Crane Co. Aktie

Welcome to the Crane Company Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I'd like to now turn the call over to Allison Poliniak, Vice President of Investor Relations. Please go ahead.

Thank you, Stephanie, and good day, everyone. Welcome to our third quarter 2026 Earnings Release Conference Call. I'm Allison Poliniak, Vice President of Investor Relations. On our call this morning, we have Alex Alcala, President and Chief Executive Officer; and Rich Maue, our Executive Vice President and Chief Financial Officer; along with Jason Feldman, Senior Vice President, Treasury and Tax who's on for Q&A.

We will start up our call with a few prepared remarks, Alex and Rich, after which we will respond to questions. And just a reminder, the comments we make on this call will include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements.

Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers and tables at the end of our press release and accompanying slide presentation, both of which are available on our website at craneco.com in the Investor Relations section. Now let me turn the call over to Alex.

Thank you, Allison, and good morning, everyone. Crane delivered another quarter of record performance, reflecting the strength of our portfolio, broad-based demand across our end markets, exceptional execution throughout the company and the continued success of our acquisition strategy.

Demand remains very strong across Aerospace and Advanced Technologies Momentum continues to build within process for technologies, and our recent acquisitions are performing well ahead of expectations. Together, these drivers resulted in an 8% core sales growth. Strong operating leverage, record margins, record earnings and a record backlog while reinforcing our confidence in the outlook for both 2026 and 2027.

Of note, order activity was particularly strong in process both technologies, where core orders increased 20% year-over-year and 8% sequentially. This combined with exceptional strength and resilience across the aerospace and Advanced Technologies, total company backlog increased 9% year-over-year providing strong visibility as we close out the year and enter 2027.

Execution continues to be a key differentiator, adjusted operating margin expanded 130 basis points to a record 22.5% despite the temporary dilutive impact of our recent acquisitions. These results demonstrate our ability to translate growth into meaningful earnings expansion while continuing to invest for the future.

Our acquisitions continue to significantly exceed expectations. Revenue growth, margin expansion and earnings contribution are all ahead of plan. And we now expect to achieve our 10% ROIC hurdle approximately 18 months earlier than originally anticipated. We expect these acquisitions to contribute approximately $0.30 per share to 2026 earnings up from our previous expectation of $0.20 per share, with operating margins expanding more than 500 basis points this year.

These incredible results reinforce our confidence in the Crane business system and our ability to create substantial shareholder value through disciplined capital deployment. We are equally excited about the opportunities ahead including the pending acquisition of [ Trillium ] pumps. Given our strong year-to-date performance, record backlog levels and confidence in both our core and acquired businesses, we are raising our full year adjusted EPS outlook by $0.35 at the midpoint to a range of $7.23 to $7.38 per share.

Turning to Aerospace & Advanced Technologies. This segment continues to perform exceptionally well. Demand remains robust across commercial aerospace, defense and space, supported by a record backlog and a growing pipeline of opportunities. Commercial aerospace remains healthy with solid OE demand and continued strength in aftermarket.

On the defense side, investment remained very strong as customers continue to prioritize missile defense, radar, advanced power inversion and space-based capabilities. All areas where we continue to invest and win. Strong execution and continued program wins are providing increasing visibility into the future growth.

As a result, we continue to expect 2026 core growth modestly above the high end of our long-term 7% to 9% growth framework, leveraging that growth between 35% and 40%. The team continues to execute at a very high level, and we remain highly confident in the long-term growth opportunities across the segment.

Process [indiscernible] Technologies also delivered an outstanding quarter. The business returned to core growth while delivering record profitability. Core sales increased 6%. Orders grew 20%, and adjusted operating margins expanded despite the dilutive impact of recent acquisitions. More importantly, the transformation of the portfolio continues to gain momentum.

Growth was broad-based across cryogenics power, wastewater nuclear and general industrial markets. We secured additional wins in cryogenics, supporting the growing space launch market. New pharmaceutical orders related to GEO P1 capacity expansion and further wins in wastewater and power.

For the full year, our outlook has improved. Driven by solid core growth in the second half. We now expect low single-digit core growth full year and continued margin expansion. We also continue to enhance the quality of our portfolio through disciplined capital allocation.

The announced acquisition of Trillium pumps strengthens our position in the attractive water and wastewater market. while the announced divestiture of our Building Services & Utilities business further sharpen the strategic focus of the segment. Before moving on, I want to recognize and thank the outstanding Basin team.

For nearly 120 years, this business has been an important part of Crane, built by incredibly talented people who consistently deliver results the right way. We are grateful for the many contributions and proud of what they have accomplished. As they begin this next chapter, I'm confident they have a bright future ahead.

Together, these actions continue to reposition PFT around highly engineered mission-critical technologies, serving attractive growth markets, including pharmaceuticals, water and wastewater, power Progenics and nuclear. Importantly, we are not finished. We continue to see attractive opportunities to further strengthen the portfolio and remain confident in our ability to outperform the markets we serve over the long term.

To summarize, Crane is performing at a very high level. Our businesses are executing exceptionally well. Our end markets remain attractive. Our acquisitions are exceeding expectations. Our portfolio continues to become stronger and more resilient.

We will enter 2027 with record backlog, strong momentum across both segments increasing earnings power and significant strategic flexibility. As we look toward 2027, our confidence continues to grow. Over the summer, we completed strategy reviews across all our businesses, and those we reinforce our long-term growth framework.

In particular, 4 themes stand out. First, Aerospace and Advanced Technologies remains exceptionally well positioned. Strong aerospace and defense demand, combined with the benefits of years of investment in differentiated technologies, creating a resilient portfolio gives us confidence in the segment's ability to deliver attractive growth for many years to come.

Second, the transformation of the process flow technologies portfolio is gaining momentum. While the benefits are increasingly visible in our results today, we believe we are still in the early innings of our value creation journey as we continue to reshape the portfolio around higher growth, higher margin and less cyclical markets.

Third, our acquisition strategy continues to create meaningful value. We have significant capacity to deploy capital, a robust pipeline of opportunities and a proven ability to integrate businesses and accelerate earnings, margins and returns.

And last, but most important, we have an incredible intangible asset, the Crane Business System. The combination of world-class processes and a high-performance culture built on focus, intensity and accountability, continues to differentiate Crane and drive sustainable value creation.

pimply put, our businesses are performing very well. Our portfolio is stronger, it has ever been, and we continue to see significant opportunities to create value through both organic and inorganic growth.

Before turning it over to Rich, I'm pleased to announce that we will host our next Investor Day on February 9 in New York City. We look forward to sharing more about our strategy, growth opportunities and long-term outlook at that event.

With that, I'll turn the call over to Rich.

Thank you, Alex. Another outstanding quarter with certainly more to come. Alex, as you just said, the Crane business system, this machine that we have and this unique culture is what enables us to consistently deliver the results that we do quarter after quarter. .

And it reminded me of the Academy Award-winning movie Fletch during an iconic scene, where Chevy Chase was impersonating Gordon Liddy, an airplane mechanic supervisor. During that scene, I was reflecting on our well oiled machines and I thought about full or coaching to our leadership teams and even how we talk with our investors when Fletch pro claims, it's so simple maybe you need to refresh your course.

It's all ball bearings nowadays guys. Now you just prepare that [indiscernible] valve with that 3 in 1 oil and some gas pads and I'm going to need about 10 courts of any freeze preferably prior. No, no make that Quaker Stan, and we'll just keep delivering top quartile results quarter after quarter.

And with that in mind, let me start off with total company results. Total sales were up 28% in the quarter compared to last year with 8% core growth, reflecting broad-based strength across both process flow technologies and aerospace and advanced technologies. Sales from our 4 acquisitions contributed 21% growth in the quarter, once again outperforming our expectations.

Adjusted operating profit increased 36%, reflecting the impact of the higher core sales contributions from the acquisitions, productivity and favorable pricing net of inflation, another outstanding result. And total core FX neutral backlog was up 9% compared to the prior year, reflecting strength at both Aerospace and Advanced Technologies and Process flow technologies.

Core orders increased 11% year-over-year, with continued strength in Aerospace & Advanced Technologies, up 2% as expected. And when excluding a multiyear order received in the same period last year, we're up in the mid-teens and process flow technologies up an exceptional 20%.

We generated strong free cash flow in the quarter and repaid $170 million of debt, resulting in pro forma net leverage today at 1.1x a very strong balance sheet that positions us well for further M&A. Before discussing segment performance, I wanted to remind everyone that our adjusted results exclude the benefit from [indiscernible] tariff recoveries recorded during the quarter.

Once again, in our view, it's important to isolate these onetime benefits from the true underlying operating trends in the business. A few more details on the segments of the quarter here. Starting with Aerospace and Advanced Technologies.

Sales of $344 million increased 27% in the quarter, with core sales up 9.5%. Our record backlog of nearly $1.3 billion increased 9% on a core basis and increased 20%, including the impact of the DRC acquisition. Once again, demand remains very strong across our highly diverse portfolio.

Top line strength in our core business was driven by the commercial OE ramp as well as ongoing broad-based strength within the defense market. Total aftermarket remained strong, bolstered by military and when isolating prior year initial provisioning was up 11%, with core commercial aftermarket up at a high single-digit rate, exactly what we expected.

Adjusted segment margin was exceptional at 26.3% ahead of our core leverage expectations and up 100 basis points year-over-year. That performance is notable given the higher OE sales and expected dilution from the drug acquisition and it speaks to the resiliency of our margin profile, irrespective of any changes in OE aftermarket mix.

Drug continued to outperform our expectations, and our core A&E business delivered another very strong quarter. Taken all together, we remain very confident in our full year segment sales outlook and continue to expect full year core sales growth slightly ahead of our 7% to 9% algorithm.

The diversity of the overall AAT portfolio supports the durability of that 7% to 9% regardless of periodic changes in the sales composition, whether that be in OE versus aftermarket or commercial versus military. Moving on to Process Flow Technologies.

In Q3, we delivered sales of $413 million, up 29% compared to a year ago with core sales up 6.2%, and the acquisitions of [ Panametrics ] were topotecan adding nearly 24 points of growth. Demand improved significantly in the quarter. Compared to the prior year, core FX-neutral backlog of PFT increased 8% on a sequential basis was up 2% and core FX-neutral orders were up 20% year-over-year and up 8% sequentially.

Adjusted operating margin was a record 24% and was 80 basis points above the prior year. And like AAT, results were above our expectations, given better performance across both our core businesses and each of our 3 acquired businesses. In summary, another outstanding quarter.

Moving to the nonoperational items below the segments. Corporate expense for the quarter was $20 million as expected. And for the full year, we expect to be within our previously guided $80 million to $85 million range.

Net nonoperating expense in the quarter was $14 million and we continue to estimate full year 2026 net nonoperating expense of approximately $58 million.

And lastly, we continue to estimate our tax rate for the year to approximate 23%. And taking all of this into account, our performance to date as well as the risks and opportunities we see ahead.

As Alex mentioned, we are raising our adjusted full year guidance by $0.35 to a range of $7.23 to $7.38. Overall, again, an outstanding year-to-date and momentum continues to build. And with that, operator, we are now ready to take the questions.

[Operator Instructions] And we'll take our first question from Jeff Sprague with Vertical Research.

On TSI, Alex, obviously, very, very encouraging. Is the endpoint now much higher on this than you thought also, obviously, you're ahead of schedule on what you wanted to do. But as the upside were even bigger than you thought maybe you could kind of frame that relative to how you initially bridged the deal shortly after you closed it.

Yes. Thank you, Jeff. So yes, the upside is higher. I think we have that 5-year mark, where we're going to go from $60 million EBITDA to $150 million in 5 years. Now we think that's going to be quicker than that. And then when we look at the 5-year mark, the growth is going to be higher and the margins are going to be higher as well. So outside to that 5-year reference point for sure.

And then one of the other sort of interesting things here, and I don't know if it's how you plan to approach all deals. But a lot of companies that are doing deals, right, seem to be allergic to trying to fix stuff.

They just want to pay for growth. Not saying that everything you'll be looking to buy is a fixer upward. But both PSI and Trillium, right? They seem to win good assets, maybe not run the way they should be an opportunity to kind of run it through your business system. As you look at the M&A pipeline, is there a lot of that sort of asset opportunity out there? .

Yes, Jeff. So every -- yes, that's a good observation. I think we do look at deals from the lens of CBS. So we obviously would see more opportunity than the seller.

But you feel is different. There's other deals. You may remember, Optech, which we also did earlier this year, a smaller deal we don't talk a lot about, but that was a high-growth business, very well run, and we're just adding contributing to it.

So I think we're open to a combination of circumstances, certainly not opposed to turnarounds or improvements like what we've been doing. It's all about where we see shareholder value creation and a combination of a path to improving the portfolio when we're hitting that 3-, 5-year mark.

We'll take our next question from Matt Summerville with D.A. Davidson.

I was wondering if you could maybe comment, you've sold the business up in Canada. You're in the process of selling the U.K. business -- are there more consequential portfolio actions still to be had specific to PFT?

And I'm also curious, sort of tangential to that, given that I would assume that transaction in isolation is going to be dilutive. Maybe comment on that and maybe how much Trillium can backfill relative to that dilution .

Yes. Thanks, Matt. So there is no more substantial divestitures that we're looking at right now. We evaluate the portfolio every year and our thinking could change.

But if you recall, like you mentioned, we divested that Crane Supply in Canada exposure to nonresidential construction. This business in BSU primary exposure is also nonresidential.

So this completes our exit of that market, a very well run business operated by a great team, but not really aligned to the markets that we're trying to expand into. As far as the accretion dilution, I'll let Rich answer that.

Yes. Matt, yes, I think the way to think about the BSU business, right, we did -- this is a business that does roughly $160 million will be the outlook this year in revenue, and they're essentially at fleet margin.

So when you look at that and compare to Trillium, Trillium is $115 million in revenue with below fleet margin. So there will be some dilution to your point, obviously, the timing and the amount -- the timing of the close and the amount will coincide, right?

So we're currently thinking that, that will close sometime near the end of the first quarter. So if you tried to create a model around that, it's not a full year impact, but we would expect to offset a good portion of that with Trillium in the year. If that helps.

Perfect. And then maybe if you could just provide a little bit more end market and geographic color specific to in the context of that 20% year-on-year improvement you saw in organic order activity.

Yes, Matt. So it's looking quite positive from our perspective for PFT. I think a number of end markets that are seeing the growth, which is a positive from our perspective, makes us confidence on sustainability. .

We -- where we've seen the tailwind, those markets where we've been focused on over the last few years and increasing our exposure cryogenics, which is driven by space launch, water, wastewater, primarily U.S.-based business, where it's been resilient pharma, which our backlog is growing, and we expect increased investment in particular in the U.S. power as well.

So all these markets and of note, Chemical continues to be flat, where in the past, we've depended on chemical recovery to boost our growth -- that's not the case anymore in PST. So that chemical recovery is all upside still. We expect to drive growth without depending on that, and that will be additive to it.

I think regionally, U.S. continues to be the best market overall. Europe pretty flat. I think Middle East has recovered from the first half and continues to be solid, and then we have much less exposure in the rest of the world.

We'll take our next question from Nathan Jones with Stifel.

Maybe a follow up maybe a follow-up around the chemical market there. I would imagine it's probably the tale of a couple of different regions with capacity still coming out of Europe and maybe capacity improvements in the U.S. .

Maybe you could talk about chemical in a little bit more detail from a regional perspective and your outlook for a recovery there is -- I mean, if Europe just gets to being kind of a flat chemical market or something like that and stops going down, can the U.S. add growth to that, just how you view the shape of a recovery there?

Yes, Nathan. So Yes. I think you stated in Europe, we expect to continue to be flat even going to next year. I think the 2 markets that are the most interesting for us is the U.S. and Middle East. I think the U.S., as I mentioned in the last call, is held up pretty well.

As you know, when oil prices are high, there's a feedstock advantage on natural gas. So even when there's capacity globally, it makes sense for chemical companies to invest in the U.S. So we see some sporadic project activity.

Middle East also recovering. I think a full recovery that you'll notice in the P&L will come -- it's usually driven by construction, residential construction, durable goods, which I'm not expecting, not counting on at least in the first half of '27, we'll see after that.

