Crane Co

Crane Company is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets. The Company has two reporting segments: Aerospace & Advanced Technologies and Process Flow Technologies. The Company's strategy is to grow earnings and cash flow by focusing on the development and manufacturing of highly engineered industrial products for specific markets where its scale is a relative advantage, and where it can compete based on its proprietary and differentiated technology, its deep vertical expertise, and its responsiveness to unique and diverse customer needs.

The Company's businesses participate in markets that are highly competitive. Because of the diversity of products manufactured and sold, its businesses typically have a different set of competitors in each geographic area and end market in which they participate. The Company believes that it is a principal competitor in most of its markets. Its primary basis of competition is providing high quality products, with technological differentiation, at competitive prices, with superior customer service and timely delivery.

The Company generates revenue through the manufacture and sale of engineered industrial products. Revenue from the sale of products is generally recognized at a point in time - either upon shipment or delivery - based on the specific shipping terms agreed with its customers. Certain products are customized or sold directly to the U.S. government or indirectly to the U.S. government through subcontracts, and in these cases, revenue is recognized over time because control is transferred continuously to customers as the contract progresses. In 2025, the Company recognized approximately $109.1 million ¹ in revenue over time related to contracts in progress as of December 31, 2025, or 4.7% ² of total sales.

The Aerospace & Advanced Technologies segment supplies critical components and systems, including original equipment and aftermarket parts, primarily for the commercial aerospace, military aerospace, defense, and space markets. The commercial market and military market accounted for 61% ³ and 39% ⁴, respectively, of total segment sales in 2025. Sales to original equipment manufacturers and aftermarket customers were 66% ⁵ and 34% ⁶, respectively, in 2025. The segment provides mission critical systems such as pressure sensors for aircraft engine control, aircraft braking systems for commercial aircraft and fighter jets, power conversion solutions for defense and space applications and lubrication systems. AAT's integrated capabilities include Power Solutions, Sensing Systems, Fluid & Thermal Management, Landing Systems, and Microwave Solutions. Manufacturing facilities are located in the United States, United Kingdom, Taiwan, and France.

The Process Flow Technologies segment is a provider of highly engineered fluid handling equipment for mission critical applications that require high reliability. The segment is comprised of Process Valves and Related Products, Pumps and Systems and Commercial Valves. Process Valves and Related Products manufactures a wide range of products and solutions for the process end markets including sensing and instrumentation, sampling systems, valve positioning and control systems, vacuum insulated pipe and valve systems for advanced cryogenic applications, valve diagnostic and calibration systems, as well as a broad portfolio of on/off isolation valves and associated actuation. Pumps and Systems manufactures pumps products for water and wastewater applications, primarily in the United States municipal and industrial markets. Commercial Valves manufactures valves and related products for the non-residential construction, gas utility and municipal markets.

On January 1, 2025, the Company completed the sale of the Engineered Materials segment for approximately $208.0 million ⁷ on a cash-free and debt-free basis. During the second quarter of 2025, the Company received $7.8 million ⁸ related to a final working capital adjustment. In connection with the divestiture, the Company recognized a pre-tax gain of $43.5 million ⁹, recorded in income from discontinued operations. On November 1, 2024, the Company completed the acquisition of Technifab Products, Inc. for $38.8 million ¹⁰ on a cash-free and debt-free basis. On May 1, 2024, the Company completed the acquisition of CryoWorks, Inc. for $60.7 million ¹¹ on a cash-free and debt-free basis. On January 2, 2024, the Company completed the acquisition of Vian Enterprises, Inc. for $102.5 million ¹² on a cash-free and debt-free basis. On October 4, 2023, the Company completed the acquisition of Baum lined piping GmbH for $93.5 million ¹³ on a cash-free and debt-free basis. On January 1, 2026, the Company completed the acquisition of the Druck, Panametrics and Reuter-Stokes brands from the Baker Hughes Company. Also on January 1, 2026, the Company completed the acquisition of optek-Danulat. In September 2025, the Company entered into a $900 million ¹⁴ senior unsecured delayed draw term loan facility and a $900 million ¹⁵ senior unsecured revolving facility. In December 2025, the Company borrowed $900 million ¹⁶ under the Term Facility and an additional $250 million ¹⁷ under the Revolving Facility. The Company raised the annual dividend for 2026 by 11% to $1.02 per share ¹⁸.

Net sales increased by $173.8 million ¹⁹, or 8.2% ²⁰, to $2,305.0 million ²¹ in 2025 from $2,131.2 million ²² in 2024. Operating profit increased by $68.4 million ²³, or 19.2% ²⁴, to $424.2 million ²⁵ in 2025. Net income attributable to common shareholders was $366.6 million ²⁶ in 2025, compared to $294.7 million ²⁷ in 2024. Diluted earnings per share from continuing operations was $5.66 ²⁸ in 2025, compared to $4.60 ²⁹ in 2024. Cash provided by operating activities from continuing operations was $394.8 million ³⁰ in 2025, compared to $257.8 million ³¹ in 2024.

For 2026, the Company expects total sales growth in the low-to-mid 20%s, driven by the Druck, Panametrics, Reuter-Stokes, and optek-Danulat acquisitions, as well as mid-single digit core sales growth and a slight foreign exchange benefit. The Company expects an improvement in operating profit driven primarily by productivity benefits and operating leverage on higher volumes, lower transaction related expenses, higher pricing net of inflation and contributions from the Druck, Panametrics, Reuter-Stokes, and optek-Danulat acquisitions.

