very in from segments related quarter $X.XX U.S. in in to press related last expectations

issues deliveries an or Typically, Order that to Reserve cover Bureau and for Federal the of finished, X a we in from orders runs Annual BEP, their year it Print order in through of July timeframe. from July banknotes the August, year, Every to Printing, see Engraving printed but timing-related BEP did October and late is Currency was the this September early fiscal slowdown we slippage XX. the the the In just from released for believed order later the recent banknotes ordered run-rate for the the publicly for was well from BEP quarter the BEP the below their coming issued When fourth quarter. Currency rates reduced that was the of third released Consequently, late fiscal their match to The the their and products fiscal the total of Federal than our volume year Print the XXXX. expected Reserve and released, start was to order run-rates. Order expectations in August. normal then print the

the excess substrate. We driver that buildup order printed the of lower a primary and currency inventory believe of banknotes was of

Reserve’s of have September to we in Reserve fiscal also bring accumulated now do the to to with visibility levels a has We Federal during that situation. currency at direct meet direct not do to years. our a normal. to not been a period personally Banknote a substrate it’s we level XXXX of over back this believe slowly or inventory – Federal smooth I in picture get late with We have line also the the reduced of production understanding the to inventory a inventories traveled last Federal senior Reserve that the over began and of situation. BEP get management better or month banknotes clearer and BEP only the of team

result worn by Print been for built the will as excess and grow. in a as little that destruction in more color, net rates extent for you despite unfit inventory see the Currency order part circulation primary notes lower Federal The of to to years. cash in excess rates had institutions, the in to or currency attributes Print circulation longer. recent have lesser the at effect Order depository To language which That lower reduction refer Reserve on to cost reason banknote Order the notes is policy The continues destruction up website, in that of and a if provide Currency result a changes. strong policy a overproduction look that have inventory you change technology somewhat efforts changes confirmation keeping the the of

the regarding For and its sells safes same banks technology growth years. referring them where cash to recyclers is and re-circulate that for the Payment example, returning notes good used than Innovations and to rather The and the being last have other retailers, to businesses encouraging Crane for few increased Reserve over the fit Federal actually changes in smart recirculation $XX fee recyclers processing. seen Federal sales substantial by Reserve language XXXX, $XX bills, globally retail we or

the are returned net Reserve CITs. banknotes the impacts There to from that used result and Federal recyclers replacement and less frequently. less and fitness frequently is destruction checked large are the banks also being and by they The for being are

don’t do conclusion, is evidence we we suggests definitive the have this have temporary. data to enough While that a draw

are demographics. all a to primary top with these continues as By notes for public increased that been revert in increase. Numerous consistent circulation the one the demand based saw the cash we’ve for seen use years. there trends positive that has value, and the no developments, new rates low-value all in in As the of studies transactions, also cash three XXXX in or U.S. By normal show payment for adjusts circulation, transactions These cash payment currency continues what More be to method specifically, the to their X.X% expect number rates. instruments of volume the across to U.S. run technology and States. X.X%. volume baseline we banknotes policy United circulation in change currency new for of will XXXX

seen been return always in and short-lived Importantly, Reserve we year. recently at normalized fiscal Federal a volumes the have BEP most in inventory they the corrections with times, have and these several following XXXX to

As in a a the shipments EPS in guidance, this we’re special to the of range from of XXXX year, guidance government of minutes. additional excluding will half of range to to a Rich second lower-than-expected $X.XX. some provide items, a result our U.S. few prior reducing to $X.XX details $X.XX $X.XX

provide framework Payment will & to and While year next. guidance it’s for segment think Technologies early still provide about to this too XXXX, comprehensive I a Merchandising

growth approximately overall with business in segment. this for well the the sales segment billion, of for $X.XX as expect currency We year as XXXX core positive sales

of We expect of then our XX% approximately segment and XXXX. also for adjusted in to back into range XX% now margins XXXX XX.X% target the long-term segment in

many for times, be of view see the but term, we time. is lumpy longer opportunities business, Crane unchanged. Currency that will As a at This over our is growth sustained growth