But again, very pleased with the transformation of the portfolio that we're much less dependent on that recovery to drive growth.

Maybe just to add, if you recall, our chemical exposure is mainly in the U.S., right? So maybe 70% of our chemical exposure is U.S.-based.

I'm going to try and pin you down a little bit more on PSI. The 5-year target was $150 million said you're going to get that quicker than that now. Do you have a new target for the 5-year number that's over that $150 million?

Yes. I mean I think -- it will grow in the 4% to 6% range and be leveraging that 35%, 40% after the 3-year mark.

We'll take our next question from Myles Walton with Wolfe Research.

I'm curious if -- if I can on something off here, as were the acquisitions of PFT about 100 basis points dilutive to the reported margins, just backing into it based on -- you talked about up 500 basis points this year for the acquisitions. And then if that's the case, the 300 basis points of core margin expansion on 6% core growth, could you just maybe help us understand how you got that kind of operating leverage in the core business.

Yes. I mean, in the quarter, look, it was -- I think you you're correct. Our performance from a margin point of view was exceptional. The leverage on the core business. And if I just -- I'll give both in the aerospace Advanced Technologies sector.

We were just above the high end of our 35% to 40%. So I think low 40s in terms of operating leverage there. And it's a combination of everything, right?

We just continue to execute really well from a price cost point of view, a productivity point of view and so forth, even in the face of any changes in mix. So like I said, the durability and resiliency of our Aerospace & Advanced Technologies part of the portfolio.

We're going to see that kind of performance irrespective of the composition of revenues. On the PFT side, we're already accretive in that zone today with the deals as we're exiting the year. Our core leverage in the quarter was just -- I think it was just north of 40%, something like that. So fairly solid.

Myles, just to add to that. We've continued to invest in PFT through the cycle. So there's no incremental cost increase that we'll see. So our leverage is pretty strong.

As we continue to mix more into these higher growth market. That's also where we are more profitable. So we see this bit of a flywheel effect where the growth is in our higher-margin businesses.

So the incremental leverage will be very solid in PST as we continue to drive growth.

Got it. And just a clarification, if I could. The margin is up 500 basis points. That's for the full year. So you're saying you're already above that level here in the third and fourth quarter. Is that right? In terms of the PSI acquisition.

Yes. In the second half of the -- yes, in the second half, just mathematically, I think we have to be there. .

Yes, great. And then -- so then this PFT performance from a margin perspective, we should think about this as being reasonably sustainable at these levels?

Yes. Yes. Again, it gets back to our core leverage rate in that 35% to 40% range through cycles. And we expect Q4 to be very, very similar. .

We'll take our next question from Dan DiCicco with BMO Capital Markets.

You mentioned PFT wins throughout the quarter. I think power, cryogenics wastewater. Could you provide some color on what you're seeing there?

Yes. If you think about those markets, Dan, cryogenic, the 2 main markets are space launch, on the rocket itself but on the launch pads and those build-outs continue.

So we're seeing good traction there. And then the second biggest market is just general aerospace in the factories with environmental testing to aerospace ramp-up continues. We see that demands and the teams are doing an exceptional job.

When you think about power again, our power business is mainly U.S.-based and the expansion on natural gas combined cycle turbines. That's where we see the momentum. And pharma -- similar in the U.S., the reshoring activity of funnels are increasing. So capacity expansion in the U.S., those type of project wins. Those are some highlights then. Always we expect to continue those markets to continue to '27.

And we'll take our next question from Ronald Epstein with Bank of America.

This is Andrew Steiner on for Ron. I just wanted to ask a quick one on the missile demand and the broader domestic munitions ramp with several primes securing ops over the past few months.

Can you talk about how the process towards getting under contract for these programs has looked from your end so far?

Yes, I'll comment, and then I'll let Rich comment just we said, we're in about 15 missile programs. I think our jump-off point this year is around $35 million, mostly or different type of product power products and microwave products. And we expect next year to grow 40%, 50%.

A lot of that demand is already in the backlog. And then the projections for -- after that, 4 to 6x growth of the 35 base. And I think is where these contracts come into play, securing a bit more growth next year, but also securing that continued expansion growth through the rest of the decade. Do you have anything?

I would just -- I would echo that, but just say that the demand signals that we're getting just continue to increase. We continue to see a lot of activity, a lot of RFQ work and so forth to the point that you made, we're seeing a lot of that. It's not slowed. It's increased.

Can you just comment on what the process with these UPS actually looks like from the view of a subcontractor?

You broke up a little bit. Can you repeat?

Yes. I was just looking to see if you guys could provide some color on what the UCA contracting process has looked like a view of a contract?

Yes, I think you asked -- I don't know if everybody heard, but we're seeing to break up how the contract processing looks for that missile demand. So we get RFP requests for tranches of multiyear opportunities for the different programs.

And we provide those updated quotes. And then we align with the customer to cure and then get a contract in a purchase order. So it's all happening at different times and different programs for different tranches for different periods of year that's on an ongoing basis. Hope that helps.

[Operator Instructions] I'd like to now announce Justin Ages with CJS Securities.

Given the ongoing repositioning that you guys have done in PFT, can you give us an update on what the relative contribution of each of the end markets is you used to say like nuclear, 5%. Anything like that so we can see what the current contributions are?

Yes. I'll give you a quick snapshot. So I think starting with chemical, right? In the past, it's been like 30%. Now we have it close to 20% in chemical, water wastewater is around 15%; general industrial, up 20%.

And then our Power business, combined with -- when I say power, it's gas and nuclear -- it's like 15% with [indiscernible] I think those are the main ones of them.

Great. And then given lingering conflict in the Middle East. Can you just remind us what your current exposure there is?

So exposure is mainly in PST and it's less than 5% overall. So what we -- we don't see really any material impact this year going forward. We saw some delays in shipments earlier in the year that's somewhat normalized. There's plenty of activity -- so not really a headwind that we expect.

I'd say maybe tangentially, it's just the freight costs being higher and things like that, that we've been able to more than offset.

Thank you. This concludes the question-and-answer portion of today's call. I would like to now turn the call back to Alex Alcala for closing remarks.

Thank you for your questions and continued interest in Crane. We have significant momentum across the company, a record backlog and substantial opportunities ahead.

Most importantly, we have a proven team, a proven system. We remain highly confident in creating future and our ability to create long-term shareholder value. Thank you, and have a great day.

Thank you. This concludes today's Crane Company Third Quarter 2026 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.

Welcome to the Crane Company's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Allison Poliniak, Vice President of Investor Relations.

Thank you, Tasha, and good day, everyone. Welcome to our second quarter 2026 earnings release conference call. I'm Allison Poliniak, Vice President of Investor Relations. On our call this morning, we have Alex Alcala, President and Chief Executive Officer; and Rich Maue, our Executive Vice President and Chief Financial Officer; along with Jason Feldman, Senior Vice President, Treasury and Tax, who's on for Q&A. We will start off our call with a few prepared remarks from Alex and Rich, after which we will respond to your questions.

And just a reminder, the comments that we make on this call will include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, those of which are available on our website at www.craneco.com in the Investor Relations section.

Now let me turn the call over to Alex.

Thank you, Allison, and good morning, everyone. We delivered record second quarter results. that reflected strong execution across the company and continued momentum across our portfolio. That excellent performance included solid 5% core sales growth, strong operating leverage and the continued benefits of our recent acquisitions. And momentum continues to build across the company. Total backlog increased 5% sequentially during the quarter, with core sequential backlog growth across both segments, providing further visibility and confidence as we move into the second half of the year. Aerospace & Advanced Technologies led the way, delivering 13% core sales growth driven by broad-based strength across both commercial aerospace and defense markets. Backlog also increased to a record of nearly $1.3 billion with core year-over-year backlog growth of 11%.

At Process Flow Technologies, we delivered a second consecutive quarter of sequential core backlog growth, providing increased visibility and supporting our confidence in a strong second half. Execution remains excellent with another quarter of adjusted operating dilution from our January acquisition. Combined with positive and improving demand trends, this momentum positions us well for the second half and also as we head into 2027. Overall, operational execution was exceptional. Total company adjusted operating margin expanded 180 basis points to a record 21.3%, driven by strong core margins in both segments impacted by favorable pricing, strong productivity and disciplined cost management. These results demonstrate our ability to convert growth into new earnings expansion, while continuing to invest in the long-term opportunities across the portfolio.

The performance of our acquisitions has been outstanding. Integration activities continue to progress ahead of plan. Operational performance has exceeded our expectations, and we are realizing synergies faster than anticipated, while also identifying new opportunities for growth and margin improvement. With 6 months now behind us, I'm incredibly pleased with all aspects of the four acquired businesses. All our associates at Panametrics, Druck, Reuter-Stokes and optek together with our dedicated integration teams are leveraging these businesses incredible technology, combined with the process and disciplined cadence of Crane business system to achieve results well ahead of plan to date. And my thanks to the team for driving it every day.

It's clear that our vision for these businesses are becoming some of our best and most profitable businesses in Crane is materializing well ahead of schedule. As a result, we now expect our recent acquisitions to contribute approximately $0.20 per share to full year earnings, up from our prior expectation of approximately $0.15 per share. Another clear example of our ability to leverage the Crane business system in our incredible culture and talent to drive tremendous shareholder value through accelerated inorganic growth. This is incredibly exciting for Crane. Given our strong first half performance, record backlog levels and continued confidence in both our core and acquired businesses, we are raising our full year adjusted EPS outlook by $0.20 at this point, to a range of $6.85 to $7.05 per share. Highly modular and adaptable standard system [Audio gap] in and low-risk development. Clear examples of our capabilities and our ability to win share on new and growing applications.

Our Defense Power business, which many of you visited during our investor meeting in Fort Walton Beach last year continues to build momentum. We are seeing accelerating demand in our power solutions for our AESA radar platforms, while also expanding our position in emerging vehicle electrification programs. In addition to the XM30-demonstrator win, that we previously discussed, we secured additional power content on another hybrid electric combat ground vehicle program during the quarter. Overall, we continue to see strength across the aerospace and defense demand environment. The backlog we've built, along with the new programs and opportunities, our Aerospace and Advanced Technologies teams have secured continue to provide us with great visibility well beyond 2026.

Looking to the balance of the year, we now expect full year core sales growth for the segment to land just above the high end of our long-term 7% to 9% range. Very confident for yet another outstanding year at Aerospace and Advanced Technologies. Process Flow Technologies delivered another strong quarter, and we remain confident in our ability to consistently outperform the markets we serve over the long term. Over the past several years, as you know, we have strategically shifted the portfolio towards attractive end markets and align well with our differentiated technologies, strong customer relationships, and leading competitive positions, providing a solid foundation for sustained growth and market share gains. Overall demand for the quarter was in line with our expectations and execution strong driven an 80 basis points improvement in adjusted margins, again, even with the dilutive impact of the acquisitions.

Momentum in cryogenics remained strong, driven by capacity needs within the space long segment. We secured projects for both ASX and Blue Origin in the quarter. We continue to win in this market based on our differentiated engineering support and manufacturing services.

In nuclear, we continue to support restarts of existing facilities such as Constellation Energy's, Crane Clean Energy Center, and we remain well positioned for future growth given our positioning for Westinghouse AP1000 builds in our core business and for waste given their strong positioning in the nuclear space. For the full year, we expect core growth to be consistent with our initial guidance of flat to up to low single digits, leveraging within our targeted range of 30% to 35% and and driving margin expansion despite market headwinds.

In summary, we delivered a very strong first half and continue to build momentum across the portfolio. Our businesses are performing well. our end markets remain attractive, and we are exceptionally well positioned to continue generating strong results and drive further long-term shareholder value. That strong position also provides us with significant strategic flexibility. As we look ahead, acquisitions remain an important lever to further enhance our growth and earnings profile. We remain active in evaluating opportunities and are encouraged by both the quality and breadth of activity across our pipeline. While timing and competitive dynamics are always difficult to predict, we believe we are well positioned to deploy capital in a disciplined and value-creative manner. Our focus on M&A remains consistent, adding highly engineered mission-critical technologies that strengthen our existing franchises, increase our exposure to attractive end markets and support long-term margin expansion. We continue to see strong opportunities across both Aerospace and Advanced Technologies and process flow technologies.

Now let me turn the call over to our CFO, Mr. Rich Maue, for more specifics on the quarter.

Thank you, Alex. Another outstanding quarter for Crane. Let me start off with total company results. Total sales were up 26% in the quarter compared to last year with 5% core growth, driven primarily by the ongoing strength within the Aerospace and Advanced Technologies segment. Sales from our four acquisitions contributed 20% of the growth in the quarter, which was above expectations. Adjusted operating profit increased 37%, reflecting the impact of the higher core sales contribution from the acquisitions productivity and favorable pricing net of inflation, another outstanding result. And total core FX-neutral backlog was up 7% compared to the second quarter of last year and up 5% sequentially. And primarily reflecting continued strength at Aerospace and Advanced Technologies, though backlog was up sequentially again at process flow technologies. And core orders increased 2% year-over-year with Aerospace and Advanced Technologies up 5% and process flow technologies approximately flat. Orders and backlog across the acquisitions were also solid and continuing to support a stronger full year outlook. We repaid $100 million of debt in the quarter and another $90 million subsequent to the quarter, resulting in pro forma net leverage today at about 1.2x, a very strong balance sheet that positions us well for further M&A.

Before discussing segment performance, I want to highlight that our adjusted results both adjusted EPS and adjusted margins exclude a benefit from EPA tariff recoveries recorded during the quarter, we believe it is important to isolate these onetime recoveries from the true underlying operating trends in the business, and we do not expect any material incremental amounts for the balance of the year. A few more details on the segments in the quarter. Starting with Aerospace & Advanced Technologies, sales of $339 million increased 31% in the quarter with core sales up 13.3%. Our record backlog of nearly $1.3 billion increased 11% on a core basis and increased 20%, including Druck. On a sequential basis, core backlog increased 7%. Once again, as reinforced at the air show last week, demand remains very strong across our highly diverse portfolio. In addition to the wins that Alex just talked about, we continue to respond to increasing RFPs and RFQs across several defense programs supporting missile defense and for military orders -- foreign military orders for the F-16 brake control upgrade program continue to grow. Again, continued momentum giving us high confidence in our multiyear outlook.

Let me spend a minute on the core business in the quarter. On the OE side, sales remained strong with both commercial and military up double digits driven by our commercial customers as well as ongoing strength within the defense market. Total aftermarket was up 8% in the quarter, with growth similar across both commercial and military customers. Taken all together, we remain very confident in our full year segment outlook and expect full year core sales growth slightly ahead of our 7% to 9% algorithm. Adjusted segment margin was excellent and above expectations at 25.8% compared to 26.6% last year down slightly reflecting the expected dilutive impact from the Druck acquisition. This was an outstanding result given Druk's outperformance in the quarter as well as continued strong performance in our core A&E business.

Moving to Process Flow Technologies. In Q2, we delivered sales of $386 million, up 21% compared to a year ago with core sales down 1.4% with the acquisitions of Panametrics, Reuter-Stokes and optek adding nearly 22 points of growth and foreign exchange contributed 0.8 percentage points of growth in the quarter. Compared to the prior year, core FX central backlog at PFT decreased 2%, but on a sequential basis, improved 2% and core FX-neutral orders were approximately flat, consistent with our expectations. Adjusted operating margin of 22.2% was approximately 80 basis points above last year, and this was inclusive of the dilutive impact from the Reis acquisition. And like Aerospace and Advanced Technologies results were above our expectations given better performance across both our core businesses and each acquired business. Productivity continues to read through as well as price net cost. In summary, an excellent quarter.

Moving to the nonoperational items below the segments. Corporate expense for the quarter was $19 million as expected. And for 2026, we continue to forecast corporate expense to be in the range of $80 million to $85 million. Net nonoperating expense for the quarter was $17 million, and we continue to estimate full year net nonoperating expense of approximately $58 million. And lastly, we continue to estimate our tax rate for 2026 to approximately 23%. Taking all of this into account, our performance to date as well as risks and opportunities we see ahead. And as Alex mentioned, we are raising our adjusted full year guidance by $0.20 to a range of $6.85 to $7.05.

