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Crane Co (CR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose 9.2% to $577.2M on 6.5% core sales growth; adjusted EPS was $1.49 and GAAP EPS from continuing operations was $1.37, with adjusted operating margin expanding 90 bps to 18.9% .
  • Results beat Wall Street consensus: adjusted EPS $1.49 vs $1.33 and revenue $577.2M vs $567.8M; adjusted EBITDA outperformed consensus as well; management raised FY adjusted EPS guidance to $5.50–$5.80 from $5.30–$5.60 (bold beat and guidance raise). Values retrieved from S&P Global.*
  • Core orders grew 19.6% and core backlog increased 18.2%, led by Aerospace & Electronics (A&E); A&E delivered record adjusted segment margin of 26.3% and backlog topped ~$1.05B, up 29% YoY .
  • Process Flow Technologies (PFT) posted 7.2% sales growth with 20.7% adjusted margin (+20 bps), offset by chemical softness (especially Europe) and tariff headwinds planned to be offset via price/productivity .
  • Catalyst stack: guidance raise, robust backlog/order momentum in A&E, and PSI acquisition agreement to add Druck, Panametrics, and Reuter-Stokes with a targeted 10% ROIC by year five; dividend maintained at $0.23 for Q3 2025 .

What Went Well and What Went Wrong

What Went Well

  • Record profitability in A&E: adjusted segment margin reached 26.3% (+250 bps YoY) on higher volumes, price net of inflation, favorable mix, and productivity; backlog up 29% YoY and 9% sequentially to just over $1B .
  • Strong top-line and operating leverage: sales +9.2%, adjusted EPS +23.8% YoY; adjusted operating profit +14.7% and adjusted EBITDA +16.4% with adjusted EBITDA margin up 130 bps to 21.1% .
  • Guidance raised and strategic M&A: FY adjusted EPS increased to $5.50–$5.80, with planned PSI acquisition strengthening sensing capabilities across A&E and PFT; management reiterates balance sheet capacity and net debt/EBITDA ~1x post-close .

Management quotes:

  • “Delivering another excellent quarter, with 24% adjusted EPS growth on 6.5% core sales growth… gives us the confidence to raise our full-year adjusted earnings outlook to $5.50–$5.80.” — Max Mitchell, CEO .
  • “Following the acquisition, we estimate that Crane will have a net debt to adjusted EBITDA ratio of approximately 1x, leaving us with substantial capacity for further acquisitions.” — Rich Maue, CFO .

What Went Wrong

  • Tariff headwinds and mix pressure: gross tariff impact expected at ~$30M for 2025 (down from ~$60M prior view), offset by price and productivity; H2 A&E margins expected to moderate given a mix shift toward commercial OEM and tougher aftermarket comps .
  • PFT demand pockets soft: chemicals remain sluggish with Europe the softest region as projects shift right; sequential PFT core orders down ~1% vs Q1, though YoY +4% .
  • Corporate costs timing: H1 corporate expense higher due to stock comp accounting for retirement-eligible employees; working capital draw in Q1 led to negative FCF seasonality before recovering in Q2 .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$544.1 $557.6 $577.2
GAAP EPS – Continuing Ops ($)$1.20 $1.34 $1.37
Adjusted EPS – Continuing Ops ($)$1.26 $1.39 $1.49
Operating Margin (GAAP, %)15.8% 18.1% 17.8%
Adjusted Operating Margin (%)17.7% 18.7% 18.9%
Net Income Margin (GAAP, %)12.9% 14.0% 13.9%
Adjusted EBITDA ($USD Millions)$107.9 $115.9 $121.9
Adjusted EBITDA Margin (%)19.8% 20.8% 21.1%

Segment Breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
A&E Net Sales ($MM)$230.9 $248.9 $258.2
A&E Operating Profit ($MM)$52.7 $64.6 $67.9
A&E Adjusted Op Margin (%)23.8% 26.0% 26.3%
PFT Net Sales ($MM)$297.7 $308.7 $319.0
PFT Operating Profit ($MM)$59.5 $62.8 $63.9
PFT Adjusted Op Margin (%)20.5% 20.9% 20.7%

KPIs

KPIQ2 2024Q1 2025Q2 2025
A&E Backlog ($MM)$814.9 $960.1 $1,052.8
PFT Backlog ($MM)$399.9 $389.9 $403.1
Total Backlog ($MM)$1,214.8 $1,350.0 $1,455.9
Cash from Operations ($MM)—$(46.2) $105.0
Capital Expenditure ($MM)—$(14.2) $(16.1)
Free Cash Flow ($MM)—$(60.4) $88.9
Adjusted Free Cash Flow ($MM)—$(58.2) $93.3
Cash & Equivalents ($MM)$306.7 (Dec-24) $435.1 $332.2
Total Debt ($MM)$247.0 (Dec-24) $247.1 $47.2

Estimate Comparison (Q2 2025) — S&P Global*

MetricConsensusActual
Primary EPS ($)1.33391.49
Revenue ($MM)567.85577.2
EBITDA ($MM)118.02121.9