technology and that also by it more $X for XXXX, XXXX. global initial volatility will businesses, any this Crane about approximately accretion. new normal demand, be in this at EPS $X new early be given or goal necessary but the We share per levels somewhat for year, Like whether we accretion share track level an in of accretion point all to to know should plans the of less U.S. we volume volume given normal able on solutions than business in and the as on more continued BEP opportunities. cost We success a volume the to be exciting of might EPS our invest will with I that are work targeted don’t continue on the customers amount well preparatory generate and where average with to to continue pursue with share improve the as position series. future per working our of

move that and guidance quite forward XX.X%. coming let Q&A over of a with of on growth Handling anticipate but adjusted few original delivered year-to-date of Fluid X% some good and I year-to-date and in the our margins Handling questions other to comments. slightly Fluid to to core quarter subject, back segment another ahead me look

has somewhat become the I’m industrial the its outperform growth Handling shares, end United to Fluid as has gaining States markets, how little initiatives. slowed, spotty of the on activity broader a business. project up, in surprised driving While activity order economy development continues held the market at well side our through has product actually particularly new

our is large polypropylene at alternative our U.S. opportunity would in the million initiative North line Carolina This diameter market highlight $XXX example Marion, Ellis for I Brad solution large pipes. lining pipe is Day. a in February One discussed that diameter Investor

orders, We Xx Our lower provide cost solutions freed polypropylene space chemical to customer. will and in a order we million $X Marion, $X after Xx invested date North $X a our a Carolina including abrasion with have few better million and than to large to Total pipe in quotes in service We resistance. million XX% million. equipment. XX% existing Kaizen. through key line a life months with site $XX firm up the exceed new longer launch, A from

This map. Aerospace well year growth development with making technology executing X%, sales year-to-date of and year-to-date an and core its of is margins on Electronics had XX-year business has incredible substantial adjusted road XX.X%. very progress

on quarter, contract long-term pressure working. will sensing In where X Trainer our tire mid-October, fleet we the is Air win on Boeing’s C-XM brake announced our SmartStem a mentioned MQ-XX map for system Last wins U.S. aircraft. Focusing and installation of for new we on road we new platforms. sensing this solution control Force’s XX provide

first on This Our aircraft platforms. a numerous been by the widely has time SmartStem is used is commercial military used customer. it

a content and on Sensor announce am radar. awarded program pleased Defense that has Tier Today, business to Lower with I Raytheon’s contract Missile our also been LTAMDS power Air or

of & should authorized but on Currency, This technology award At While and aircraft integrated continue lifetime, I will detract Army’s over shouldn’t this Patriot already to Technologies, network. lifetime current Merchandising business. where will progress this best-in-class making the to substantial missile eventually be issue missile radar replace its the are midsized have defense of disclose air radars customer-related comparable operate we in from not discussed Crane we the platform. its results to value the potential U.S. we value are Army the offering. short-term Payment and industry’s a

are Crane few XX% to international security record working in denominations We business, Currency’s better new our year-to-date. our very A And paper examples, this on international issued prior technology, opportunities business than has of with denominations of expect our large in number banknote this new business. XXXX. printing at long-term new XX be excluding and year XX we a Venezuela, micro-optic grown there

At Crane segment retail perform to Payment well. exceptionally continues Innovations, the

we cash will payment in ensure systems. working are that on products, in next remain leader we the like generation aerospace, industry products Just customer-facing that

We phases are solutions. of also the new-to-the-industry deep commercialization into the

efficiency improve and Paypod our also in PayTower we to for smart addition retail products, Europe, stores. are productivity with In Japan in and which traction safe gaining

field have both full including for of We safe software. hardware trials and smart solutions, PayTower both suite ongoing a and

entered than Paypod, Given understanding smart for in have fully a as position market some the OEM while other our retail more component the traditional of and to local solution, similarities position needs has our of the we as supplier market. And PayTower the market Japanese a the markets. safe actually it customized rather market, is Japanese

XX.X% of in And performed core well our markets, year-to-date with of in driven pleased XX% despite a decline, Engineered not we sales the has with are end surprise market. tough continued weakness the RV Clearly, Materials results. adjusted by margins