Looking at the cadence of the second half, we expect Q3 to be similar to Q2 with Q4 modestly lower, reflecting normal historical seasonality. Overall, an outstanding first half and momentum continues to build. And with that strong performance, for anyone considering investing in Crane or those looking to potentially invest more in Crane. I am reminding you of the wisdom imparted by the award-winning actor, Matthew Broderick, playing the fan favorite Ferris Bueller in the movie Ferris Bueller's Day Off. Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.

And with that, operator, we are now ready to take our first question.

[Operator Instructions] Our first question is coming from Amit Mehrotra.

Maybe I just wanted to start on process flow, any notable observations in growth trends as you sort of progress through the quarter? I understand organic growth was negative. Obviously, organic orders were a little bit negative. But maybe any thoughts on any evolution on that on that rate as you progress through the quarter? And just any expectations around organic growth or core growth for the back half of the year as well.

Yes. Sure, Amit. So we're feeling very positive about PFT in the second half. When we went into the year, we expected the first half to be the softest, and we are pleased to see two quarters of sequential backlog improvement and sales improvement. As we progress through the quarter, we saw orders strengthening. And I'll speak more about it. So the demand trends are very positive in position as well for a second half. It could have very well been a positive outcome based on the trends that we've seen from a year-over-year basis. We saw quote activity starting to increase and many areas of strength, including in the chemical production, which is a bit of a new green spot where we're starting to see customers talk about and report volume growth, in particular, in the Americas. So all signs are quite positive in the second half. I expect PFT to turn positive growth year-over-year in the second half. Very confident about that with those trends. In addition, I think in addition to chemical and the Americas starting to show some further signs, we continue to see industrial demand be very strong, building backlog in our businesses that driven industrial power, power gen, in the United States, at gas combined cycle plants, we continue to build back work in that area, water wastewater, cryogenics. So all those trends make me very positive about PFT in the second half.

Great. Got it. That's helpful. And just as a quick follow-up, I noticed kind of your more stronger comments on the M&A pipeline. It does seem across diversified industrial that there has been a recent uptick in activity. Maybe just give a little bit more color there on kind of there have been shifts in in sort of getting closer to the finish line on stuff? And are you still seeing opportunities sort of like PSI that -- I know PSI was really kind of three deals in one, so to speak. But would be curious to see if you're seeing deals where you can both kind of see accretion on the technology stack as well as sort of meaningful opportunity for margin expansion. So if you can just talk about that it would be appreciated.

Yes. I mean I think as a general guideline, our focus on any deal that we make and what investors would expect is that any deal that we make is because we think it's accretive to the growth profile will become accretive to the margin, will strengthen our portfolio from a technology standpoint, and also will meet the financial hurdles. So that is the base expectation of any deal you'll see us. We are seeing our funnels get stronger with deals with those characteristics in both and PFT. In fact, they've never been stronger. So activity is solid. Like I mentioned in my comments, the timing is a bit unpredictable. But we have the debt capacity, we have the management capacity, and I think we're well aligned to execute on capital deployment and continuing that with that momentum. Nothing imminent to talk about right now, but I feel optimistic about it.

We'll take our next question from Matt Summerville with D.A. Davidson.

Two questions, both on AAT. Can you help me, or how I think about how best to frame the opportunity you could see ahead with all of this [indiscernible] and incremental militarization around [ FAD, ] Patriot, Tomahawk, et cetera, et cetera, kind of discuss your exposures and how you think about that opportunity as part of your go-forward kind of organic potential? And then I have a follow-up.

Yes. Thanks, Matt. So on missile demand, we see about $35 million of content today. We're on over 10 programs, including those that you mentioned. We're seeing strong demand today increasing, but we're also seeing from our customers, our key activity and forecast that would expand 4x that rate, going to the end of the decade. So we are in a pretty good position. A lot of our electronic power, mod power, microwave content, and we don't have any capacity constraints to supply that demand. So pretty good upside for us in that area.

Yes. Just to add to that a little bit, because of the capacity that Alex mentioned, we're actually getting incremental quotes for potential content wins from others. So not just growth on existing platforms. So another opportunity, I would say, beyond market for us.

Understood. And maybe if you guys could speak to how you're presently thinking about the durability of the commercial aftermarket cycle and overall demand there in seems like maybe you were expecting a little bit of maybe geopolitical induced demand destruction, but that doesn't seem to be coming to fruition. So how would you kind of recalibrate how you're viewing that business today?

Yes, Matt, I would say, just overall, demand is solid, remains solid, right? If you step back, and you look at our aftermarket positioning, think of us as $55 million to $60 million in revenue a quarter in commercial.

[Audio gap]

A number of new NPDs that are self-funded that will be launched in the years ahead, starting next year, but we think we'll accelerate I think we've identified various regional commercial opportunities where we have opportunity to drive share in the different businesses. And then on the Druck, the aerospace side, there's a lot of synergies between our A and E business and Druck on growth of new programs. We're starting to see opportunities to gain share there as well. So all these things will become upside to our original thinking.

Great, great. And then just one more. So you highlighted just share gains and some recent wins in AAT. So maybe just if you could touch on what do you think is enabling that for the business? Or what are you doing on the commercial front that's allowing that to happen?

Yes. I think something that we've done well over the last decade and the Max was very adamant about was to continue to invest through the cycles. So we continue to invest in engineering through [indiscernible] it through the ups and downs through the slow demand, and we have this advantage on speed, scalable modular that allows us to move fast on these demonstrators accurately at a reasonable cost, and we're on every demonstrator for the U.S. Air Force. We're on the new CCA opportunities. We're gaining share on the private jets and vehicle electrification, radar, and I think that's been the major key. It's just a continued investment through the cycles that have put us in this good position to win.

We'll take our next question from Myles Walton with Wolfe Research.

Rich, can you size the dilution in the two segments from deals since January?

From a margin perspective, overall, you're referring to or...

Yes. Yes.

Yes. So if you -- I'll speak to the quarter just to give you a sense, right? So we would be probably close to 100 basis points where we were in Q2, close to 100 basis points better in aerospace and advanced technologies. And if you looked at PFT, we'd be closer to -- I think we disclosed on the call, 80 basis points with the dilutive impact, it would be closer to 160, excluding. So the degree of performance on the underlying business is exceptional is what I would say. But I would also say that we expected further dilution coming from the deals they are performing better. So each of the acquisitions are performing better and our core underlying business is performing better. In the first quarter, I think the numbers are similar. I don't have them in front of me, but I would say that they're similar in the first quarter.

Okay, and then within PFT...

A little bit behind what we did in Q2, just given momentum with the deals.

And then within PFT, the implied expansion from a bucket of price cost, and mix, where should we think the most amount of that came from?

In terms of our our core margin?

Core margin expansion year-on-year.

Yes. I mean just continued strong productivity cost price cost, just solid. I would say that, that -- and as Alex pointed out, as we were moving through the quarter, from an orders perspective, getting stronger, and we also did a little bit better as we were moving through the quarter from a top line point of view, so a little bit of leverage on volume, too. And very pleased with that performance just to add with the we were smart in understanding the inflation headwinds that would come from the current conflict in the Middle East and the teams were able to quickly get ahead of that. So I'm very pleased that we're able to drive margin expansion even with increased aviation that we're seeing in freight and other areas. So I think very strong execution for teams.

Okay. And one last one, if I could. The extra nickel from the deals? Was it mostly out of drug in aero or mostly PFT?

Yes, all three businesses. Yes. All three businesses are performing.

We'll take our next question from Justin Ages with CJS Securities.

You gave a bit more color on nuclear, and I was just wondering if you've seen any activity related to kind of expanding the capabilities because one of the things you had mentioned in the past was now that they've been unshackled from their previous owner, you were looking into alternate revenue streams there.

Yes. So for [ Vertusoaks, ] I mean, we're seeing strong demand today from the restarts, license expansions and so forth. We are investing for the future in technologies that will get us more into pressurized water reactors. We have -- as you may recall, we have a very strong position in boiling water reactors, and there's opportunity to go beyond that. So there's new product development and strategies to expand. That will play out in the years ahead. Reuter-Stokes was already investing pre-acquisition in SMRs, so they have a very strong position with one of the key leaders. So there's a lot of stuff going on that will play out here in the future for them, but also seeing the strength of the demand today.

Justin, just to add, and I think a part of your question is getting at the tieback to the Baker Hughes business and GE and the legacy. So I would say, yes, as well as looking beyond those relationships that were historically solidified. We're looking at other opportunities beyond that, right? So strategically, expanding our footprint of opportunities to others, that is absolutely something that we're focused on. Aero derivatives is an end market, right, that I think we've been asked about or you might have been yourself or others. That's a perfect example, where there's opportunities beyond the legacy relationship in what we see is a pretty nice growth market.

That's very helpful. And then can you just refresh us on capital allocation priorities? You paid down debt, you paid down debt after the quarter ended. What's your target leverage range now?

Yes. I mean, we would target between 2 and 3x. Clearly, we're below that now. Our priority is M&A, number one, first and foremost. So I would think about us as deploying our capital to M&A. Certainly, we'll pay down debt as well as part of expanding our capacity, but sort of fungible when you think of it from that perspective. And we'll buy back shares when we think it's the right time to buy back shares. But now it's all about M&A.

[Operator Instructions] We'll take our next question from Jeff Sprague with Vertical Research.

A lot of good ground covered here. I just wonder if -- just coming back to PFT, Alex or Rich. Just thinking about maybe chemical finally beginning to turn after kind of a tough slog here. Just some color on kind of the margin ramifications of that, whether it's just kind of apparent mix in the business or the operating leverage that might come with that.

Yes, Jeff. So again, on Chemical, I've been quite cautious to talk about improvement. But now we're starting to see something, like I mentioned, in particular, in the Americas. You can see some of the chemical companies reporting on increased volume, which is what we're waiting to see to start to feel better. Our orders are starting to show as well. The margins are above average for PFT. So it will be accretive, and you'll see improved leverage on PXD versus what we normally talk about the 30%, 35%. It will be stronger as these markets recover. That's what I would say.

Great. And then maybe just on guidance and Rich, I was on maybe 10 minutes late. So perhaps you've covered this. I did hear your comments about aero aftermarket growing mid-single digits kind of going forward. But did you formally change that in your guide? You kind of proactively or preemptive the aircraft the guy last quarter on geopolitical risk. Is that now kind of reverse back to formally being your guide that we're looking for a single digit?

Yes. So Jeff, I would say that our run rate or approximate range of commercial aftermarket is in the $55 million to $60 million range is the way to think about it as we move through the balance of the year and as we enter next year, we feel to the point I made earlier, pretty good about a mid-single-digit to upper mid-single-digit growth profile for commercial aftermarket.

Great. And then just on the kind of the OE build. I mean, it looks like you're managing any sort of margin friction there quite well across the business. But does that perhaps change as volumes move up even versus looking forward?

Yes. So look, maybe what's different about Crane, I think appreciate this, Jeff. We make good margins on OE, whether that's military OE, commercial OE, and that arbitrage between aftermarket and commercial isn't as significant for us as for others, which is, I think, a really good benefit for our investors, frankly, right? The diversified nature of the portfolio, we're sort of agnostic as to whether or not OE is up or aftermarket is up and so forth. So when you look at our 7% to 9% guide and our 35% to 40% leverage, we're going to be in that or better, frankly, but in that range, no matter what. And so I think that's the way we think about it. So to your point, we're seeing excellent OE growth here, and we're loving that...

And you see the margin reading through.

And you see the margin -- yes. I think we might have had a record performance in the segment this quarter.

We'll take our next question follow-up from Scott Deuschle with Deutsche Bank.

Sorry for the ignorant question, but is the recovery in the U.S. chemical market connected at all the closure of the straight of moves, or is it reflecting a fundamental improvement in the market?

I would say it's demand base. So when we talk about our impact or investments in the Gulf, customers can invest even when there's no demand for increased chemical in the Gulf because of the advantage of feedstock. So that's one driver. But in this case, there's a volume demand increase at the USC I think the U.S. consumer, in particular, has been resilient. And you can see some of these chemical companies starting to see that benefit. So I think I'll call it independent of that, Scott.

And this concludes the Q&A portion of today's call. I would now like to turn the floor over to Alex Alcala for closing remarks.

Thank you for joining us today and for your thought for questions. As you've heard throughout the call, Crane delivered an outstanding second quarter marked by strong core growth, broad-based operational execution, record margins and another quarter of record earnings. These results similar to the strength of our portfolio, the resilience of our business model and the disciplined execution of our global teams. We remain focused on what has consistently differentiated crane, innovation, customer focus and the relentless application of the Crane business system to drive productivity and value creation.

I'd like to thank our employees around the world for their commitment and outstanding execution, and thank our shareholders for their continued confidence and support. We are so excited about the opportunity ahead and remain well positioned to deliver long-term value for our stakeholders. We appreciate your interest in Crane and look forward to updating you on our continued progress next quarter. Thank you, and have a great day.

Thank you. This concludes today's Crane Company's second quarter 2026 earnings conference call. Please disconnect your lines at this time, and have a wonderful day.

Welcome to the Crane Company First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would like to now turn the call over to Allison Poliniak, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good day, everyone. Welcome to our first quarter 2026 Earnings Release Conference Call. I'm Allison Poliniak, Vice President of Investor Relations.

On our call this morning, we have Alex Alcala, President and Chief Executive Officer; and Rich Maue, our Executive Vice President and Chief Financial Officer; along with Jason Feldman, Senior Vice President, Investor Relations, Treasury and Tax, who's on for Q&A.

We will start off our call with a few prepared remarks from Alex and Rich, after which we'll respond to questions. And just a reminder, the comments we make on this call will include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements.

Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation. both of which are available on our website at www.craneco.com in the Investor Relations section.

Now let me turn the call over to Alex.

Thank you, Allison, and good morning, everyone. We appreciate you joining us today. As I step into the role of CEO, I'm energized by the opportunity to lead Crane at a time when strong leadership, disciplined execution and agility truly matter. Much like this time a year ago, we are operating in an environment that continues to evolve rapidly. Fortunately, our business system, the CBS machine, together with our global team's relentless focus, resilience and commitment to execution with a disciplined cadence continues to differentiate Crane.

We view periods of uncertainty and market dislocation not as obstacles but as opportunities to elevate our performance. Time and again, Crane has emerged from challenging environment stronger than before and increasingly advantaged relative to our competitors. And we're off to a strong start in 2026, with first quarter results reflecting excellent execution across the company, exceeding our expectations and underscoring the strength of our teams and our commitment to delivering shareholder value.

Adjusted EPS of $1.65 was up 15% over the prior year, driven by 4% core sales growth reflecting broad-based strength at Aerospace & Advanced Technologies and continued strong execution at Process Flow Technologies, including solid core order and backlog momentum.

Also of note with the strong performance of our recent acquisitions that drove substantial amount of upside in the quarter relative to our expectations. Druck, Panametrics, Reuter-Stokes and Optek all performed exceptionally well. With integration and deployment of CBS progressing ahead of plan and early benefits emerging faster than anticipated and ahead of what was reflected in our January guidance.

We entered the year with positive momentum of both AAT and PFT. As the first quarter progressed, our execution further strengthened our confidence in the underlying earnings trajectory for the year. At the same time, however, the external environment became more challenging. Geopolitical dynamics are evolving and macroeconomic uncertainty is still very much part of that backdrop. Taking all of this into account, our performance to date and the range of scenarios, risks and opportunities we see ahead, we are raising our adjusted full year outlook by $0.10 to a range of $6.65 to $6.85.

Our guidance reflects what we have clear line of sight to and high level of confidence in delivery, even against a more uncertain macro backdrop, and it assumes continued elevated energy prices and inflation through the balance of the year, and already factors in potential decline in commercial aftermarket. In addition, as you would expect, our teams have actions to get ahead of the increased inflation as we move through the year. We remain focused on execution, continuing to build on our momentum and finding potential opportunities to over deliver.

Across the organization, we continue to stay agile in a dynamic environment. Our deep management teams have been here before, and we will manage with the cadence and disciplined execution that you have all come to expect from Crane.

