Crane Company Stands Firm on $5.30-$5.60 EPS Guidance for 2025 Despite Robust Aerospace Growth

Insights from the Earnings Call: Crane Company (CR) First Quarter 2025

Management View

CEO Max Mitchell announced an adjusted earnings per share (EPS) of $1.39 for the first quarter of 2025, attributed to a 7.5% rise in core sales along with strong performances in divisions like Aerospace & Electronics and Process Flow Technologies. Additionally, core orders saw a significant uptick of 16%, bolstering the firm’s standing even more firmly.
The firm maintained its forecast for the full year 2025 adjusted earnings per share (EPS) between $5.30 and $5.60. Mitchell stated that notwithstanding economic uncertainties, Crane continues to be assured about attaining at least the lower limit of this projection even with a slight decline in demand.
COO Alex Alcala pointed out how the firm managed to counterbalance possible tariff effects via adjustments in pricing and increased productivity. He also underscored their limited vulnerability due to minimal import reliance from China and other nations.
CFO Rich Maue highlighted an all-time high Aerospace & Electronics backlog totaling $960 million, representing a 21% increase compared to the previous year, driven by robust aftermarket and OEM sales performance.

Outlook

Management confirmed its 2025 adjusted earnings per share forecast between $5.30 and $5.60, demonstrating faith in the present economic and demand conditions. The outlook takes into account ongoing tariffs across the year as well as factors such as rising costs and fluctuating supply chains.
The expansion in Aerospace & Electronics is projected to reach from moderate to high single-digit percentages, bolstered by robust demand from both commercial sectors and defense. Similarly, Process Flow Technologies is forecasted to experience positive growth, fueled by recent successful product launches and strategic shifts in market positioning.
The firm kept its emphasis on achieving long-term expansion through acquisitions, boasting a war chest of $1.5 billion for mergers and acquisitions, along with an extensive lineup of prospective deals in sectors such as aerospace, electronics, and process flow technologies.

Financial Results

In Q1 of 2025, the adjusted earnings per share climbed to $1.39, buoyed by a 7.5% rise in core sales. The adjusted operating profits saw an uptick of 18%, driven by greater volume along with improvements from pricing strategies and productivity enhancements.
Aerospace & Electronics saw revenues reach $249 million, marking a 10% rise compared to the previous year, alongside achieving record profit margins at 26%. This division also witnessed substantial growth in backorders, fueled by strong demand from both commercial sectors and defense industries.
Process Flow Technologies reported sales of $309 million, marking a rise of 9%, with an adjusted operating margin of 20.9%. The growth was supported by acquisitions, newly approved products, and robust performances in the fields of cryogenics and industrial automation.

Q&A

Damian Karas from UBS asked about the revised sales forecast and how much of an impact the current order backlog will have on upcoming demand. The Chief Financial Officer, Rich Maue, clarified that they anticipate pricing changes should add roughly 3% to their projected sales figures. He also mentioned that a substantial amount of orders currently in the backlog will significantly enhance financial outcomes after 2025.
Scott Deuschle of Deutsche Bank challenged the sustainability of commercial OEM pricing improvements and segment EBIT growth. In response, Maue explained that the pricing increases were widespread, and the rise in EBIT within the Aerospace & Electronics division was aided by a favorable product mix as well as robust engineering sales.
Nathan Jones from Stifel expressed worries about potential supply chain risks and tariffs leading to preemptive buying. However, COO Alcala stated that they did not expect major supply chain issues, with the effect of tariffs being negligible.

Sentiment Analysis

Experts conveyed a somewhat optimistic outlook, emphasizing the durability of expansion within the Aerospace & Electronics sector along with the effects of tariff implementations. Queries revolved around the robustness of order backlogs and pricing approaches.
Throughout, management kept an assured demeanor, stressing strategic implementation and the prospects for sustained expansion. CEO Mitchell bolstered confidence among stakeholders regarding Crane's capability to handle external challenges adeptly.
In comparison to the prior quarter, both analysts and management exhibited steady confidence, with analysts particularly interested in examining the effects of tariffs and potential merger and acquisition activities.

Quarter-over-Quarter Comparison

The adjusted earnings per share rose from $1.26 in the fourth quarter of 2024 to $1.39 in the first quarter of 2025, indicating robust core sales expansion and enhanced profit margins.
The backlog for Aerospace & Electronics increased sequentially from $864 million to $960 million, underscoring steady demand in both commercial and defense sectors.
The strategic emphasis was adjusted somewhat toward reducing the effects of tariffs via pricing strategies and boosting productivity, all while keeping core growth objectives intact.

Risks and Concerns

Possible obstacles encompass tariffs influencing the cost of goods sold and geopolitical instabilities impacting supply chains.
The measures proposed by management involve preemptive price modifications, enhancements in efficiency, and expanding supplier options.
Concerns from analysts were centered around potential threats to demand within the chemical market and the continued viability of expansion rates in the aerospace and electronics sectors.

Final Takeaway

At the start of 2025, Crane Company exhibited impressive fiscal health, fueled by significant expansion within key sectors and efficient expense control measures. Their maintained earnings per share forecast ranging from $5.30 to $5.60 reflects leadership’s assurance in addressing market fluctuations and seizing prolonged development prospects. Ongoing expenditures in technological advancements, mergers, and targeted price adjustments set the stage for enduring prosperity.

Review the complete earnings call transcript here.