Crane outside this the results team and overall we proud how are adjustment I how was of continue well given our I’m that of market our and to proud be control, very of executing. However,

let Rich, turn to over commentary. for some financial you additional it me

Rich Maue

Max morning good everyone. and Thank you,

and I as As XXXX compare will presentation. special that the slide outlined in of quarter excluding be items comments will our providing to XXXX, release press segment usual, third

million growth increased leverage $XX initiatives. X% again to impact. unfavorable very XX on was repositioning X% to as of than very slightly operating of sales basis last operating million profit while year, offset of actions operating Handling strong foreign execute in and the declined by $XXX This than higher exchange strong benefits. well a driving team quarter, Handling growth Fluid margins small continuing repositioning with performance reflecting sales Fluid X% points XX.X%, and productivity by core with as more divestiture a the X%

and the for Fluid our quarter for also activity were achieve Orders, with still $XXX levels foreign the guidance. was X% of adjusted exchange, end and last at million million $XXX last compared Handling last year. in increased million year-over-year. at sequentially After was quarter necessary September exchange, to line of order of X% the our of adjusting flat year full at September end compared for foreign approximately with the both expectations in Order fell end year. and the XXXX us to backlog the backlog demand and consistent to $XXX

modestly the guidance year to and our expect original better with consistent our end original margins than sales guidance. with We

perspective, States with From a be stronger activity our business. in geographic distribution valve and strength process across decent process pace from to In the continued commercial conditions levels markets. moving with we our our United market particularly the business, projects from at verticals. business chemical valve are remained stable subdued than seeing continues in the China, Europe, we activity Canadian and good In along are valves, a particularly seeing at positive

U.S. The retail with $XX in perform driven Crane core primarily last from a the growth At the XX% Payment again, a million exchange XX.X% to portion of XX.X% were the decline, compared lower driven $XXX of the sales quarter, decreased year margins Currency a government, discussed. of year, Segment result and of this payment operating business & absence to lower revenues with and continues X% by last the operating sales Max compared divestiture unfavorable foreign of by solid core the Merchandising to Venezuela million XX% year. Technologies, prior of The XX% from of to declined sales impact. small profit as well vertical. year,

the the moderate solid by Given the magnitude decline, of the rate sales de-leverage reflects team. execution

million to remain side increased operating increased end X%, $XXX the $XXX particularly the business, quarter of military XXXX There strong driven and a OE at end surprises well. spares the markets and of X% at at was with of commercial September X% on aftermarket aftermarket Electronics although million year. commercial the growth the handful as heavily growth accompanied were September the by which continued in very solid sales last of by by end programs, F-XX. Aerospace including $XXX the and at Electronics modestly the to leverage. end no military of $XXX different driven grew robust, grew and and compared million Aerospace Total of sales at million backlog

as from our the discussed, here execution Max landing, really the technology completing facility repositioning As well Aerospace power, consolidation Engineered the strong Electronics performing wins new on result growth. declined XX% in sales to million, a decline recreational a long-term Operating margins to lower fronts sensing continued continued strong all to to road to drive during of sales customers. XX.X%, to by is decreased $XX in the driven team and primarily Materials and period. vehicle by actions team October a volumes, and challenging across related performance in maps

and tax Turning total more to results to third the XX% was year. our now detail in last our quarter of quarter rate company third on compared guidance, XX%

We $XX free our rate of XX% cash million guidance. continue was with to tax flow third consistent the year quarter, in original to full a compared approximately of In million the year. $XXX expect last quarter

over are current M&A actively next capacity the with We given the growing and are our opportunities years. we of pipeline sheet, our comfortable our very working strength and of balance on few

reducing a $X.XX mentioned, of EPS special revised Crane items, prior $X.XX to our outlook range excluding of our are guidance, As Currency, range for we to our to $X.XX Max $X.XX. reflecting from

cash our to reducing also range $XXX compared of prior a million. are $XXX $XXX guidance of million our free million to to million $XXX We range to flow

Operator, now take our first ready to we question. are

Operator

Thank you.

question. your line question proceed from the with of today is Bank America. first with Please Our of Kristine coming Liwag

Kristine Liwag

Hi, morning good guys.

Max Mitchell

Good morning.