Now some thoughts on the performance of the recent acquisitions and the segments in the quarter and as we look to the balance of 2026. As I mentioned, the acquisitions performed exceptionally well. I'm extremely pleased with the execution and pace of improvements. Over the years, we have built tremendous organizational capability that has enabled us to integrate 4 businesses simultaneously at speed and with 0 disruption to the core businesses. This performance reinforces the strength of CBS and the opportunity to create meaningful shareholder value through continued disciplined inorganic growth, combined with the power of the CBS machine.

The teams are energized, having fun and are driving results better than our expectations at the start of the year.

Strong operational execution, restructuring cost actions and early commercial excellence momentum drove a majority of the upside relative to our January guidance, reinforcing our confidence in both the quality of the businesses and our integration playbook.

Margins across the acquired businesses were substantially improved from last year and ahead of our plan, and we see opportunity for continued progression in the quarters ahead. More specifically, we now expect the margin and earnings contribution from the acquisitions to be more evenly weighted throughout the year compared to our prior expectation of back-half weighted performance.

Based on what we're seeing today, we now expect accretion for the full year to be at least double what we communicated in January or about $0.15 of EPS. And my confidence in exceeding our target ROIC by year 5 has only increased over the last few months. I'm so proud of all our new associates that have joined Crane this year and I'm excited to see where we will continue to take these outstanding brands in the future. We are already moving beyond just the tactical integration actions and are well on our way with strategy deployment, painting a very exciting future for everyone, including our shareholders.

Turning to Aerospace & Advanced Technologies. We continue to see strength across the aerospace and defense demand environment. The backlog we've built, along with the new programs and opportunities, our Aerospace & Advanced Technologies teams have secured, continue to provide us with great visibility well beyond 2026.

Looking to the balance of the year, we continue to expect full year core sales growth for the segment to land at the high end of our long-term 7% to 9% range.

On the commercial side, OE activity remains healthy with Boeing continuing with strong production rates. Commercial aftermarket revenue was down as expected in the quarter due to unfavorable year-over-year comparisons, while commercial aftermarket orders were up 11% in the quarter. While we haven't seen an impact to orders at this time, given the geopolitical situation, elevated oil prices and long-haul travel disruption through the Middle East, we could see an impact to commercial aftermarket as the year progresses. However, even factoring in a decline in commercial aftermarket, we remain confident in our 7% to 9% sales growth range, leveraging at 35% to 40%. Rich will provide more details on how we're thinking about this.

On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remains solid, and there's a continued focus on strengthening the product defense industrial base given the heightened global uncertainty we continue to see. We are seeing significant demand signals across both missile defense and radar applications among other areas in our portfolio, further strengthening the long-term outlook with the potential for some benefit this year depending on order timing and lead times.

In the quarter, we received strong orders for the PAC-3 program and remain under negotiations for similar wins. Additionally, we received incremental orders for LTAMS and are currently under negotiations for additional contracts with other providers. We fully anticipate additional orders in these 2 defense growth areas as we move through the year. And beyond this, we continue to develop new technologies, win new business and pursue additional opportunities across the segment that gives us confidence we'll deliver above-market growth for the rest of the decade.

Particularly on the defense side, we expect replenishment of military aircraft spares and missiles, along with continued demand for ground-based radar systems, all extending the period of strong demand for years. Very confident for yet another outstanding year at Aerospace & Advanced Technologies.

At Process Flow Technologies, another solid quarter, and we remain well positioned to consistently outgrow our markets across the cycles. We have deliberately repositioned the portfolio around core end markets: pharmaceuticals, wastewater, cryogenics, Chemicals, and nuclear power where we hold strong competitive positions and differentiated capabilities that support sustainable market outperformance.

Overall demand for the quarter came in slightly ahead of our expectations and execution was strong, driving a 50 basis point improvement in adjusted margins even with the dilutive impact of acquisitions.

On the order side, power generation remained a key area of strength. We also saw solid project activity in pharma tied to U.S. capacity expansion. Continued momentum in cryogenics driven by capacity needs within the space launch segment and strong orders in LNG.

In nuclear, as part of the Holtec Palisades restart, we're able to add value by extending contract terms. With respect to the ongoing conflict, note that only about 5% of PFT segment sales are directly exposed to the Middle East.

While we're continuing to ship today and overall demand in the region in the quarter was on track, we do see projects moving to the right and potentially impacting the balance of 2026, along with some shipment lane disruptions. Notably, we're not seeing cancellations.

Longer term, we do see incremental opportunities for rebuilding as the geopolitical environment stabilizes. And even with this uncertain backdrop, we continue to invest for long-term growth through disciplined execution of our multiyear technology and new product development road maps along with ongoing commercial excellence initiatives, all supported by strong and consistent operational execution.

Tactically, we have proven our ability to respond quickly to changes in demand. We will remain nimble during this period, taking appropriate pricing and cost actions as needed. For the full year, we still expect core growth to be consistent with our initial guidance of flat to low single digits, leveraging within our target range of 30% to 35%.

In summary, a really solid start. Our strategy is unchanged and we remain focused on managing through any near-term demand variability without losing sight of our long-term objectives. Taken together, our businesses remain exceptionally well positioned to continue delivering strong results.

We also continue to see significant opportunity to further enhance performance through acquisitions. Our balance sheet remains exceptionally strong, with substantial available M&A capacity and we continue to pursue a robust pipeline of potential opportunities. M&A activity has not slowed, and we are actively engaged on a number of opportunities across both Aerospace & Advanced Technologies and Process Flow technologies. While there is nothing imminent at this point, our pipeline remains healthy, and we remain disciplined and selective as we evaluate potential transactions.

Before turning the call over to Rich, I want to emphasize that while external conditions remain dynamic, our focus has not changed. We remain disciplined in the areas we control. Execution, customer focus, cost improvements, development of our people and continued investment in our growth initiatives and technology road maps. We believe this approach positions Cranes to outperform our end markets and create long-term shareholder value.

Regardless of near-term volatility, over the long term, our approach remains consistent. We will deliver a 4% to 6% long-term core sales growth through the cycles from resilient and durable businesses with solid aftermarket. Substantial operating leverage on top of already solid margins today that should lead to double-digit average annual core profit growth with significant upside from capital deployment.

Now let me turn the call over to our CFO, Mr. Rich Maue for more specifics on the quarter.

Thank you, Alex, and good morning, everyone. Wow, what a start to the year. Let me start off with total company results. Total sales were up 25% in the quarter compared to last year, with 4% core growth driven primarily by the ongoing strength within the Aerospace & Advanced Technologies segment. Sales from acquisitions contributed 18% in the quarter, which was modestly above expectations, reflecting strong execution as these 4 new businesses become a part of the Crane machine.

Adjusted operating profit increased 29%, reflecting the impact of the higher core sales, contribution from the acquisitions and productivity and favorable price net of inflation, a truly outstanding result. And total core FX-neutral backlog was up 9% compared to the first quarter last year, reflecting continued strength at Aerospace & Advanced Technologies, and core backlog was up 3% sequentially driven primarily by Process Flow Technologies.

Core orders were down 5% year-over-year, but were modestly better than we expected. The decline was entirely driven by an unfavorable comparison within Aerospace & Advanced Technologies where a 15% decline reflected the record first quarter orders last year in this business, which included several multiyear orders that we highlighted to you last April. Core orders in PFT increased 5% compared to last year, and core backlog in PFT was up 7% compared to December. Backlog and orders across the acquisitions were also solid, coming in modestly above our expectations and continuing to support a strong full year outlook.

From a balance sheet perspective, we ended the quarter with pro forma net leverage at 1.4x, leaving us well positioned for further M&A, as Alex noted. A few more details on the segments in the quarter. Starting with Aerospace & Advanced Technologies. Sales of $318 million increased 28% in the quarter with core sales up 9.4%. Our backlog of nearly $1.2 billion increased 14% on a core basis and increased 24%, including Druck.

On a sequential basis, core backlog increased 2% with total backlog up 11%. Again, no surprises and at record levels. Demand remains strong. We are seeing increasing RFP and RFQ activities across several defense programs supporting missile defense and ground-based radars, some of which reflect recent wins at some of our defense customers giving us further confidence in our multiyear outlook.

Let me spend a minute on the core business in the quarter. On the OEM side, sales were strong, up 16% with commercial OEM up 20% and military up 10%. Total aftermarket was down 2% in the quarter with military aftermarket posting a very strong increase, up 28% in the quarter, reflecting the breadth and strength of our portfolio. That military strength was offset by commercial aftermarket, which was down 13% as expected. Specific to commercial aftermarket shipments were largely in line with what we expected for Q1, but with an unfavorable comparison against higher initial provisioning in the prior year first quarter. Even with that decline, we came in above our growth expectations for the quarter.

Of note, commercial aftermarket orders in the quarter were up 11% year-over-year and 10% sequentially. While we haven't seen any impacts to order so far resulting from the ongoing conflict, elevated oil prices and disruptions to long-haul travel through the Middle East could create pressure on commercial aftermarket as the year progresses. We are factoring into our guidance that commercial aftermarket could decline on a full year basis. Taken all together, though, we remain very confident in our full year segment sales outlook. We continue to expect total core sales growth at the high end of our 7% to 9% algorithm. While the mix across subsegments may shift as the year plays out, our overall guidance is unchanged and that really speaks to the diversity and durability of our Aerospace & advanced Technologies portfolio.

Adjusted segment margin of 24.6% compared to 26.2% last year, primarily reflecting the impact of the Druck acquisition. This was an outstanding result and nearly 200 basis points better than we expected given Druck outperformance in the quarter as well as continued strong performance in our core A&E business.

At Process Flow Technologies, in Q1, we delivered sales of $378 million, up 23% compared to a year ago with core sales down 0.6%, slightly better than we anticipated with the acquisitions of Panametrics, Reuter-Stokes and optek-Danulat adding 19 points of growth and FX contributed 4 points of growth in the quarter. Compared to the prior year, FX-neutral backlog at PFT decreased 2.5%, but on a sequential basis, improved a solid 7%. In addition, core FX-neutral orders were up 5% and also modestly above our expectations.

Adjusted operating margin of 22.1% was approximately 50 basis points above the prior year, and this was inclusive of the dilutive impact from the recent acquisitions, and like Aerospace & Advanced Technologies, results were above our expectations given better performance across our core businesses and each acquired business. Productivity is reading through as well as price net cost.

In the quarter, the impact from the conflict in the Middle East was nominal, as Alex mentioned, we have just under 5% of total exposure in region on a full year basis. We expect projects to move to the right, and we do expect notable freight and other inflationary headwinds as we move through the balance of 2026. Our teams are already executing to ensure no net inflation risk to the P&L, inclusive of margin impacts. In summary, we continue to expect core operating leverage for the segment between 30% to 35% for the full year.

Moving to the nonoperational items below the segments. Corporate expense for the quarter was $24 million, slightly lower than our expectations. Recall, we anticipated corporate expense to be highest in Q1 due to accounting rules that require accelerated amortization of stock-based compensation expense for associates that are retirement eligible. For 2026, we continue to forecast corporate expense to be in the range of $80 million to $85 million.

Given the funding for the acquisitions of Panametrics, Druck, Reuter-Stokes and optek-Danulat, net nonoperating expense in the quarter was $15 million, and we continue to estimate full year 2026 net nonoperating expense of approximately $58 million. And lastly, we continue to expect our tax rate for 2026 to approximate 23%. Taking all of this into account, our performance to date as well as the risks and opportunities we see ahead. As Alex mentioned, we are raising our adjusted full year guidance by $0.10 to a range of $6.65 to $6.85 again, reflecting what we have clear line of sight to and a high level of confidence in delivering.

Looking at the cadence of quarterly results for the year. We expect Q2 to be similar to Q1 and our full year earnings split to now be more balanced at around 49% to 51% between the first and second half given the strong Q1 performance. The second half earnings performance is expected to be more evenly balanced relative to our historical quarterly cadence of a sequential decline from Q3 to Q4, given the expected performance of our recent acquisitions. We began the year with performance that exceeded our expectations, underscoring the strength of our teams, our strategic direction and our execution. We remain committed to building on that momentum and consistently delivering results. You know, Alex, all the uncertainty that everyone is talking about this earnings season reminded me of a notable quote from the Academy Award-winning actor, Ryan Reynolds from a timeless movie classic, National Lampoon's Van Wilder, "worrying is like a rocking chair, it gives you something to do, but it doesn't get you anywhere." At Crane, leveraging our CBS machine, we are very intentional and focused on what's in our control, no matter what the environment, and we always view periods of uncertainty as periods of opportunity.

And with that, operator, we are now ready to take our first question.

[Operator Instructions] We'll take our first question from Amit Mehrotra.

I wish I had a good movie quote, but I'll have to come up with one next quarter. Maybe starting with the progress you're making on PSI, which is obviously very, very strong and clear. Maybe just unpack where the upside is coming from across Druck, Panametrics, Reuter-Stokes. And obviously, you've had this target of getting from $60 million to $150 million over 5 years to hit that ROI target. It seems like you're achieving that greater or even faster. Maybe you can just update us on timing with respect to that progression?

Yes. Thank you for the question. So related to PSI, the quarter upside, I mentioned 3 areas. First, the execution of the 3 businesses was stronger than expected. Just from a volume standpoint, demand and stronger execution has been very solid. So that created some upside. The cost actions. You may recall that we're taking 2 types of cost actions in the short term. One is eliminated the overall PSI layer, management layer. We're really operating as these 3 businesses. So that was executed very well. And then within the businesses, we're executing product line simplification, there's realignment of the resources and restructuring. So we moved -- teams moved quite quickly in the quarter, and we started to see some of that upside.

And then the third element is the beginnings of value pricing and commercial excellence that are starting to read through as we move also at great speed, and expect that to improve during the year. Related to timing overall. So this year, we came in thinking on the top line, the PSI set of businesses would be in the range of 4% to 6% on the growth. We're now thinking closer to the higher side of that range. And we were thinking, we would improve 200 basis points of margin, and now we're thinking at least 300 basis points of margin. So ahead of schedule of our plan, which puts us overall in that 5-year time line really gaining ground. So very confident and over delivering to those benchmarks.

Great. And just maybe as a follow-up, can we talk about PFT core order improvement? Obviously, very, very strong sequentially. Is it enough to sort of call an inflection in the process flow cycle? Where you're seeing the strongest momentum across, obviously, you're in various regions and various end markets. Maybe you could just double click on that in terms of where you're seeing that momentum.

Yes. So on the question of orders for PFT, the strength has come in some markets that we've been highlighting in the past has continued. I think that will continue through the year. So power generation in Americas, pharmaceuticals, cryogenics, wastewater, in particular, gave us the upside. So that's been pretty consistent. Interestingly, we don't see those segments impacted by the higher energy prices. So we think demand will remain solid through the year.

Chemical has continued to be sluggish at a trough holding, but I wouldn't call it an inflection point yet until we see that piece of the business changing. Now historically, higher energy prices has led to increased demand in that chemical segment, but it takes a while to read through particularly in the Gulf, where we -- the customers see that benefit of feedstock between gas and oil. And even though the end demand and customer demand for their customers may be slower, it still makes sense to invest and expand capacity debottlenecking and so forth. So I think solid not quite calling an inflection, especially on the chemical, but definitely better than we expected going into the year and feel better about the prospects that we did 3 months ago.

Great. All right. Congrats on good results. Appreciate it.

Thank you, Amit.

We'll take our next question from Matt Summerville of D.A. Davidson.

A couple of questions. Can you maybe comment on the magnitude of EPS accretion you witnessed as it pertained to the acquisitions and specifically what you've done to drive near immediate linearity in those businesses, which last conference call were sort of deemed to be quite second half -- back half loaded overall? And then I have a follow-up.

Rich?

Yes. So we obviously did see some accretion in the quarter, as Alex mentioned. We felt just given the results that -- we feel like we're going to see at least double what we thought on a full year basis. So coming into the year, we were -- had in our minds about an $0.08 number in mind, and we felt comfortable today saying that we would see a full year of $0.15. So we did see a portion of that here in the first quarter. I wouldn't say it's necessarily linear, but perhaps close. So that would be the overall impact and how we're feeling about the business, if that helps.

