Crane Co (CR)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered robust top-line and margin expansion: net sales $544.1M (+12.3% YoY), GAAP EPS from continuing operations $1.20 (+61.2% YoY), and adjusted EPS $1.26 (+60.2% YoY). Adjusted operating margin rose 320 bps YoY to 17.7% as price, productivity, and volumes drove leverage .
• Aerospace & Electronics remained the growth engine (sales +11% YoY; adjusted margin 23.1%, +290 bps), with total aftermarket sales up 21% and record backlog $864M; Process Flow Technologies rose +13% YoY (adjusted margin 20.3%, +330 bps) despite hurricane-related downtime (~$0.09 EPS impact) .
• Management initiated FY 2025 adjusted EPS guidance of $5.30–$5.60 (12% growth at midpoint), with ~5% total sales growth, adjusted segment margin ≥22.5%, corporate cost ~$80M, net non‑operating expense ~$10M, adjusted tax rate 23.5%, and diluted shares ~59M .
• Capital deployment optionality increased: dividend raised 12% to $0.23/qtr (annual $0.92), cash $307M vs. debt $247M at year-end, and ~$1.5B of debt capacity for M&A; EM divestiture closed Jan 2, 2025 with ~$208M net proceeds received post quarter .

What Went Well and What Went Wrong

• What Went Well

  • “Crane Company had an exceptional year… we delivered 8% core sales growth with 28% adjusted EPS growth in 2024” (portfolio sharpened via Vian, CryoWorks, Technifab acquisitions and EM divestiture) .
  • A&E strength: aftermarket +21%, commercial OEM +10%, military aftermarket +36%; adjusted A&E margin 23.1% (+290 bps) and backlog +23% YoY to $864M .
  • PFT margin structurally higher: adjusted margin 20.3% (+330 bps) with “strong core operating leverage… productivity, strong net price and higher volumes” .

• What Went Wrong

  • Helene hurricane disruption: Marion, NC site downtime at high end of expected headwind (~$0.09 EPS), with recovery underway and insurance expected to offset financial impact .
  • PFT backlog modestly lower sequentially: core FX-neutral backlog −4% YoY on timing of projects, though orders +3% and backlog remains ~40% above 2019 levels .
  • Macro/tariffs: management cited mixed industrial signals; limited concern on China tariff exposure but acknowledged potential 2025 FX headwind (~1 point in sales) embedded in guidance .

Financial Results

Segment performance

Key KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our initial 2025 adjusted EPS guidance of $5.30–$5.60 reflects what we have confidence in delivering, and reflects solid 12% adjusted EPS growth at the midpoint” .
• “We generated $234 million of adjusted free cash flow… in 2025, we are confident that we will deliver adjusted free cash flow conversion greater than 90% as the supply chain improves” .
• “We continue to have substantial financial flexibility with approximately $1.5 billion of debt capacity today for M&A” .
• “We received the first F‑16 brake control upgrade order… total orders now about $44 million… $150–$200 million life‑of‑program sales including foreign military sales” .

Q&A Highlights

• PFT backlog dynamics: backlog burn in Q4 reflected execution/timing; orders sequentially consistent; backlog ~40% above 2019; 2025 PFT core growth low-to-mid single digits; margin leverage above the 30–35% norm .
• Margin trajectory: portfolio mix shift toward higher growth/margin markets continues; line of sight to mid‑20s operating margin at PFT via pricing, innovation, simplification, and operational excellence .
• A&E cadence: 2025 assumptions—commercial OE low double‑digit, military OE mid‑single-digit, commercial and military aftermarket mid‑ to high‑single-digit; Boeing MAX ramp conservatively embedded .
• Insurance recovery: business interruption recoveries expected Q2/Q3 2025, offsetting second‑half 2024 income loss; embedded in guidance .
• Macro/geopolitics: U.S. stronger; Europe stagnant; China stable; limited concern on China tariffs given localization and supply base management .
• M&A scope: pursuing high‑quality assets in A&E and PFT in the “hundreds of millions” EV range; open to larger transformational opportunities if strategically sound .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 and forward quarters was unavailable at the time of retrieval due to data access limits; as a result, formal beat/miss analysis versus consensus cannot be provided. Future updates should anchor to S&P Global consensus when accessible.

Key Takeaways for Investors

• Solid Q4 close with broad-based price/productivity-driven margin expansion and A&E aftermarket/OEM strength; backlog supports sustained growth into 2025 .
• FY 2025 guide implies continued double-digit EPS growth and higher segment margins, with conservative macro and FX assumptions—setup appears favorable for upside if Boeing/commercial aerospace ramps accelerate .
• PFT’s structural margin step-up and mix shift provide resilience; watch backlog timing and cryogenics ramp to maintain leverage targets above historical algorithms .
• Balance sheet optionality and ~$1.5B debt capacity underpin M&A catalysts; recent EM divestiture and dividend hike signal portfolio focus and shareholder returns .
• Monitor Helene insurance recovery timing (Q2/Q3 2025) and FX headwinds; both are embedded in guidance and could influence intra-year cadence (Q1 seasonally lowest) .
• Aerospace defense programs (F‑16 brake control, AESA radars) and aftermarket tailwinds provide multi‑year visibility; backlog at record levels de-risks near-term execution .
• Without consensus data, traders should focus on qualitative catalysts (dividend raise, guidance initiation, backlog/aftermarket strength, M&A pipeline) and upcoming March 6, 2025 A&E Investor Day for incremental signals .