In 2026, the Company expects Aerospace & Advanced Electronics sales to increase in the low to mid 20% range driven by high-single digit core sales growth, a low-to-mid-teen percentage contribution from the Druck acquisition and a slight benefit from favorable foreign exchange. The Company expects a substantial improvement in its commercial OEM business driven by higher aircraft build rates, and increased demand for its military OEM business driven by continued global geopolitical uncertainty. The Company also expects growth in its commercial and military aftermarket businesses driven by continued high utilization of aircraft, but at decelerating rates compared to 2024 and 2025 reflecting increasingly challenging year-over-year comparisons.

In 2026, the Company expects Process Flow Technologies sales to increase in the low-to-mid 20%s driven by flat-to-low single digit core sales growth, a low-20% contribution from the Panametrics, Reuter-Stokes, and optek-Danulat acquisitions, as well as a 1% ³² benefit from foreign exchange. The Company expects core sales to be driven by demand in the pharmaceutical, water and waste-water and cryogenic markets offset by ongoing sluggishness in the chemical markets.

The Company expects segment operating profit for Aerospace & Advanced Technologies to increase compared to 2025 due to higher volumes, positive net price and the contribution from the Druck acquisition. However, the Company expects operating margin to decline modestly compared to 2025 driven by the dilutive impact of the above-mentioned acquisitions. For Process Flow Technologies, the Company expects segment operating profit to increase compared to 2025 due primarily to the contribution from the Panametrics, Reuter-Stokes, and optek-Danulat acquisitions. However, the Company expects operating margin to decline modestly compared to 2025 driven primarily by the dilutive impact of the acquisitions.

The Company's operating philosophy is to deploy cash provided from operating activities, when appropriate, to provide value to shareholders by reinvesting in existing businesses, by making acquisitions that will strengthen and complement its portfolio, by divesting businesses that are no longer strategic or aligned with its portfolio and where such divestitures can generate capacity for strategic investments and initiatives that further optimize its portfolio, and by paying dividends and/or repurchasing shares. The Company raised the annual dividend for 2026 by 11% to $1.02 per share ³³. Capital expenditures were $53.5 million ³⁴ in 2025, compared to $36.6 million ³⁵ in 2024.

The Company's sales depend heavily on industries that are cyclical in nature or are subject to market conditions, which may cause customer demand for its products to be volatile and unpredictable. Demand in these industries is affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. The Company's business, financial condition, operating results and cash flows may be adversely affected by changes in global economic conditions and geopolitical risks, including credit market conditions, trade policies, including recently announced and potential additional tariffs on certain raw materials, levels of consumer and business confidence, commodity prices and availability, inflationary pressures, exchange rates, levels of government spending and deficits, political conditions, and other challenges that could affect the global economy, including the ongoing conflict in the Middle East as well as impacts associated with any economic sanctions imposed against Russia, in response to their invasion of the Ukraine.

The Company's Aerospace & Advanced Technologies segment sales are primarily affected by conditions in the commercial aerospace industry, which is cyclical in nature, and by changes in defense spending by the U.S. government. Commercial aircraft are procured primarily by airlines, and airline capital spending can be affected by a number of factors including credit availability and related cost, current and expected fuel prices, and current and forecast air traffic demand levels. The defense portion of the segment's business is dependent primarily on U.S. government spending, and to a lesser extent, foreign government spending, on the specific military platforms and programs where its business participates. The Company's Process Flow Technologies segment competes in markets that are fragmented and highly competitive. Demand for its Process Flow Technologies products is heavily dependent on its customers' level of new capital investment and planned maintenance expenditures.

Macroeconomic fluctuations may harm the Company's business, results of operations and stock price. The Company's business, financial condition, operating results and cash flows may be adversely affected by changes in global economic conditions and geopolitical risks, including credit market conditions, trade policies, including recently announced and potential additional tariffs on certain raw materials, inflationary pressures, and exchange rates. Demand for the Company's products is variable and subject to factors beyond its control, which could result in unanticipated events significantly impacting its results of operations. In the Aerospace & Advanced Technologies segment, a significant decline in demand for air travel, or a decline in airline profitability generally, could result in reduced orders for aircraft and could also cause airlines to reduce their purchases of spare parts. The Company conducts a substantial portion of its business outside the U.S. and faces risks inherent in non-domestic operations. Net sales by destination outside the U.S. from continuing operations were 41% ³⁶ of its consolidated amounts in 2025. The Company may be unable to identify or to complete acquisitions, or to successfully integrate the businesses it acquires. The Company's ability to source components and raw materials from its suppliers could be disrupted or delayed in its supply chain, which could adversely affect its results of operations. As of December 31, 2025, a hypothetical 1% increase in prevailing interest rates would increase the Company's 2025 interest expense by approximately $11.5 million ³⁷.

Management's message emphasizes the Company's strategy to grow earnings and cash flow by focusing on the development and manufacturing of highly engineered industrial products for specific markets where its scale is a relative advantage, and where it can compete based on its proprietary and differentiated technology, its deep vertical expertise, and its responsiveness to unique and diverse customer needs. The Company continuously evaluates its portfolio, pursues acquisitions that complement its existing businesses and are accretive to its growth profile, selectively divests businesses where appropriate, and pursues internal mergers to improve efficiency. For 2026, management expects total sales growth in the low-to-mid 20%s, driven by the Druck, Panametrics, Reuter-Stokes, and optek-Danulat acquisitions, as well as mid-single digit core sales growth and a slight foreign exchange benefit. Management expects an improvement in operating profit driven primarily by productivity benefits and operating leverage on higher volumes, lower transaction related expenses, higher pricing net of inflation and contributions from the Druck, Panametrics, Reuter-Stokes, and optek-Danulat acquisitions.