Yes. I think to add, Matt, on the cost actions that we took, we were able to execute faster than we had originally planned. So that creates not only upside for the year but also more balanced earnings through the year. Now that said, some of this backlog with improved pricing reads through, we'll still expect to see some gradual improvements from the acquisition as the year progresses.

Yes. The only other thing I would add is that you saw -- we saw more -- a little bit more in the way of -- I think as we think about the cadence, the volumes have been a bit stronger as well in particular for Druck.

Understood. And maybe, Alex, or Rich, if you can expand just on kind of the actionability you're seeing in the M&A pipeline, maybe handicap a bit whether you see more deals getting over the finish line before the end of the year into the early part of '27. And if the average deal size you're looking at is starting to kind of melt higher similar -- and maybe more similar in nature to the size of PSI as an example.

Yes, Matt. So deal activity or M&A opportunities continues to be quite strong. There's a lot happening. We're involved in several processes on both sides of the segment. It's a range of sizes. I think we've commented before that our sweet spot is around that $500 million of value and -- but there's deals that are smaller than that, that we're looking at, that seem quite interesting as bolt-ons. And there are some deals that are a little bit bigger than that, that also look interesting. So it's a bit opportunistic. We remain disciplined. So we'll see how the year plays out. But as far as activity and focus, there's quite a bit happening.

You'd add anything, Rich?

No, I think that sums it up. The nature of the transactions, too, I would say, from a complexity and bandwidth perspective, everything we're looking at is -- nothing is going to cause us to hesitate in the way of resource constraints.

We'll take our next question from Jeff Sprague with Vertical Research.

I just wanted to come back to the comments about Aero aftermarket and completely understand it could sort of fade as the year progresses given what's going on, but it's a little unclear what you're actually doing with your guidance. Are you sort of saying, yes, it could be weaker, but we can make it up elsewhere? Or have you actually dialed in a decline in aftermarket in the way you've guided the year here? I think the range has changed, right? But, yes.

Yes. Thanks, Jeff. So I think maybe a little perspective to start as well on this. So if you remember, when we came into the year and we initially issued our guidance for commercial aftermarket, we -- where I would say, on the lower end of perhaps what the rest of the industry was projecting, right? We were saying something like in the mid-single-digit range coming in. And we did get a lot of questions. We did get a lot of questions back on that. And here we are a quarter later, and we see the headwinds in the marketplace potentially from the Middle East, the conflict and so forth. And we're basically saying here, we're going to guide down. So our guidance reflects a down number for commercial aftermarket. Now when you consider what our initial guide was, the move, and you guys can all do the math, right? It isn't a big number overall. And then in terms of offset, what we are seeing is a pretty considerable demand increase in our view, potentially -- I would say, we are seeing in military, in particular in spares aftermarket you saw in the quarter. we were up 28%. We have the incremental benefit that comes in the second quarter through the balance of the year in the F-16 brake control upgrade program, I think you're aware of. So when you look at -- when you step back and you just look at the overall complexion of our aftermarket and where we're coming from off the first guidance number that we put out in January, we feel highly confident that we're going to offset even in this revised down outlook for commercial aftermarket.

It plays out differently, Jeff, right? Because aftermarket demand has been resilient post COVID, as you know, due to higher energy and travel has been resilient. But if it plays better than our assumption, then that's an opportunity for us and [ offside ] but we felt comfortable assuming a more conservative view because we have the offsets already line of sight in our backlog.

Yes. No, great. I was just unclear if you have formally dialed it in or you were just saying you had contingency to deal with it if it happens. So Rich, very clear answer there. I appreciate it.

And then on -- just back to PSI, to what degree have you seen just maybe the commercial front end of the business change? In other words, very good businesses, right, but orphan, so to speak, inside a larger organization. So maybe just a little bit of color on what's happening on the customer side. Are you seeing better order intake or inquiries in some of those businesses than you might have otherwise expected? Or again, is the upside more about -- and accounts, obviously, but it's more about the pricing and some of the cost actions that you already elaborated on.

Yes, Jeff. So what we're seeing right now on the commercial side, there's been significant changes on how we operate, which projects we go after, how we go after them. So I would say we're being more successful in winning the target projects that are more interesting and more profitable for us very quickly. And also around just our pricing practices, value pricing, those would be the primary areas where we're starting to see differences. So we have this long period, as you recall, 6 months to really prepare ramp-up. And those are the areas we've been able to impact shortly. Now we're starting to work the strategies of longer-term growth, which were never baked into our model. And so now we're shifting focus into that, and we think there's upside even to the numbers that we talked about as those initiatives develop.

And maybe just a quick unrelated one. Plenty of capacity in your defense businesses for these missile-related ramps and the like? Or we should expect some more capacity in the ground to ride this wave.

We have plenty of capacity. Actually, Rich and I just did a deep dive review with the team a few weeks ago. We're very well positioned for that. I think the pacing item in the industry will be more [ than the primes ]. We can significantly outpace the ramp-ups of the manufacturers of the actual missile. So we're in pretty good shape there.

We'll take our next question from Justin Ages with CJS Securities.

You mentioned chemicals still sluggish holding at trough levels. And I just want to know how that fits into the broader commentary that you gave about seeing some PFT projects being pushed out. is that chemical being pushed out? Or those have already been pushed out, so no change in the time line there?

Yes. The pushouts that we commented on were specific to the Middle East dynamic, and it's really related to the conflict where some of the petrochemical areas or refineries have been shut down temporarily. So some of that activity has pushed out to the right, no cancellations. So that's very unique to that region and that conflict. Now here as we started Q2, we started seeing those things starting to move a little bit faster than I thought they would. So that said, in our guidance, we did factor in some delays in projects in that region of the Middle East in our guide from a conservative standpoint. If it moves faster, then again, it will be a positive for us. Broad -- more broadly, in chemical, again, higher oil prices. We expect the Gulf at some point to see some momentum in projects that will take several quarters. We are starting to see a little bit of MRO activity pick up, particularly in the Americas which usually precedes project investments here in the year going into next year would be our expectation.

And then staying in PFT, you mentioned good performance in cryo. Can you just remind us or give us some color on the size of that space and the market opportunity there?

Yes. So our cryo business today is about 4% or 5% of total PFT, but it's growing at mid-teens of 15%, 16%, 17%, so it's growing quite fast. It's mainly Americas-based servicing, very high-growing markets like space launch or commercial space launch, as you know, is increasing significantly. So supporting that launch platform, not on the actual rockets or aircraft, but on the launch is where we're seeing a lot of demand supporting general aerospace, environmental testing. So as aerospace keeps ramping up, the investments in infrastructure for testing, pharmaceuticals and other areas, semiconductors as well. So very, very interesting markets, high growth, and growing at a fast pace. So this is an area that has been part of our transformation. We basically went from 0 a few years ago to 4% to 5% now, combination organic and inorganic actions.

We'll go next to Scott Deuschle with Deutsche Bank.

Alex, what are the most PMI sensitive parts of PFT? Is then are you seeing any uptick in demand in those PMI sensitive businesses? Or is it more just areas like pharma and cryo and nuclear?

I mean our biggest uptick has been power generation, which is right now driven obviously by the investment in data centers. That has not, I think, been PMI-related pharma, cryo, wastewater. We did see pretty solid just industrial activity in the quarter. we didn't call it out, but it was a little bit stronger than we expected going into the year.

Yes. I would have said general industrial portion as well of the market where we are seeing a little bit of improvement, Scott. That helps?

Okay. I think you all have described PFT as being pretty early cycle. So if the broader industrial cycle is turning, as the PMI data suggests, I guess, why would it just be a small benefit to your general industrial business?

Well, I mean it was low -- mid-single-digit type activity that we saw there, right? So in the industrial space, that's a pretty healthy activity. We'll see how things progress. But was we're pretty pleased with how it started the year.

Okay. And then Alex, how large is the PAC-3 product line for Crane today? And if it's not material now, I guess, could it be become material if it grows 200%?

I mean we look at the whole missile platform, right, which is the number I have in my head, it's around that $30 million to $40 million range of microwave and modular power or product lines. And so I would use that $30 million to $40 million jump-off point and the projections are from 2x to 4x, 5x growth from now to 2030.

Okay. And then last question -- go ahead.

Yes. PAC-3 would be towards the top end of the programs. We have maybe 12 or so programs that we're watching closely, and that would be one of the ones that are at the top, Scott.

Okay. And then Alex, can you give us a sense as to how much of PFT's cryo sales are related to the space market? And will that space growth within cryo? Is that going to correlate with SpaceX's launch cadence over the coming years?

Yes. On the Space launch, it's about 35%. So it -- and then you put in aerospace in general, now you're looking more like 45% and the balance is other industrials like I said, pharma and so forth. But the growth does correlate with the launch activity, which is increasing but not only SpaceX, but the other companies, like Blue Origin and so forth. So we service -- I think there are 6 or 7 key customers of ours in that space launch, and it's growing exponentially in line with the space launch activity.

We'll take our next question from Myles Walton from Wolfe Research.

I was wondering on the commercial aftermarket comments that whether or not you are reducing the outlook there because of what you're seeing or because of what you anticipate seeing? And if you can give us any clarity or color as it relates to recent bookings trends, the 11% growth in orders versus the 13% decline in the quarter wouldn't suggest you're seeing much, but maybe just add color if, again, you're doing this based on what you're seeing or what you anticipate you'll see.

Yes, I'll comment first and then Rich can add. But I mean, if you look historically, right, over the last 15 years, high energy prices, pre-COVID and post-COVID are 2 different stories. Pre-COVID, it was a pretty strong correlation, higher energy prices, higher airfare, lower activity demand. Post-COVID, we saw a big spike in energy prices in the 2022 with the Ukraine conflict. And it was very resilient. There was no slowdown from there. So we're not sure what is going to happen. We have not seen any decline, as Rich mentioned, 11% up, and we're also sequentially up. However, as we look forward and considering the industry general concerns, we wanted to think through a range of scenarios that would give us a lot of confidence in our guide. So based on that, we assume the decline in our guide to have really, really high confidence. But it could maintain, it could sustain and that would just be upside for us.

You'd add anything, Rich?

No, I think that sums it up, Myles.

Okay. And relative to the decline, you're thinking like mid-single-digit positive was before and now you're sort of conceptually thinking that decline is what you're baking in from a conservative viewpoint. Is that right?

Yes, I think that's fair.

Okay. All right. Great. And then on PFT, just as it relates to core growth as you look to the rest of the year, given the strong orders in the first quarter, are you able to see the turning to get to low single-digit positive organic growth or core growth for PFT in the second quarter?

I think for the year, we're still expecting flat to low single digits. I think for the quarters -- yes. I think we're -- the second quarter may be a little bit consistent with Q1, right?

Yes. I would think if you're looking at just sequentially, think of it as not that different from Q1 into Q2 sequentially, Myles, without having the FX in front of me. And -- but that's the way we're thinking about the overall absolute number.

Okay. And then just one last one. What is the downward pressure on margins for the rest of the year versus the 23.2% you did in the first quarter?

The downward pressure? So we mentioned on the call that increased -- we're definitely going to be seeing and are starting to see the inflation on commodities as well as freight. Earlier in the year, you have a backlog that you're getting through. But -- so just from a timing perspective, we see the opportunity to get more price to offset as we move through the balance of the year and we get through that backlog. So that pressure is -- I would say it's modest, but something that we're working through and comfortable with overall and suggesting an increase net to the margins.

So for the full year, improved margins versus...

About a half -- yes, we're seeing about a half -- I think 0.5 point improved overall margin profile.

Yes. Sorry, I was just comparing the first quarter versus the implied next 3 quarters is. The next 3 quarters are obviously slightly down versus the first quarter on the 23%.

Yes. Well, I think, again, it gets to -- it does get to some of that -- it's basically the same answer, right? I'm going to see some inflationary pressure. I'm going to cover some of it. Net-net, albeit up 50%, but yes, it's going to be that inflationary pressure, Myles.

We'll take our next question from Nathan Jones with Stifel.

A couple of the acquisitions. Alex, you talked about moving to the strategy deployment phase on the acquisitions, I think you talked a little bit about shifting the focus to growth initiatives. Hoping you could maybe provide a little bit more color on what that involves for each business?

Yes. So when you think about -- again, just to be clear, Nathan, none of this was baked into our model, it's all upside. But if you think about Druck, some of the opportunities we saw military defense, Druck has a pretty good position in Europe and not really any position of note in the United States defense where our legacy Aerospace and Defense business has strength. So we're building up the strategies of how to create those synergies and create growth.

There's various regional differences in penetration and share also in Druck, in the business. Europe, U.S. differences channel, non-channel that we are working through. So those are a couple of examples of where there's potential growth upside.

Panametrics in that business, we think about really also regional. I think we see a lot more opportunity in Americas to grow. They have a lower share in Americas than average. So there's opportunity there in aligning those efforts from a commercial standpoint.

And then Reuter-Stokes, we've been -- we have a very, very strong position in power generation piece of nuclear. But we also have some product lines around other platforms of radiation monitoring and Homeland Security. So we plan to build on those platforms as well and grow. So those are some of the things we're thinking about from a strategy deployment standpoint.

That's great. My second question was going to be on the value-based pricing that you're already beginning to realize. I think that's very rapid benefit there. I know some of these businesses have longer-term contracts. So maybe you can talk a little bit about where you're seeing value-based pricing where you'll see it in the future. And I mean it's obviously it's very early in the piece there. So just any color you could give us around that stuff.

Yes. So the longer-term contract, lengthen are probably less than you would think. If you think about Druck, about 30% of the business is on longer-term contracts. So there's a lot of areas where we can move more quickly. On the Reuter-Stokes, part of the business is about 40%. Some of these are naturally coming up and renegotiated. And the Panametrics is very, very low on longer-term contract. So all in all, there's a lot of opportunities within the year and then as we continue to work the longer-term contracts. So very confident in our ability to keep improving these margins through the year and going into next year.

[Operator Instructions] We'll take our next question from Ronald Epstein with Bank of America.

This is Jordan Lyonnais on for Ron. On the balance of the year for commercial aero, if we're going to see aftermarket decline in the guide, how should we be thinking about margins for the segment? And for PFT, are you guys factoring in or have any concerns on the new tariffs that are going through on raw materials?

No. A good question. So on the margins overall, Jordan, when you look at the mix differential, what I would say -- I'd step back and say, first of all, our portfolio in Aerospace & Advanced Technologies. When we say commercial OE, we make money on commercial OE, right? It's -- our model, as you know, is very -- or perhaps different from others in the industry. So when we do mix up and down, yes, there is some impact, but it's not as perhaps drastic maybe in other companies. Specific to the commercial aftermarket as we have that coming down in our forecast or in our guidance. When we look at what we're seeing in military moving in the opposite direction, the margin profiles are not that far off, frankly. They're quite similar. So that mix change is not going to be as significant, if at all, from a margin pressure point of view.

In PFT, with respect to tariffs, I would say the overall tariff change has not been all that material to us so far in the year or it won't be in the year. The one area that I would point to is with the refund process to the extent that we're successful there. We'll, of course, call that out in the balance of the year, but none of that is factored into our guidance. No upside is factored into our guidance.

This concludes the Q&A portion of today's call. I'd like to now turn the call -- floor back over to Alex Alcala for closing remarks.

Thank you all for joining us today. Over the past 13 years, Crane has undergone a meaningful transformation, reshaping the portfolio, significantly improving margins and growth and delivering strong shareholder value under Max's leadership. That foundation positions us exceptionally well for what comes next. This transition is not a change in direction. It's the next phase of the same journey it's about acceleration of profitable growth.

Looking ahead, I am more excited than ever about Crane's future and the opportunity to continue delivering for our customers, our associates our communities and our shareholders. We will remain focused on executing our strategy, leveraging the Crane Business System to drive strong organic growth while continuing to pursue our disciplined approach to accelerating inorganic growth. I've had the privilege of working alongside an extraordinary team across the globe, and I'm energized by the path ahead. With this team, this strategy and this portfolio, I'm confident that the best chapters of Crane are still in front of us.

Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

Thank you. This concludes today's Crane Company First Quarter 2026 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.

Welcome to the Crane Company Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Allison Ploniak, Vice President of Investor Relations.

Thank you, Madison, and good day, everyone. Welcome to our fourth quarter 2025 earnings release conference call. I'm Allison Ploniak, Vice President of Investor Relations.