Kristine Liwag

Currency volumes the in notes Max, new year from deal? year government your about after circulation should more ‘XX accretion think ‘XX from we how government we to the $X normal forward if longer, the U.S. target should policies and volume institutes U.S. Crane fiscal going the fiscal about in XXXX the is and think how keep

Max Mitchell

Kristine. thanks, Yes,

the it not level. it’s is inventory new a adjustment So normal,

is of data map This have facts to extrapolation. us is and much data, so – as really customer and in get dig time done And we part this and this for not our our is as can this ourselves. we

Print on at next anticipating next adjusted, to Order be order, least If the am you fully expect I revised I look at Currency inventory is year-over-year. XX% after run-rate, year’s the up the

the there corrected. mean what believe. a be is back is reversion I once So That’s going run-rate inventory a to to firmly

achieve it that we position $X currency from still to cost well of going of are back. holding of key today to this part track. macroeconomic know to but the do again As to is uncertainty, we XXXX, to that. are in going a based achieving being broader earnings accretion, $X by given our know clearly still we the multiyear that’s what us to we on of that, $X.XX we are Volume U.S. accretion And profile from today, on come relates $X allow currency executing everything

Kristine Liwag

That’s helpful. How your in process pausing surprise. years this you buyback have diligence And a largest M&A lower point And then for capital now that it’s by done few consider you you clear you what and thinking the and took M&A to was Crane about due other Currency stock? acquisition redirecting candidates? order are at would

Max Mitchell

always to are Kristine. effectively, returning capital our we look going don’t allocation, If to deploy we a to our balanced We have approach at shareholders.

So in I is there process. our to-date. policy any that be will don’t ongoing that think change an

We opportunities at. have a continue look number of to we that

– over have process, out In called we can the our businesses that not the surprises. But swings of the think diligence have due our to years. some terms customers remember, number that have us any continue And have large have long-term and for you manage Crane have – quarter. those I very we of we seen one seen our a of businesses have

of future. I execute pretty reinvesting businesses, of the well, well, positioning the in proud ourselves execution, and leverage terms We continue am investing to in for – beyond our expectations

we the described manage to we understand we well are well, going Day, long-term. we manage Investor that, lumpiness, So continue it for have even at to an we

Kristine Liwag

can’t are repurchase free you mean amount you follow-up, by any then to a Great. an million, about regular similar I doing find or $XXX repurchase? end, targets roughly around slated could maybe that you And you share share year consider one flow cash last if of accelerated generate would do

Max Mitchell

and to don’t to And options usual, have say. will continue don’t much evaluate more we Kristine, all as we preannounce, I

Kristine Liwag

Great. Thank you.

Max Mitchell

Thanks, Kristine.

Operator

And our the your with line question. question next Jones Please is Stifel. with Nathan from of proceed

Nathan Jones

everyone. Good morning

Max Mitchell

How are you, Nathan?

Nathan Jones

stuff on $X.XX can solely will that this your you order up Fed? in reduction guidance is EPS surprisingly, here. currency to the related I lower not confirm the the Max, follow from Max,

Max Mitchell

Yes.

Nathan Jones

disclose half year. to were to this of the It’s prior too is profit relative is the year of what able second what you about your $XX in million number revenue the operating getting lower that or Are expectations deep?

Rich Maue

it’s Yes, Nathan. too deep, getting little a bit

are sensitive a and are this We concerned to is just little of we to important trying an ours them. customer cautious be and

Nathan Jones

Okay, the fair it quarter. in looks this inventory of understandable. amount like third A correction happen did

XQ are into talking of about quarter. down total occurs of you more only done in inventory Max, kind in of X% XQ fourth then does or Has of spread it think, I XXXX? most occurred implies and $X.XX revenue, in this is correction the this the billion out

Max Mitchell

Yes.

So up, came year. over the correction over annual the order the of that will course once it’s inventory purchase be – balanced balanced

within out. will there play that our we but volume in saw reduced speak a a So see even like What customers, you almost, third I felt level directly almost of in bit side. for customer the was surprise it our quarter can’t

Fed meet year. and take normalized and arms couldn’t our which throughout immediate the So waiting – it’s smooth order. but we why course BEP, the quite to this, we Various had it, the of we information is the to in be time were the with slowdown an around our going that to confirm terms we of really and saw get for while understand go

Nathan Jones

sorry. maybe it Okay, –

Rich Maue

guidance smoothing are us terms the I of in we of we the it relates to more fourth impact our quarter to Yes. as than but in here of year, for just that the going in here terms see of going balance to QX. saw was receive, we in the the order say to

Nathan Jones

profit the revenue on line the More or operating line?

