Yahoo Finance Crane Co (CR) (Q1 2024) Earnings Call Transcript Highlights: Strategic Acquisitions and Robust ...
Adjusted EPS: $1.22, with a full-year guidance increase to $4.75 - $5.05.
Core Sales Growth: 5% growth, with core orders and backlog both up 11%.
Revenue from CryoWorks Acquisition: Approximately $28 million annually.
Adjusted EBITDA from CryoWorks: Approximately $5 million.
Purchase Price for CryoWorks: $61 million.
Expected ROIC from CryoWorks: Exceed 10% by year 5.
EPS Accretion from CryoWorks: Approximately 10% by year 5, excluding intangible amortization.
Annual Investor Day: Scheduled for May 14, with a focus on 4% to 6% long-term core sales growth rate.
Adjusted Free Cash Flow: Raised guidance to $250 million - $275 million for the full year.
Total Debt: Approximately $357 million at the end of the first quarter.
Cash on Hand: $219 million at the end of the first quarter.
Release Date: April 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you talk about how much incremental price capture you're expecting in the Process Flow Technologies (PFT) business in 2024 relative to 2023? And could you provide some end market color around the healthy project activity in North America and China, as well as what you're seeing in the MRO side of PFT? A: Richard A. Maue, Crane Company - Executive VP & CFO, noted that for 2024, price capture in PFT is expected to be in the mid-single-digit range, slightly lower than 2023 but still healthy. Max H. Mitchell, Crane Company - Chairman, President & CEO, added that project and MRO strength is broad-based, particularly in North America and China, with expansions and reliability improvements driving demand. Europe remains unchanged, with some strength in semiconductor-related chemical applications.
Q: How does the reduced growth outlook for the LEAP engine affect your Aerospace & Electronics business? A: Richard A. Maue mentioned that for 2024, there is no expected change in their business relative to the LEAP engine outlook. The demand environment remains strong, and any changes would not impact the current year.
Q: Could you give us a sense of the price realizations this quarter at Aerospace & Electronics (A&E) and PFT separately? A: Richard A. Maue clarified that in PFT, price realization is around the mid-single digits, and at A&E, approximately one-third of the core growth seen in the quarter was through price increases, with the rest being volume increases.
Q: Can you characterize the broader competitive intensity at PFT, especially relative to Chinese competitors? A: Max H. Mitchell explained that there has been no dramatic change in the competitive landscape. The company remains well-positioned even within China, where there is a place for global manufacturers. They continue to win based on technology, quality, and delivery.
Q: Regarding the high single-digit organic growth rate target, have things gone better than expected, and has your outlook changed for potential future wins that drive this long-term organic growth rate? A: Richard A. Maue noted that since setting the growth target, the company has won more projects than anticipated, particularly in defense, and sees further opportunities in pricing. Max H. Mitchell added that they would update their long-term vision at the upcoming Investor Day.
Q: Could you update us on the unmet demand in Aerospace & Electronics due to supply chain bottlenecks and what it would take to see some of these constraints removed? A: Max H. Mitchell stated that the unmet demand remains in the $50 million to $60 million range, stable and not worsening. The supply chain issues have shifted from specific shortages to more general challenges, with modest improvements expected to continue.
Q: How long can the aftermarket strength continue for both military and commercial segments of Aerospace & Electronics, and are you seeing higher pricing opportunities? A: Richard A. Maue expects continued strong demand in the military aftermarket and robust commercial aftermarket, with strategic opportunities for price increases being actively pursued. The outlook remains positive with low double-digit growth expected in the commercial aftermarket.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