On our call this morning, we have Max Mitchell, our Chairman, President and Chief Executive Officer; Alex Alcala, Executive Vice President and Chief Operating Officer and incoming CEO; and Rich Maue, our Executive Vice President and Chief Financial Officer; along with Jason Feldman, Senior Vice President, Treasury, Tax and Investor Relations, who is on for Q&A.

We will start off our call with a few prepared remarks from Max, Alex and Rich, after which we will respond to your questions. Just a reminder, the comments we make on this call will include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, both of which are available on our website at craneco.com in the Investor Relations section.

Now let me turn the call over to Max.

Thank you, Allison. Thanks, everyone, for joining the call today. While we've got many exciting things to discuss today as we exit the fourth quarter, and we're already off to a fantastic start for 2026. Our performance last year and our initial guidance for 2026 show that we are consistently and reliably delivering on our commitments and our long-term value creation thesis. 4% to 6% core sales growth, and we were just at the high end of that last year, 35% to 40% core operating leverage and upside from capital deployment. And that's just the baseline. We're always working to over-deliver. All aspects of this thesis have continued to play out as expected and will continue.

For the quarter, once again, we exceeded even our high expectations, underscoring the strength of our team's strategy, excellence in execution and a relentless commitment to delivering shareholder value. Adjusted EPS of $1.53 was up 21% over the prior year, driven by an impressive 5.4% core sales growth, reflecting broad-based strength at Aerospace and Advanced Technologies, and continued strong execution of process flow technologies. For the full year, adjusted EPS increased by 24%, driven by our outstanding teams delivering on customer expectations enabled by our sustained investments in advanced technologies and innovative solutions. [indiscernible], we also continued building on our strong track record of enhancing and shaping our portfolio by adding technologies and capabilities inorganically that will drive growth and support both existing and new customers.

Having previously announced the signing with Baker Hughes on June 9 last year, we are excited to formally welcome the Druck, Panametrics and Reuter-Stokes brands to the Crane portfolio. having closed on the acquisition of these brands on January 1. As a reminder, Reuter-Stokes doubles the size of our nuclear business, adding industry-leading radiation sensing and detecting technologies for nuclear plant operations as well as for Homeland Security applications. Nuclear is an exciting market space today, and we see additional applications for the core Reuter-Stokes technology and a number of other high-growth adjacent markets.

This business is being integrated into our Crane Nuclear business, which Chris Mitchell has successfully run for us over the last years. Panametrics will operate as a stand-alone business unit in our Process Flow Technology segment reporting to SVP and [indiscernible]. This business adds advanced ultrasonic flow meters and precision moisture analyzers, a really incredible portfolio of solutions that enables accurate measurement of liquids and gases across applications such as cryogenic gas storage, LNG transportation, wastewater treatment, chemical and petrochemical production.

And lastly, drug will be maintained as a stand-alone business unit reporting to SVP J. Higgs under the newly renamed Aerospace and Advanced Technologies segment. This new name better captures who we are today and our future strategic direction for this segment than the prior Aerospace and Electronics name. Still the same focus on proprietary, highly differentiated technologies with primarily sole-sourced positions, but continuing to expand our range of technologies and offerings and looking at adjacent end markets where our capabilities are similarly valued.

We expect to selectively and carefully widen our aperture in this segment without losing focus on what differentiates us. Specifically the addition of Druck's complementary product line meaningfully strengthens our pressure sensing capabilities across critical applications, including aircraft engine monitoring and Hydraulics with strong positions in both single-aisle and widebody aircraft platforms as well as environmental control solutions. Druck also expands our presence into ground-based test and calibration equipment for aerospace and certain other end markets, leveraging the same best-in-class pressure sensing technology.

Another exciting news in addition to Druck, Panametrics and Reuter-Stokes business is closed January 1. At the start of the year, we also closed on the acquisition of optek-Danulat, headquartered in Essen, Germany. Optek is the leader in in-line process control, optical sensing measurement solutions for biopharma, pharma and other demanding markets with annual sales of approximately $40 million. Optek is a perfect complement to our growing instrumentation business, my personal thanks to Jurgen Danulat for his trust in Crane [indiscernible] stewards of his legacy moving forward and to the outstanding team at Optek. Just really a fantastic addition.

The teams have hit the ground running across all businesses. The integration process is well underway, and the machine is fully in motion. Further, M&A activity is robust, and we continue to execute and cultivate accelerated opportunities. We see many opportunities progressing through 2026, but at this time, nothing additional is imminent in Q1. Alex will provide more detail on our core businesses as well as the recent acquisition shortly, but let me touch on the planned succession time line that we announced last night. I want to congratulate Alex for being appointed as Crane's next CEO, and effective April 27, 2026, at our next Annual Shareholder Meeting. And at that time, at the request of the Board, I will move to serve as Executive Chairman for a transitionary period expected to be no more than 2 years.

Having partnered with Alex for more than a decade, I can confidently say he is the right leader to accelerate Crane's strong His deep operational expertise, proven ability to develop an extra strategic initiatives and unwavering commitment to our high-performance culture have been critical in shaping crane into the market leader it is today and our proven performance across PFT and AAT. In my new role as Executive Chairman, I look forward to supporting Alex and the leadership team. as we continue driving strategic growth and long-term value creation. Coming off the incredibly strong performance in 2005 and turning to 2026, I am highly confident in the strength and resilience of Crane's team and portfolio.

Moving to 2026 guidance. I'd like to highlight that our guidance for 2026 includes a change to our non-GAAP presentation of adjusted EPS, which now excludes noncash tax-effected acquisition-related intangible amortization. Rich will provide more on this during his remarks. By using this new convention for both '26, I'm pleased to announce our initial 2026 adjusted EPS guidance, $6.55 to $6.75. A 10% adjusted EPS growth at the midpoint. When excluding the $0.16 benefit of onetime hurricane-related insurance recoveries that we received in 2025 as well as after-tax acquisition-related intangible amortization in both years. Importantly, I'm excited to share that we estimate that the acquisitions will be slightly accretive to 2026 earnings results.

As I started with, many exciting developments across the company and our investment thesis is stronger than ever. Now let me pass it over to our Chief Operating Officer and incoming Chief Executive Officer; Mr. Alex Alcala to provide some color on the current environment, segment performance and recent acquisitions. Alex?

Thank you, Max. I'm truly honored to have been appointed the next Chief Executive Officer of Crane. I'm enormously grateful for the Board and in particular, to Max for his trust and support over the years. I'm also thrilled that Max will continue as Executive Chairman, allowing me to keep benefiting from his tremendous experience and leadership.

But this is not about me. It's about our leadership and the 8,500 associates who execute every day, leaving the Crane culture of incredible intensity, focus and accountability. I've been fortunate to be part of the Crane journey for the past 13 years. We've transformed our portfolio, substantially improved our margins and our growth profile, and delivered significant shareholder value under Max's leadership. But I can tell you, I've never been more excited about our future and the progress we will continue to make for our customers, our associates our communities and our shareholders.

Looking ahead, we will stay true to our journey, driving the Crane business system to deliver strong organic growth while also pursuing our strategy of accelerated inorganic growth. Over the years, I have literally traveled more than 1 million miles as part of this incredible journey with Crane, and I'm ready for the next million with this extraordinary team. Now some thoughts on the segments in the quarter as we look to 2026. Let me start with Aerospace & Advanced Technologies. These markets remained very strong. The backlog we built, along with the new programs and opportunities, our aerospace and electronics teams have secured continues to provide us with visibility into 2026 and beyond.

On the commercial side, Things continue to look healthy. [indiscernible] and Airbus continue to ramp up production and aftermarket demand is still running at elevated levels, although the year-over-year comparisons have become increasingly challenging. On the defense side, a lot of activity and interesting industry announcements over the past few weeks. Procurement spending remained solid, and there's a continued focus on strengthening the product defense industrial base given the heightened global uncertainty we continue to see. Given the level of activity we are seeing for 2026, we expect core sales growth for the year to be up at the high end of our 7% to 9% long-term growth assumption.

And importantly, that growth should leverage at about 35% to 40% for the full year despite the less favorable mix, which is moving back to normal levels. Our guidance assumes OEE sales will grow double digits year-over-year, partially offset by decelerating growth rate in commercial aftermarket. We are excited to join the AAT segment and expect over the next few years that it will be incremental to both the segment's growth and margin profile. However, while it will be incremental to growth in 2026, we expect Druck to be dilutive to overall segment margin in the near term.

Overall, we are on track for another outstanding year. And beyond this, we continue to develop new technologies, win new business and pursue additional opportunities across the segment. That gives us confidence we'll deliver above-market growth for the rest of the decade. A few highlights for the quarter in AAT. First, in our Defense Power business, we remain actively engaged and solidly positioned with defense vehicle OEMs collaborate on the common technical truck and new combat vehicle programs.

Second, Crane also continues to win funded next-generation military demonstrator programs for our brake control systems. We will also begin production for the F-16 brake control project in 2026 and received two more follow-on orders, one from the United States Air Force and the other from a foreign military customer. And last, with elevated interest around air defense systems, we are actively tracking and pursuing new high-power AESA radar opportunities.

Overall, our Aerospace and Advanced Technology segment is positioned to significantly outperform its markets over the next decade. We're extremely proud of what this team has accomplished and the momentum they've built. At Process load Technologies, we remain well positioned to outgrow the cycle. Over the past decade, we have deliberately repositioned our portfolio towards technologies and end markets that are higher growth and where we maintain leading competitive advantages and clear differentiation, positioning enough to deliver consistent, sustainable growth ahead of the market. And the latest acquisition enable us to continue that journey.

Similar to Q3, we continue to see strength in segments such as pharmaceuticals, cryogenic power generation and water while chemical markets remain subdued at trough levels. Our disciplined approach and sharp focus enabled us to maintain leadership in this segment, as evidenced by our Q4 performance even given today's macro backdrop. A few highlights from PFT in the quarter. Our collagenic business had another strong Q4, securing orders for a number of space launch customers. We continue to win and expand our share in this important vertical due to our excellence in engineering solutions, along with our ability to rapidly execute orders.

Additionally, we continue to drive solid wins in pharma, securing another large [indiscernible] capacity expansion to manufacture GLP-1 drugs. Our ability to deliver high-performance solutions for our critical pharmaceutical application continues to set us apart in a competitive market and positions us for sustained growth in this segment. And lastly, despite the sluggish chemical industry, our teams continue to secure targeted opportunities within chemicals, securing key new project wins in the Middle East. Looking ahead to 2026 for PFT, given our fourth quarter orders remain sluggish, we are adopting a cautious view of 2020 levels to start the year and expect that core growth to be flat to low single digits for 2026.

However, we do expect more leverage to still be within our targeted range of 30% to 35%, with the additions of Panametrics, Reuter-Stokes and optek-Danulat joining the PFT family, we fully expect over the next couple of years that they will be incremental to both segment growth and margins. In 2026, while there will be incremental to growth near term, we expect them to be dilutive to overall segment margin. Overall, both businesses are strongly positioned for sustained success with the resilience and strategic foundation needed to deliver outstanding results in 2026 and beyond. Before I wrap up, I want to provide additional color on the acquisitions of Panametrics, Druck and Reuter-Stokes.

The integration process is off to a strong start, and our outlook for these businesses is already exceeding our initial expectations. As Max mentioned, we now anticipate these businesses to be slightly accretive to earnings in 2026. compared to our original expectation of no accretion in year 1. We have been preparing for the last 6 months, and I personally spent a significant portion of this month visiting all these teams and the CBS machine is already being deployed. I'm extremely confident that these businesses will become some of our best performing and most profitable businesses within Crane in the years ahead. As I think about the levers of focused improvement, the cost synergies will come from 3 major areas, all driven by CBS.

Organizational simplification and focus. By operating these businesses as three independent entities, we're eliminating the top management cost were. Product Line Simplification or 80/20, reducing complexity and eliminating work with limited return on investment; and traditional productivity improvements, driving efficiency through supply chain and lean tools and processes. In addition, all growth synergies are fully incremental upside to our financial model. We have dedicated teams in place and are off to a great start. I'm very confident we will meet or exceed our targets. Now let me turn the call over to our CFO, Mr. Rich Maue for more specifics on the quarter.

Thank you, Alex. And congratulations as well. I really look forward to having as much fun with you as I've had with Max over the last decade. And Alex, I gave Max this same advice when he became CEO, and borrowed from Michael Cane as Charlie Crocker in the timeless movie classic, the Italian job. It's a difficult job and the only way to get through it is if we all work together as a team. And that means you do everything I say. I'm kidding, of course. I don't -- not really. And to Max, borrowing Humphrey's ever famous line as Rick Blaine, in the Academy Award-winning drama Casablanca, we will always have Paris.

I'm going to get choked up.

Good morning, everyone. Let me start off with total company results. We drove 5.4% core sales growth in the quarter, reflecting the ongoing strength within the Aerospace & Advanced Technologies segment. Adjusted operating profit increased 16%, reflecting the impact of higher productivity and favorable pricing net of inflation. In the quarter, core FX-neutral backlog was up 14% compared to last year, again, continued strength at Aerospace and Advanced Technologies and core FX control orders were up 2%, from a balance sheet perspective, with the close of the acquisition of Druck, Panametrics and Reuter-Stokes, we ended the year with net leverage of 1.1x, which reflected 102% adjusted free cash conversion in 2025 and outstanding performance by our team.

And as Max noted earlier in January, we also closed on the acquisition of optek-Danulat, that port our net leverage to 1.4x, leaving us well positioned for further M&A. A few more details on the segments in the quarter. Starting with Aerospace & Advanced Technologies. Sales of $272 million increased 15% in the quarter, nearly all of that growth organic. And even with the continued high level of core sales growth, our record backlog of just over $1 billion was up 25% year-over-year and was up slightly sequentially. Core orders were up 8%. Again, no surprises and continued strong demand broadly. Total aftermarket sales increased 1% with commercial aftermarket sales up 3% and military aftermarket down 3%. And OEM sales increased 23% in the quarter with commercial sales up [ 27% ] and military sales up 18%, all in line with our expectations.

Adjusted segment margin of 23.6% and expanding 50 basis points from 23.1% last year, primarily due to strong productivity, higher volumes and higher price net of inflation. At Process Flow Technologies. In Q4, we delivered sales of $309 million, flat relative to a year ago with core sales down 1.5% as we anticipated, offset by a slight benefit from the Technifab acquisition and 1.6 points. of favorable FX. Compared to the prior year, core FX-neutral backlog at PFT decreased 7% and core FX-neutral orders remained soft, down 3% driven by the weaker chemical end markets as expected. However, adjusted operating margin of 22% expanded again and in the quarter was 170 basis points higher. Despite the headwinds on the top line, productivity is reading through as well as price.

Moving to the nonoperational items below the segments, along with some additional 2026 guidance matters. The start, as Max mentioned, beginning in 2026, we are excluding intangible amortization from our non-GAAP presentation of adjusted EPS. Following the significant increase in intangible amortization related to this month's acquisition activity, we believe that excluding it from adjusted EPS gives investors a better picture of Crane's free cash flow and also enables better comparison to the majority of our peer companies that use the same convention. Reconciliations recasting last year are in the slide presentation accompanying this call.

Now moving on to a few nonoperational items. Corporate expense for the full year of 2025 was $87 million, modestly above our prior view of $85 million due primarily to M&A activity. For 2026, we anticipate corporate expense to be in the range of $80 million to $85 million. In Q4, we received $5.2 million of insurance recoveries from the Hurricane Helen flood we had at one of our PFT sites or a $0.07 benefit to results in the quarter. With this final payment, the matter is now fully resolved with our insurers. Remember that our full year 2025 guidance included $9 million of insurance recovery related to Hurricane Helene with $6.7 million received through Q3. So $2.3 million or about $0.03 of the fourth quarter's insurance recovery was in our latest October guidance.