Rich Maue

profit operating impact Overall line.

Nathan Jones

guard. cost that going smooth Maybe obviously actions. the it in to margins but longer has anything difficult It’s then start equation when the kind it we the XQ, be we impact do little forward? to start a you for out you go XQ this by you this as about of decrease takes in from took appropriate to very this side see Can taking bit margin to should off impact to Okay. cost of

Rich Maue

Yes. level you expect I it, might overall taken to We look improve the fourth to segment as for we’ve mean would demand adjust as the in expect we – and so for change. the already margins action quarter.

Nathan Jones

it pass Okay, thanks. will on. I

Rich Maue

Thanks, Nathan.

Operator

Vertical Next question. question from line proceed with Please of Linzey the your is with Brett Research.

Brett Linzey

Hi, good morning all.

say just XX% to a you you year-to-date Did Just were currency, sales comment up currency, ex-Venezuela? that U.S. clarify in back I ex to the want and said.

Max Mitchell

Yes.

Brett Linzey

you’re guess have larger of situation next I as then create then run that there kind where any specific XXXX? are continue And as Venezuela, I year, And in to into risk mean countries get specific you we comp. tough with look Okay. that issue another to into contracts the we a similar that does comp another

Max Mitchell

none No, terms And similar of now. right that XXXX. in for situations, not aware of of for in Venezuela, we’re other and – other terms

Brett Linzey

assumptions then the that year treasury the some are an the from back trying what next with that to come there? underpin think just up of get XX% perspective order does And comfortable drivers you snapback that

Max Mitchell

of billion run by Fed on the the currency, of rates notes. individual mean, X.X own past if look rate it’s X.X the our for adjusting Extrapolating down billion. at historic Well, extrapolation X.X a few at website, all billion I back think, notes run to currency, you to to it’s believe least I billion I is to X years this each come going

Brett Linzey

versus MRO versus flat, then order follow-up improvement Fluid project Handling, the side and please? QX, on aftermarket, is which unbundle And and what both sales orders OE maybe maybe could you basis, Okay. one just or just did the on

Rich Maue

then of Brett. – in side you are From the a Yes. so process the business

as the bit side QX that that I So business. similar say seeing the to in relates it better process steady to – side. would levels side, we MRO, a saw coming little of into maybe project say, actually the on again we’re what would I QX, on

Brett Linzey

And a comment, sequential is that Rich?

Rich Maue

Yes.

Brett Linzey

Great, I will thanks. on. pass alright. Okay,

Rich Maue

Brett. Thanks,

Operator

the is question next The with of Damian question. your Please Karas from with line UBS. proceed

Damian Karas

guys. good Hey morning

Rich Maue

Damian. morning, Good

Damian Karas

step of could full step Rich, currency help what it the of further could But as further. is take year guess, that you maybe reduction this us decline run-rate take for XX% expect impact And of driving are you kind expecting to result that what’s for one a the just federal been Understand that’s financial just beginning we kind late you situation on had based the that fully order basically what I U.S. the guidance impact offset government? saying, of would and the Max XXXX financial through understand year. one XXXX?

Rich Maue

Yes.

So understand U.S. just is the year, all I impact. of government. EPS reduction demand the is mentioned, Max so that, to sure impact make the It we correlated the reduction that with the in this saw is, to as

think would year, year, months relates the we full we it expect frame, we we pickup start new July see that yearly currency continued As the in as will happen, that a order time start sort the late first the year that that and government to that fiscal receive see next of headwind would from for to that XXXX, for order thoughts U.S. X succeeding but of we helps. our where about BEP, that comes if the to

Damian Karas

and off you have by can I you that direct guard any little you that read intentions mention that an don’t think buying perhaps a guys get increase Max, follow-up. this, or bit inventories, visibility earlier do you Okay, I’m customer into their did given to I that forward? caught into visibility anything is the going guess, BEP you’re there your into inventory can if curious just