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$5.30–$5.60 $5.50–$5.80 Raised
Total Sales GrowthFY 2025~5% ~6.5% Raised
Adjusted Segment Op MarginFY 202522.5%+ 22.5%+ Maintained
Corporate CostFY 2025$80M $80M Maintained
Net Non-OperatingFY 2025$(10)M expense $+4M income Raised
Adjusted Tax RateFY 202523.5% 23.5% Maintained
Diluted SharesFY 2025~59M ~59M Maintained
DividendQ3 2025—$0.23/share Declared

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
A&E demand/backlogA&E backlog $864M; strong core growth A&E backlog $960M; aftermarket +20.4% Backlog >$1B; aftermarket +18%, military +37%, record margin 26.3% Improving
Mix & marginsMargin expansion across segments Company adj op margin 18.7% H2 A&E margin to moderate on mix shift to Com OEM Moderating near term
Tariffs/pricingNoted macro/tariff risks Outlook contingent on trade policy ~$30M gross tariff impact; offset via price/productivity Manageable
PFT end marketsPFT margin expansion; cryogenics strength Core leverage ~35% Chemicals soft (Europe), cryogenics/water/wastewater strong; core orders +4% YoY Mixed/Stable
M&A pipelineAcquisitions (Vian, CryoWorks, Technifab) “More transactions than in years” PSI acquisition announced; funnel balanced, nothing imminent within quarter Active
Regulatory/tax——Studying “Big Beautiful Bill” (R&D capitalization/accelerated depreciation); modest FCF benefit Positive modest
Defense programs—Wins in hybrid-electric ground vehicles; brake control for UAV XM30 power converter dev; LTAMs funding increase supports defense power Positive pipeline

Management Commentary

  • Strategy and execution: “Our strategy and capabilities… position us extremely well to continue driving above market growth organically and complemented by acquisitions.” — Max Mitchell .
  • PSI acquisition rationale: “PSI adds highly sophisticated sensor-based technologies… We believe PSI’s capabilities and market positions… create a highly compelling value creation opportunity.” — Max Mitchell .
  • Balance sheet and capital deployment: “Following the acquisition, we estimate… net debt to adjusted EBITDA ~1x, leaving substantial capacity for further acquisitions.” — Rich Maue .
  • Segment outlooks: A&E guided to high-single to low-double-digit core sales growth with 35–40% leverage; mix to shift toward commercial OEM in H2; PFT core growth at low single digits with 30–35% leverage .

Q&A Highlights

  • A&E backlog drivers: Broad-based strength across commercial and military; notable orders in air defense (2026–2027 deliveries), legacy C4ISR power solutions, COMAC C929/C919 wins, and OEM ramp .
  • A&E margin trajectory: Expect H2 margin moderation due to mix (Com OEM up ~10% sequentially) and tougher aftermarket comps; full-year leverage still 35–40% .
  • GTF aftermarket: ~15% growth in 2025 accelerating to ~30% in 2026; currently <5% of commercial aftermarket sales .
  • PFT order cadence/geography: Stable but sluggish chemicals (Europe soft); strength in cryogenics (space launch), biopharma, water/wastewater; Middle East investment supportive .
  • Tariffs and pricing: ~$30M gross annual impact (down from ~$60M on lower China tariffs); copper immaterial (<$1M); offset via price/productivity, margins protected .
  • M&A funnel: Balanced across A&E and PFT; active pipeline with no immediate closings; PSI expected end of 2025/early 2026 .

Estimates Context

  • Q2 2025 vs consensus: Adjusted EPS $1.49 vs $1.33 and revenue $577.2M vs $567.8M — clear beat on both; adjusted EBITDA outperformed consensus as well. Values retrieved from S&P Global.*
  • FY 2025 consensus EPS stands at ~$5.92 vs company guidance $5.50–$5.80; guidance raised but remains below consensus, likely reflecting management’s caution on tariffs and A&E mix in H2. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong beat-and-raise quarter driven by A&E momentum, record margins, and backlog expansion; expect near-term mix headwinds in H2 but full-year leverage intact .
  • Tariffs are manageable: ~$30M gross impact now planned to be offset through price and productivity; reduces prior uncertainty and supports margin protection .
  • PFT resilience with selective softness: Chemicals (Europe) remains weak, but cryogenics/biopharma/water are growth engines; backlog and orders indicate stable to improving outlook .
  • PSI acquisition is a strategic step to deepen sensing capabilities; target 10% ROIC by year five with organizational alignment to integrate standalone entities (Druck in A&E; Panametrics in PFT; Reuter‑Stokes in nuclear) .
  • Capital deployment optionality remains high: net cash position exiting Q2 and ~1x net debt/EBITDA post-PSI supports additional M&A and organic investments .
  • For trading: guidance raise and backlog strength are positive catalysts; watch H2 margin cadence (A&E mix shift) and chemical demand signals; monitor tariff policy updates for sentiment swings .
  • Medium-term thesis: Above-market organic growth plus disciplined M&A, continued CBS-driven margin expansion, and durable aftermarket exposure in A&E position CR for sustained EPS growth .