So the actual amount received was $2.9 million or $0.04 per share better than we had expected. Also keep in mind that for the full year, total insurance recoveries benefited adjusted results by $0.16, a benefit that will not repeat in 2026. Given the funding for the acquisitions of Panametrics, Druck, Reuter-Stokes, and optek-Danulat, we now anticipate full year 2026 interest expense of approximately $58 million. And lastly, we estimate our tax rate for 2026 to approximate 23%, slightly higher than our 2025 rate of 22.9%. Looking at the cadence of quarterly results for the year, we expect Q1 2026 to be seasonally softest quarter coming in roughly flat with the first quarter of 2025, [indiscernible] given acquisition integration and increased interest expense.

For the full year earnings split, we expect the first half of 2026 to represent about 45% of full year earnings with 55% weighted towards the second half. Overall [indiscernible] and with that, operator, we are now ready to take the first question.

[Operator Instructions]. Our first question is coming from Scott Deuschle with Deutsche Bank.

Max, what are you going to do about your free time here?

I'm going to remain busy, Scott, very, very busy. In addition to Executive Chair, you kn0ow, I've become a very popular Gen-X influencer. I have my podcast that started and my only fan page is going well. It's going to be...

I'm looking to hire someone from my team [indiscernible] understood [indiscernible] I'll let you ride the Crane nuts. In all seriousness, Alex, I was wondering if you could speak to the pricing opportunity at drop in 2026 and 2027. And specifically, I was curious if there are any meaningful LTAs coming up for renewal this year or next? And what type of price increase might be possible there?

Yes. Thanks, Scott. So just pulling back on all 3 businesses, right? Druck, Panametrics, Reuter-Stokes in our financial model, we assume significant opportunity. I've been working with this team for 6 months, spent most of the months with them. So definitely validate our hypothesis on opportunities potentially more than we even thought. So feeling very bullish about these acquisitions. All three businesses have a significant opportunity to drive the Crane Business System. I talked about the areas product line simplification, restructuring, business model and just traditional operational excellence.

As far as value pricing, as you know, in Crane, we do a good job standing for setting up for a value our differentiated technology. There's opportunity to do better in all three businesses and Druck, we would expect to improvements starting this year, reading more into next year as it takes some time. Just like any aerospace visits, there are some expire naturally that need to be renewed, renegotiated. So everything -- no real obstacles to achieve our goals in that area, Scott.

Okay. Rich, can you clarify what guidance contemplates it relates to cost takeout at PSI. I think you've spoken about high single-digit million corporate cost takeout. And I wanted to clarify if that was in the guide or still on the [indiscernible].

Yes, I think no change to what we've previously discussed. There's a few buckets. I think they're the same buckets Alex mentioned. So the cost element is going to -- is -- our productivity element, however you want to categorize it, is clearly going to be one of them. On the commercial side being another and then leveraging the growth at rates that we would expect to leveraging our operating cadence. So across all three, and I would say no difference versus what we previously had communicated.

And our next question is coming from Myles Walton with Wolf Research.

This is Greg Dalberg on for Myles. First of all, I would like to say congrats to Max and Alex. So first one, I guess with the renaming of A&E to AAT, I think you mentioned in your remarks the widening of the aperture of what you would look at there. Can you go into more detail, I guess, in terms of what adjacent tech and strategic direction this is actually referring to?

Yes, Greg, this is Alex. So just a reminder, our business unit, Aerospace & Electronics was both business unit name and segment name. So last year, we announced the promotion of Jay Higgs, as Senior Vice President of the segment, and it's really positioning us to do more deals like drug. So drug would be a perfect example of the technologies that we would expand in, where it has a foot in traditional aerospace but also get it into lab-based calibration and even some high-growth industrial applications that are combined with the technology. So I think Druck would be a good reference of what you expect to see in that segment.

And the model that we have right now in the structure allows us to keep adding not only bolt-ons, but stand-alone units to keep building out that segment similar to what we've done in PFT. You recall that when we changed the name to -- from fluid handling to process flow technologies, we're thinking about expanding our aperture moving up the technology stack, having more differentiated products, and those have been the acquisitions we've done on that side as well with the sensing applications and now optic as well adding to that. And that's what you would expect to see high technology differentiated, improving our growth and margin profiles on both sides of the segments, growing both segments, doubling the size here in the next coming years is our goal that continues to create shareholder value and also optionality for the future.

And then just quickly on PFT. I know backlog sequentially for the second quarter in a row, mostly due to the Ken side. Can you just talk about what you're seeing? And I guess is there a time frame you'd expect that to typically to the chemicals and, I guess, more broadly your outlook for end markets in 2026 in PFC?

Yes, Greg. So let me pull back just on PST because we have -- we service various segments, right? So first commenting on the areas and businesses markets that grew in 2025 strongly, and we expect to continue in 2026. So wastewater, which is primarily a North America-based businesses. We saw high single-digit growth, we expect strong growth also in 2026. Cryogenics as well, double-digit growth in '25. That will continue pharma. There's a global growth that we're seeing also, in particular, in North America, some increased investments and reshoring from pharma customers that we expect power.

Again, America-based power generation, where we've seen momentum in '25, I expect that to move on to a lot of our segments and businesses continue with strong momentum. You did mention Chemical, which has been sluggish. Just to pull back also, we expect to see similar to what we saw in '25, which has been varied by region. You can't lump it all together. So Americas and Middle East, we saw growth year-over-year on orders in '25. We expect the sort of modest growth to continue in that area. Our team is doing an excellent job winning. Again, those two regions have this feedstock energy advantage. So customers see good return on investment on taking action on capacity expansions or increases brownfields in particular in the Middle East. So those will continue at a moderate pace on a negative or sluggish, Europe, China, the rest of Asia Pac, that's been down. We don't expect those to change.

So on the net, our assumption for 2026 is continue to see working through the trough, not deteriorating, stable, but not planning for a strong uptick in the year, but we're ready for it. If it happens, we'll take advantage of it, but not built into our guidance right now.

And Our next question is coming from Jeff Sprague with Vertical Research.

Congrats Max and Alex, exciting news for both of you. Just a couple from me. First, just back on the deals. You kind of laid out the cost reduction opportunity and plan I think there's also cost in to get these bedded down and integrated given that they were carve-out entities. Could you just maybe speak to that the interplay between kind of cost to integrate versus cost out? And I would assume those sort of flip a '27, '28.

Yes, Jeff. So I mean there is some cost in and cost out on a net basis, it will be a cost out. The improvements in the margins will increase in '27,'28 as a lot of our actions take a few quarters to materialize and read through to the P&L. I've mentioned before, Baker Hughes operated these businesses as PSI. So they had that high-level PSI headquarter structure, which is we're dissolving, shared services and finance, HR and IT. So that goes away, representing the loan business unit resources that we're adding overall on that basis, we expect once we're done to operate leaner and more profitable with all these ins and outs from a cost standpoint and then driving improvements on top of that.

And then just thinking about what Rich shared on Q1, it sounds like the expenses could be heavy here in Q1. Maybe you could just give us a little bit of color on kind of the expected organic performance in Q1 versus kind of the deal impact in Q1 to get to kind of that relatively flat number.

So legacy Crane organic, we'll be clearly up in A&E and likely down a bit in PFT in Q1 would be part of that dynamic in addition to the incremental interest expense that we have compared to last year in the first quarter. Sort of the, I-would say, the big drivers, Jeff. There's also within Druck, Panametrics Reuter-Stokes, there is seasonality, and they tend to be stronger in the second half than the first half historically.

Okay. Great. Understood. And then maybe just kind of stepping back just on the deal activity. So a lot of bandwidth still on the balance sheet. It sounds like you feel pretty comfortable with just the internal bandwidth to kind of execute all this? Maybe kind of address that, the ability for the organization to take on something else of size this year? Or should we expect maybe sort of smaller bolt-ons as the year is progressing here?

Yes, Jeff. So the machine is working, right? At CBS, our funnel. We're integrating these four different businesses very well with resources. We have bandwidth to do more, I expect to do more in '26. I can tell you that we're also building capabilities constantly. We improved our capabilities not only to integrate but also our strategic resources that are evaluating adjacent is proactively increasing the potential targets. So we're only getting stronger on the M&A front and expect to accelerate that going forward. So one of strong, nothing imminent in Q1, but expect to continue the momentum as we move forward. Plenty of bandwidth on our side.

And our next question is coming from Matt Summerville with D.A. Davidson.

Thanks. Couple of questions. First, can you talk about 2026 with respect to the Aerospace segment, what you're expecting from an aftermarket volume standpoint for both OEM and military? And can you also sort of discuss whether there's any sort of government shutdown impact on any of the more material military programs for you guys? And then I have a follow-up.

Yes. Thank you, Matt. I'll comment on it. Let me walk you through all the assumptions here on Arrow in all the segments. So commercial OEM, as you would expect, will continue to be strong, high teens Military OEM, mid-single digits then to your question of aftermarket. On the commercial side, we're anticipating mid-single digits and on the military side mid- to high single digits. So content as the government shut [indiscernible] the only thing that we've seen no change in orders or programs or funding, but we did see the flight test of the program get delayed a few months. So instead of being completed in January, we expect that to be complete more in the early second quarter.

So that will delay a few months, the start of the shipments for the F-16, but that's all baked and factored into the guidance we provided. No other real impact right now that we see related to government shutdown.

So as it pertains to kind of that $30 million sort of per year beginning 26 kind of target you laid out for F '16, is the is that lower than in 2015, meaning is your guidance assuming you don't fully capture that 30%, yet there's an opportunity albeit over a more compressed time frame for you to ultimately deliver that. And then can you just clarify for the PSI group of businesses, what for your 3-year cost synergy target would be if you could remind us?

Yes. So Matt, on the F-16. Yes. In our guidance, we're thinking more on F16,though the annual rate is 30% this year, more like in the 20s, low 20s of revenue. There is an opportunity and a more compressed time line. But in our guidance, we've pulled that back a bit due to few months shifting to the right. Related to the cost synergies, right? So this year, as we're starting off, we're moving fast with the actions. The teams are actually impressed me with their ability to embrace the Crane Business System machine, but it takes some time to read through. So if you're trying to do the math, would expect like mid-single-digit growth and about 200 basis of improvement in the margin profile this year.

And then in the coming years, It'll be a little bit higher than the 200 basis points on a CAGR basis that gets us in that 5-year mark to achieve or beat the 10% return on investor capital. So about 200 basis points and then a greater number in the years ahead.

Our next question is coming from Amit Mehrotra with UBS.

I wanted to ask about the power -- come back to the power generation market for a minute. I think you talked about Power Gen being 10% of the portfolio inside of PFT, but you're also adding nuclear exposure with PSI. And obviously, that's a pretty important place right now. So maybe you can just reset kind of the exposure to total power gen, and then I'll talk about nuclear power gen and how that's changing.

Yes. Thank you, Amit. So like you mentioned, the traditional power combined cycle power plants in our valve segment, that's what I've mentioned in '25, significant, as you know, amount of new combined cycle power plants are being built in the United States. So that's driving our growth. As far as nuclear, as you stated, we're basically doubling our exposure in the nuclear with Reuter-Stokes.

So we have our core business, Legacy Crane Valve Services and then now Reuter-Stokes and then combined, we call it, Crane Nuclear now. So the growth exposure there is pretty attractive. Think about it [indiscernible] you've got the restarts of the various nuclear plants like Polek or the Crane Clean Energy formally 3 miles. So that will drive upside. You have the new construction with AP1000, Westinghouse where we're very strong, have a very strong position with those reactors in our valve business, and there are some expected starts in Europe.

The third area, really, which comes with Reuter-Stokes, we also have very good exposure now to the small module reactors. So -- we have a partnership with one of the leaders that's building the first SMR in Darlington, Canada. That's starting construction already or soon, one of the reactors. And there's three more on the plan depending on how this one goes. This is boiled water reactors that Reuter-Stokes has the neutron sensing technology, which is used to gauge the power that's being generated. And then we're also benefit on this fourth leg with the extension of licenses, right? So 5 years ago, nuclear plants were decreasing or shutting down. And now we're seeing licenses being extended 50 years or so, and that requires upgrades and investments. So a pretty good tailwind that will keep getting stronger as the decade progresses.

Okay. And just as I want to revisit that 55% back half, I guess, obviously, 45% first half. And then you've given us the first quarter. It looks like just the way the math works, there's not a lot of growth year-over-year in 2Q implied by those comments as well. I don't know if I'm doing my math wrong or maybe there's the hurricane dynamic in there in terms of the comp. But can you just talk about

Yes. Jason and Allison will catch up with you. But I would say that, yes, on the part of the headwind in Q1 and in Q2 clearly will be the insurance recovery. Those were included in our numbers, $0.16 on the year, and it was probably close to 50-50 in terms of first half, second half. Yes. But from a growth perspective, I'd rather hold off on commentary on individual quarters from a core growth perspective, frankly at this point.

Fair. That's fair. Can I just ask 1 quick follow-up, if I don't mind, just on the synergies for PSI because you talked about DFT growth flat to up low single digits and then 35% to 40% incrementals. It doesn't feel in that number, there's a lot of synergies in there, but there's still 7, 8 points of margin gap. And so maybe this is just a timing thing or maybe it's conservatism but it would just be helpful to understand maybe if there's an opportunity for EBIT and PFT to grow disproportionately from revenue in 2016, just given maybe some of that margin gap that you can close? Or is that maybe more of a late '26,'27 thing?

Yes. I would probably err towards what you closed there with on your question. The 30% to 35% is on the legacy. And then as we continue to integrate the Druck, Panametrics Reuter-Stokes, we'll start to see some of that incremental coming in more so in the second half versus the first half. So that would be -- that would absolutely be the case for '26.

Our next question is coming from Nathan Jones with Stifel.

Everyone. Congratulations to Alex. And unfortunately, Max, I can't see your only fan page.

I'm not taking your request any more.

I guess, first on the acquisitions. I know you guys didn't include any revenue synergies in the deal model and in that kind of 10% ROIC target by year [indiscernible]. But I also know that you anticipate getting some. So I'd be interested in getting some color around kind of where the most the most bright areas for you to generate revenue synergies are? If you can put any kind of financial framework around that of like would generate 100 basis points of revenue synergies or 200 or whatever the expectation might be over the next several years? Understanding that those are a little more squishy and maybe a little harder to track. But just any color you can give us on how you'll approach that? And if you can give any financial framework around it.

Yes, Nathan. So let me try to answer the first part of -- you're right, we expect some growth synergies in these areas, different for each of these businesses. For example, in drug very strong, very strong position on the commercial side, not as much on the military side. So with our legacy core A&E, as you know, we have an outstanding position there. So there will be some synergies opportunities to grow the businesses there. Traditional CBS commercial excellence and driving key accounts, channel management, project pursuit funnel management, et cetera, that will drive as well within the core business, improved performance similar for Panametrics, Reuter-Stokes incredible position in the power generation.

We're looking at these adjacencies where they also play in homeland security, other industrial applications where there's a lot of room for growth with the right focus. So None of that is baked into our model, our guidance. I'm not yet ready to provide you with the financial numbers as much as I would like on what those growth opportunities would be. but they'll be there and you'll see them eventually read-through in the P&L Nate.

Yes. I think the confidence in -- I forget if it was Max's comments or Alex's is on the 4% to 6% and these businesses taking us towards the higher end of that range, part of that confidence level comes from these adjacencies and other opportunities that we already see. So I think we expect to be at that high end or even slightly above it when you look out a couple of years.

And this is probably just a housekeeping one. I think it was maybe Jeff earlier on was talking about integration costs and the impact that might have on your reported numbers. Are you eating those in the reported results? Or are they adjusted out of the reported results.

Yes. So I think in our response to Jeff's question, clearly, if they are directly associated with the integration, we will be excluding them and keeping them visible for everybody. But there are other investments that we'll be needing to make us as just part of bringing the business to where -- in the certain areas where we need to be. So in finance, for example, if I have to hire people or an HR have to hire people in IT, those are continuing costs of the business, and I can't exclude those. So that's really what we were referring to in the response to Jeff's question.

Yes, I understand. Can you just give us an idea of what the impact to free cash flow will be in 2026 from these expenses, not from the hiring, but from the costs to achieve seg just to level set that for us.