Max Mitchell

but even closely. a Kaizen-type it’s guarded more up sensitive customer asked partnering to type this of precedent going various probably Damian, facilitated we continue. information. expectation a this, It’s there’s is for of reasons, closely Our we very to to other various my is But well. suggesting – reasons that’s discussion, event for as sharing participate And asked not for

Damian Karas

a of makes it. holding just That one well up lot pressures macroeconomic be Handling, Thanks. the to fairly sense. the last Fluid business short Got cycle considering I out mean, seems one there. on And and

possibly Just kind wondering some even be indications year or the we canceled XXXX? move from and you’ve that if customers could seen exit any projects of as into deferred

Max Mitchell

well, comments but strength the at offer can releases. the project some as in the Rich I’m – surprised

projects had in these in moving that increase an we’ve are the not really not seeing an right. So been we tracking. kind to seen I any of are cancellations increase

that U.S. We’re of the Chemical moved been particularly has in had the right. seeing a those to steady strong. release

acid acetic then whole There’s refining been MRO-type has and and large chemical turnarounds a stable. there host Some pharmaceutical plant, project. been quite plants, the work. a petrochem of investment and polymer Europe on a

describe rates, So don’t its Rich, the current it. it’s is stable been at I way I know, you…. if

Rich Maue

I comments. to too more add. No, don’t much would echo I those think same there’s

well. We’re the seeing some Fluid as good business strength of across the of parts rest Handling

even in UK, portion we domestically we As Canadian the and I doing here the Brexit noise. I of municipal water in or the non-res in the well even sort UK the in U.S., highlighted think on highlighted non-res of the of face prepared also remarks, what fluid are seeing the from

Max Mitchell

Good true. comment. That’s No.

Damian Karas

for Thanks great. the guys. Okay, help. Good color

Max Mitchell

Damian. Thanks,

Operator

line the from Research. of is question with next Buckingham Robert The Barry

Robert Barry

Good guys. morning. Hey

Max Mitchell

morning. Good

Robert Barry

of payment, puts So the next the in decline next the in just order, ratably and terms this of terms Is kind lower particular. but quarters, spread in lots three dollar Fed four of over XQ takes quarters? plus in

Max Mitchell

you Did evenly say spread?

Robert Barry

Evenly, yes, over it’s allocated out amount order that’s – of next XQ. revenue it since down, call evenly kind kind the of coming was of the like the through

Max Mitchell

is but There some yes. yes. minor mix month-to-month, generally Generally, quarter-to-quarter,

Robert Barry

to on And mid-XXs, low fair? business the are is it. that decrementals the Got like in this

Rich Maue

no. No,

that – particular government. U.S. other here little cost this significant, a relates to even fixed relative more the the had with we more to it’s facilities portions bit it As dedicated customer, given it’s structure in to Crane,

to tends it comes operating correspondingly, de-leverage back be contribution. much profit our rate and when higher back, demand So much with comes more here

Robert Barry

Got it.

sounds like... So it

Rich Maue

don’t would in of an that almost I within outside I in this in the payment. – see read say much currency. off, quarter, you so of really exceptional quarter just performance given would had business year-over-year, through performance just We rest offer the the the

kind this rate think, de-leverage I in a year-over-year, notwithstanding that’s the XXs healthy, U.S. we experienced of with the with low So the, decline that government. pretty

Robert Barry

And just that? or of something accelerating that momentum? that large momentum, of that and guess, kind that here exceptional handful a offsetting I I to performance that’s of like that just more something causing at run-rate hit sustainability orders is Right. kind of that there is am trying get is

Rich Maue

Yes.

positions in response to fourth That margin about about actions think pretty good with that have, think currency we the the is in particular, as business coupled decline, us, way the respect we that about think performance we’re payment momentum, pretty think, a right? with business that it to feel we I quarter. good in the demand taking to the I for the the

hit to that run in would you good sort quarter third performance suggest that QX. XX.X% quarter, year full here rate us for in that after of the see a XX.X% pretty having So a can

Robert Barry

Right, right. Yes.

for high So to mean like at fair in Is going this is thinking be we the number you kind that XX% it with you to I to back mean, range. end is in a range? I fair of the to point? dial of assume should low decremental, XXXX mentioned pressure about that first in a given XX% half the being just at this be

Rich Maue

fair. that’s think I

Robert Barry

the of expect you to of But a due you of to Fed picture of you’re kind year. out, of life trend notes, as some circulation is useful next I growth think cetera, kind lastly, snap earlier. kind will underlying kind also part, things the doing me, if order kind et per bigger recycling, of secular kind understand this this even guess, trend? this question. People that of note that content down alluded keep but long-term pointed is growing, particular midterm life but useful and just to selling, more of damp in Yes. would for we just just was is business, outlook growing as notes that, back It the still in from of of the growing, potential? is extending currency about of I a midterm

Max Mitchell

I’m the the not So sure quite – question. I question got

Robert Barry

kind like extending from growth business. the like correction, Yes, that midterm of rethink I’m life of content content circulation inventory secular note, understand trends, towards to useful currency right, onetime sounds aside is trend and potential notes. in trying the also but I it there’s what per notes anti-counterfeit are positive this the underlying an for

Max Mitchell

circulation. extending So is the The interesting it’s that the the point. life, that’s we didn’t in interesting say extending useful bill point

And if note not same have past staying to well, so unfit be in or fit receiving would the in what in back out have argument or for notes, the unfit as the longer. you notes an in destroyed circulation say, frequency, could you’re and classified checking there been

consideration to there what how So get is the or to their notes the you while that is life going become this need challenge into and you a more taking change those out place to circulation, recycling bills wearing they’ve from do might unfit. take is policy that standpoint in be extending back

to going question out. quite to broader interesting be that’s the think I that’s see play

have So Honestly, easily down road. just the broader place, is as around we that I opportunity that make what don’t case, enough may take quite actually an that honestly. knowledge and trend could but

Robert Barry

to as call life, Right, useful right. I I Yes, referring circulation. meant think just what life in to was to I clarify,

Thanks all for So, Thanks. will it the I on. pass guys. great. color alright

Max Mitchell

Rob. Thanks

Operator

The with with question. next Genuity. of the Canaccord Please your Herbert Ken is question proceed from line

Rich Maue

Hi, Ken

Ken Herbert

good Max morning good morning. and Rich Hi

to segment, to the assumed longer-than-expected segment wanted the, return as quantify the if extent all has and impacted I earlier we MAX a sooner service? and/or gears the relative to switch of grounding I you year could. guess, Electronics XXX Just what probably sales expectations Aerospace to the margin in And in can

Rich Maue

point as overall might we be aggregate from because given of frankly. that what MAX, view. but Yes, contribution just I be aircraft, be would bit fly difficult to ongoing really say Ken, would from might the production that not of the to a do the it they legacy for deliver speculating, we little continue quantify aftermarket XXX upside what of seeing much

nothing say and of So the I would bit side. aftermarket perhaps on really tailwind on the OE side little a

Ken Herbert

if mean, maybe you’ll sounds from think XXXX, a then fair catch And obviously, tailwind? that return assuming I is timing MAX Okay. don’t to say I not up it get significant upside expectations, standpoint, volume it see to but some be the service, the expect your may a then of increase, into that you significant like? about to

Rich Maue

No nothing significant at this point.

Ken Herbert

margins on anything or in a Was It tailwind quarter. of was aftermarket in Electronics? again either defense and model could or both obviously, have be segment that margins on the strong. a in mix or out in commercial And the sounds to there probably in the segment and one-time anything continue stood incredibly terms like maybe program the quarter impacted upgrade else for the that Aerospace Okay.

Rich Maue

Not on across as I and aftermarket. I good the really. Not commercial the even mean strength, saw we mentioned, some military. pretty

to last out, The that’s as any so this strong here this year notwithstanding my you we’re sort overall is or replenishment sustainable relates really earlier has aftermarket, something would say trend, call about Ken, next to real year, digging spares MAX, throughout mainly relative XXXX. to from an and So, nothing it of XXXX. been on lower as the related comment that overall would just time, perspective at tailwind into of the commercial. that as And all IP it to a aftermarket know, relates I I headwind

Ken Herbert

am highlight there sort coming think fairly Max, of are will I you’d early to alluded view all business out. confident that now changed the to next $X you’ve get like issues sounds put at the to you as of you and of It or the normalized about haven’t the target? XXXX that way you’ve EPS $X.XX midpoint sort incremental or it sure to the year. your Is levels around year. XXXX and on with perfect. resumption And next currency higher the risk more obviously Okay, lot target specifically anything give sort detail payment else that out is of a you of fair

Max Mitchell

seen and just broader uncertainty, terms strength. macroeconomic think of in we’ve continued I

operating our about to for our exactly So I’m in you information guidance aside, summed we’re January really taking annual up that and businesses out plan it, for head thinking and how provide about with think I of visits on Ken. you more ready But it XXXX.

Ken Herbert

thank Perfect. you much. Alright, very well

Max Mitchell

Thank you.

Operator

Please of D.A. your is question. line question from Davidson. with with proceed coming next Our Matt the Summerville

Matt Summerville

you can joined within call asking that – you a business, you questions. the business? bit but Couple little across bit retail, drill late, dive you’re just a be I’m the I to minutes few seeing the but verticals? redundant, I payment maybe And deeper into on across a of you what deeper Thanks. mentioned know so little can I a apologize if CPI

Rich Maue

Overall, Matt. our our with automation pretty and desire to solid mentioned I prepared factor to in continuing retail we remarks costs. see for customers would really Sure, reduce are demand. say, We being driving there the a

in healthy on way. So momentum across heavy the projects year-to-date we see the pretty basis, seeing say we’re move see rest business transport. forward cashless to good that the business, of of I and that prospects continuing continue a vending with we really in to would are a with pretty penetration, portion

on and pretty there, gaming think thing we we highlighted would side that the say one quarter, last I this solid year-over-year. are So the I is casino, down

of the fairly across a of rest part the well casino, in the in We little naturally had healthy, to expected, expected beyond group. softness to upgrades was speak, of the business. that that but and be, momentum of a our would connected the down bit say, as year that we amount just seeing But also of that, year so slowed success so I last taking payment we’re share saw given as to expanding last product we lot

Matt Summerville

again Venezuela, international with fast how it’s that up the then would ex is ex U.S. Currency, growing? not to And imagine XX%, I Crane respect market government, business fast.

Can pretty like the you are marketplace in that differentiating Crane share? to meaningful – assume So talk it would share. you about gaining what’s I capture Currency that looks market

Max Mitchell

to And around mostly addition world-class technology, for have coupled sell expertise. value paper that our the those see offering of a world It technology technology printing of and print facility counterfeit in of in it’s to – suite share. combination with detection, micro-optics, insertion or customers on design our we’re a comprehensive the solution and Malta, that thread world-class a Combination. to any is able all myriad of we

Matt Summerville

Thank you guys.

Rich Maue

Matt. Thanks,

Operator

next your comes Jones of Our with question. Stifel. Nathan with from question the proceed line Please

Nathan Jones

guys. Hi,

think Just talking fairly to CIRCOR, some on into acquisitions, moved on get aggressively cultivating about that we’ve looking wanted follow-up the to capital on I out your from now last were market. quarter progress you

are, the market? you are update us what any can give what just on seeing So opportunities out in there the you

Max Mitchell

right continue opportunities to question. the The of each for be robust now quite Thanks segments. in Yes. our

midsize small are to So there is that we opportunities from investigating.

part an private, auction Some some process. of

And think mean, so continues. remained disciplined. our I we have process I

bolt-ons. have we continue robust process, to We a identify

We changed. now. I right are Nothing would major Activity platforms. level, say, on focused has is three our average above

Nathan Jones

it for Thank was Okay, me. you. that

Max Mitchell

Thanks Nathan.

Operator

you. Thank

call over for session. Mitchell We have reached Max the remarks. of to the end turn closing question-and-answer the And I’ll

Max Mitchell

your morning. operator all for Thank this time you, and you thank

Currency. execution demand solid a and of gains but quarter surprise Crane in at Another share clearly customer-driven

about can; in late can’t, great learn the for you how a you Have said, management As from interest what Toni Crane once think for what author, our Morrison, today. great message we in correct day. you situation a in Thank perfect Crane.

Operator

today’s concludes This conference.

you your for participation. may disconnect this You lines Thank at time. your

Crane NXT (CXT) 30 Oct 192019 Q3 Earnings call transcript