Yes. I don't have that off the top of my head here, Nathan. So we'll look to provide more color on that at the right time. I would expect our free cash flow, though, overall. Just stepping back, we had an outstanding performance here in 2025 in our business, 102% on an adjusted basis. If we didn't adjust for it, for certain items, we were at 98%. So it's not like we pulled the whole heck of a lot out to adjust. Our core business will continue in that 100% range is our view right now. in next year, I would say, including the acquisitions, it will be down a little bit, but we'll be within that 90% to 100% range without a doubt. If that helps.

Our next question is coming from Justin Ages with CJS Securities.

Congrats to Max and Alex on this new chapter. A question on the F-16. You know you noted that some of the win additional in the U.S. and international partners. Is that layered on top? Or is the Internet -- after the U.S. orders get built to maybe not into '27 will we see the benefit of the F-16 from international orders.

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Yes, Justin. So on F-16, the way we think about it is this $30 million annual sales doesn't really change much what -- as we get into the whole program link. So it goes out further benefit. We will ship first to the United States Air Force and then complement that with foreign military sales. at that $30 million or so rate per year.

We have orders that are in excess of that annual rate today. So it's not like we have to wait for the orders. It's -- we have them in backlog today, Justin. So anything incremental to that, just to Alex's point extends.

All right. That's helpful. And then you guys have done a bunch of acquisitions. You talked about your M&A capacity. You're levered now at 1.4. Can you discuss a little more what your target leverage is? What would you would be willing to go to if the right acquisition is out there?

Yes. So with the right acquisition, we don't have a problem going to 3x even strategically, if it made a lot of sense even going beyond as long as there was a path to come back down within a pretty short period of time to be in between, I'll call it, 2x, 2.5x, something like that on a -- from a target perspective. But we have no problem going up as high as 3% or even above that for the right deal.

And our next question is coming from Jordan Lyonnais with Bank of America.

On Aero and the name change, how are you thinking about adjacencies or opportunities into IGT or aeroderivatives. And then two, [indiscernible] on the military side, is there any changes to your thinking on CCA's with the new group of 1 [indiscernible].

You're breaking up just a little bit, Jordan, if you can say that again.

Apologies. Yes. Sorry, is this better?

That's much better is better.

On CCAs, that opportunity changed at all for how you're thinking about the program with tranche 2 now coming online with a batch of 9 new contractors?

And you're opening as well because it was a repeated again, that would be great.

Yes. For Aero and Advanced Tech now with the name change, the adjacencies that you're looking into, are you thinking about opportunities in IGT or aero derivatives.

I think on the first piece of the question on the AAT, again, we are exploring many different types of adjacencies. Traditionally, right, our core business has been in improved power control. So expanding beyond that in aerospace, just like we did in sensing, many different avenues, land-based. We're thinking about -- I don't want to call out specific adjacencies at this point, but many, many other adjacencies that complement both military and aerospace technologies and also play in other high-growth markets at the same time. And on the second part of your question, with CCA, do you mean collaborative combat aircraft?

I mean we're definitely playing in that space. We think we're very, very well positioned both with the, I guess, the traditional primes and the new entrants. In fact, in prior quarters, Jordan, you may recall that we have this great position in one of the new program Fury to call it out where we expect significant growth in the future. So in this different cycle, different sales cycle, different type of speed that is required, but all the demonstrators we have won our position there. And also with the new entrants, we have excellent content. So we feel very, very bullish about that segment and our ability to benefit from that. SP1 Got it.

[Operator Instructions]. This concludes the Q&A portion of today's call. I would now like to turn the floor over to Max Mitchell for closing remarks.

Fantastic. Alex, congratulations again. Thank you all for joining us today. Great call, great team, great performance. There's a great deal of momentum here at Crane. We delivered an exceptional 2025, and I couldn't be proud of our teams. We continue to innovate, win critical projects and execute and deliver exceptional results. We also accelerated and delivered on our M&A efforts, adding differentiated technologies that further strengthen the crane portfolio, and we're set up for an even stronger 2026 with a leadership transition that will drive a continued focus on transformation, execution and the relentless pursuit of improvement, relentlessly driving towards perfection while accepting the reality we will always fall short that is what pushes us forward driving change as a late great performer, Diane Keaton once said, what is perfection anyway, here's the depth of creativity. That's what I think.

While change on the other hand, the cornerstone of new ideas. As always, change Crane is constant, and it remains the catalyst for fresh ideas, strategic evolution and continued outperformance with our excellent strategy, exceptional talent, strong momentum, our progress speaks for itself, and truly, there's no limit to what we will accomplish in 2026 and beyond. Under Alex's leadership and the team. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

Thank you. This concludes today's Crane Company Fourth Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to the Crane Company Third Quarter 2025 Earnings Conference Call. [Operator Instructions].

I would now like to turn the call over to Allison Poliniak, Vice President of Investor Relations.

Thank you, operator, and good day, everyone. Welcome to our Third Quarter 2025 Earnings Release Conference Call. I'm Allison Poliniak, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our Chairman, President and Chief Executive Officer; Alex Alcala, Executive Vice President and Chief Operating Officer; and Rich Maue, our Executive Vice President and Chief Financial Officer; along with Jason Feldman, Senior Vice President, Treasury, Tax and Investor Relations, who is on for Q&A.

We will start off our call with a few prepared remarks from Max, Alex and Rich, after which, we will respond to your questions.

Just a reminder, the comments we make on this call will include some forward-looking statements. We refer you towards the cautionary language at the bottom of our earnings release and also in our annual report, 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in tables at the end of our press release and accompanying slide presentation, both of which are available on our website at www.craneco.com in the Investor Relations section.

Now let me turn the call over to Max.

Thank you, Allison, and thanks, everyone, for joining the call today. We are proud to report another strong quarter with results coming in ahead of our expectations. Adjusted EPS was $1.64 driven by an impressive 5.6% core sales growth, primarily reflecting broad-based strength at Aerospace & Electronics and continued strong execution at process Flow Technologies.

This quarter's results yet again underscore our differentiated technologies and operational discipline. In addition to our continued long-term investments in new technology and solutions, the Crane business system, the machine that we described in great detail at our March Investor Day, combined with our unique culture, enables our teams to adopt to the many unforeseen events that we're all facing every day and deliver on the results.

Our pending acquisition of precision sensors and instrumentation from Baker Hughes remains on track to close at year-end, and our strategic outlook for these businesses has only improved over the last 3 months. Many work streams are already well underway to ensure a seamless integration and create shareholder value starting day 1.

Our balance sheet remains very strong. Our pipeline of acquisitions remains robust, and we remain very active on the M&A front. And there's a tremendous amount of momentum and continued innovation happening at Crane, but Alex will cover off.

As we exit 2025, we are once again raising, but also narrowing our full year adjusted earnings outlook to a range of $5.75 to $5.95 from our prior view of $5.50 to $5.80, given our backlog, consistent execution and year-to-date performance. That reflects 20% adjusted EPS growth at the midpoint compared to 2024. Another outstanding year for Crane and our shareholders. And as we look to 2026, our consistent investment thesis remains firm. The strength of our underlying business, our strategy and our capabilities, in both operational execution and commercial excellence, support our 4% to 6% organic growth assumptions, leveraging on average of 35% into next year. We will provide greater detail on 2026 expectations as well as PSI in early January once we officially close on the acquisition.

Now let me pass it over to our Chief Operating Officer, Mr. Alex Alcala to provide some color on the current environment and segment performance.

Thanks, Max. First, let me comment on the pending acquisition of PSI. As Max said, the acquisition remains on track to close January 1, and the integration planning is well underway and progressing smoothly with the existing Baker Hughes and Crane teams. As you would expect, my team and I, as well as the PSI leadership have been intimate with all posting details on integration planning to accelerate strategic execution in 2026.

As we discussed last quarter, each brand will contribute a robust and complementary technology, further strengthening the Crane portfolio. Combined with the power of the Crane Business System, PSI will be accretive to our financial profile, both margins and growth within the next few years and our confidence in what we'll deliver has only increased as we work closely with the PSI team on a daily basis planning for day 1.

In terms of further M&A, our funnel of opportunities remains full. The deals we are working on today include opportunities in both aerospace and electronics as well as process load technologies, and most range and deal size purchase price from $100 million to $500 million.

Now some thoughts on the segments in the quarter. Starting with Aerospace & Electronics. Aerospace and defense markets remain very strong. The backlog we built and new programs and opportunities our teams have won provide a strong visibility into 2026 and beyond. On the commercial side of the business, activity remains healthy with Boeing and Airbus continuing to ramp up production and aftermarket activity continued at elevated levels.

On the defense side, we continue to see solid procurement spending and a continued focus on reinforcing the private defense industrial base given heightened global uncertainty today.

Looking ahead to the balance of 2025, we now anticipate core sales growth for the year to be up low double digits compared to our prior view for core growth to be up single digits to low double digits. And that growth will be leveraged at 35% to 40% for the full year.

Our guidance assumes growing year-over-year OE sales, partially offset by decelerating year-over-year growth rates in commercial aftermarket in Q4 that we previously highlighted. Overall, a really outstanding year.

We also continue to win new business and pursue new opportunities across the segment. That gives us confidence that we will continue to see above-market growth for the remainder of this decade.

Let me highlight a few examples. First, Crane continues to win fund and next-generation military demonstrator programs for our brake control systems for both fixed and rotary wing platforms. Second, we continue to advance our vehicle electrification solutions. Heightened by the launch of our new 200-kilowatt traction motor inverter generator control of product at the Association of the United States Army or AUSA trade show in October. We remain actively engaged with defense vehicle OEMs regarding collaboration on the common technical trust and new combat vehicle programs. Related to this, I would comment that over the past 2 years, customer vehicle development efforts were fragmented with numerous concepts in play and uncertainty around government funding.

This year at AUSA, however, the landscape was noticeably different. The focus was clear: industry attention is now centered on competing for the [indiscernible]. This shift aligns precisely with the strategic direction we've defined for our defense power business. With government funding priorities now well established, vehicle primes are concentrating their efforts almost exclusively on winning these programs. Very exciting for us.

And last, activity around air defense systems remains very robust. Golden Dome is still being defined by the DoD. However, we strongly believe we will benefit directly to existing positions of today on systems like [ LAMS ] radar system and Patriot Missile programs. Among others that will certainly be part of Golden Dome solution let alone pure increased demand drivers.

We also anticipate additional growth from new emerging opportunities that our technology is well suited for. Specifically in the scaling and upgrades of radar, counter unmanned aerial systems, high-power energy and space-based assets for Golden Dome.

With the record backlog and pipeline of opportunities, Aerospace & Electronics remains poised to well outperform its markets over the next decade. Very proud of our team.

Our Process Flow Technologies, similar to Q2 end markets are stable, and we remain well positioned to outgrow across the cycle. We continue to see strength in segments such as wastewater, pharmaceuticals, cryogenics and also power, while chemical markets remained soft, yet stable. As a reminder, we have systematically repositioned our portfolio over the past decade around our core end markets where we have the strongest competitive position and the most differentiation, enabling sustainable market outgrowth. Tactically, we have proven our ability to react to any changes in demand quickly, and we will remain nimble, taking any necessary and appropriate price and productivity measures required.

Our focus and discipline enabled us to continue to win in this segment despite the slower growth environment, and that was reflected in Q3. For example, our municipal wastewater pump business is on track for double-digit growth driven by strong momentum in new product adoption. At WesTech this year, we introduced the highest [indiscernible] wastewater pump, featuring advanced noncloud and polos technology with leading efficiency metrics. Shipments began in Q3. And as we head into 2026, a robust sales funnel gives us confidence in delivering another year of strong growth for this business.

Also, our collagenic business continues to execute commercially with a number of orders across aerospace and defense, space launch, satellite production and semiconductor investments. Overall, we secured double-digit growth in new orders in the quarter within Cryogenics, reflective our front end engineering support and manufacturing capability as a differentiator in the market. Additionally, we won a 6 million large pharmaceutical orders supporting capacity expansion to manufacture GLP-1 drugs. Our ability to deliver high-performance solutions for critical pharmaceutical application continues to differentiate us in a competitive market and positions us well for future growth in this space.

And lastly, despite the headwinds facing the chemical industry, our teams continues to secure targeted opportunities largely tied to preventive and maintenance and technology upgrades. Looking ahead to the balance of 2025, given our line of sight today, we maintain our view for core growth to fall at the lower end of our low to mid-single-digit growth range that we guided to last quarter. But with greater margin expansion as core volumes were leveraged at the higher end of our targeted range for the full year despite tariff headwinds.

Overall, both our businesses remain well positioned to continue to deliver outstanding results into 2026. Now let me turn the call over to our CFO, Mr. Rich Maue for more specifics on the quarter.

Thank you, Alex, and good morning, everyone. As we were getting ready for our Q3 earnings release this past month, and as I reflected on the consistency of our execution and overall results, generally, a movie quote came top of mind that one of our investors mentioned at a recent sell-side conference in describing our consistency. One of my favorite actors, Ryan Reynolds, had this moving while portraying AAA-rated executive protection agent, Michael Brice, in a romantic and touching comedy to Hitman's Bodyguard, when describing his job. Boring is always best. I have heard from many of you and appreciate all the movie quote suggestions that you have all sent over the last year. So feel free to send me your best thoughts on lines in the future that tie to Crane in your view. And anyone suggesting a quote that we actually use on our call will receive a free Crane coffee mug autographed by me.

In all seriousness, while the environment is certainly not boring, our story remains unchanged and our teams continue to execute to win, driving results above expectations in the most consistent and boring manner possible despite the well-documented headwinds we are all facing every day. And with that, let me start off with total company results.

We drove 5.6% core sales growth in the quarter driven primarily by the ongoing strength within Aerospace and Electronics. Adjusted operating profit increased 19%, driven by continued strong net price of -- net price and solid productivity. In the quarter, core FX central backlog was up 16% compared to last year, reflecting continued strength at Aerospace & Electronics and core FX-neutral orders were up 2%.

From a balance sheet perspective, while we are in a net positive cash position at the end of the quarter, we completed financing with our bank partners for our pending acquisition of PSI. We entered into a credit agreement that included a $900 million delayed draw term loan and a $900 million revolving credit facility, both maturing on September 30, 2030. We expect to finance PSI primarily with the proceeds of the term loan and cash on hand, leaving the $900 million revolving credit facility available for further M&A and normal working capital management.

And consistent with our prior commentary, after the PSI transaction, our net leverage will be just over 1x, still well below our 2x to 3x targeted range, leaving us well positioned for further M&A.

With respect to tariffs, we continue to expect the gross cost increase to be roughly $30 million for the year, inclusive of the impact of the Section 232 tariffs, so no change there. And as we said last quarter, we expect to offset tariff impacts through price and productivity and our teams are prepared to react appropriately to any further changes that may occur in this dynamic area.

A few more details on the segments in the quarter. Starting with Aerospace & Electronics, sales of $270 million increased 13% in the quarter, nearly all of that organic growth. And even with the continued high level of course, sales growth, our record backlog of just over $1 billion, up 27% year-over-year, was up slightly sequentially. Core orders were up 5%, in line with our expectations as some orders that we anticipated later in the year were received in the first half. Again, no surprises and continued strong demand broadly.

Total aftermarket sales increased 20% with commercial aftermarket, up 23% in military aftermarket up 12%. And OEM sales increased 10% in the quarter with both commercial and military, up 10%. Adjusted segment margin of 25.1% expanded 160 basis points from 23.5% last year, primarily reflecting strong net price, solid productivity and the impact from the higher volumes. We expect operating margin to be modestly lower in Q4 due to typical seasonality and less favorable mix between commercial OE and aftermarket.

At Process Flow Technologies. In Q3, we delivered sales of $319 million, up 3% with flat core performance in the quarter, along with a 1.6% benefit from the Technifab acquisition and 1.5 points of favorable foreign exchange. Compared to the prior year, core FX-neutral backlog decreased 5% and core FX-neutral orders were down slightly as expected. Adjusted operating margin of 22.4% expanded again and in the quarter was 60 basis points higher than last year, driven by strong productivity, mix and net price inclusive of tariff headwinds in the quarter.

Moving to guidance. There were a couple of nonoperational changes below the segments. We now expect corporate expense of $85 million, modestly above our prior view of $80 million during -- due primarily to M&A activity. We also now anticipate net nonoperating income to be closer to $7 million, up from $4 million due to higher investment income on our cash balances. And a quick reminder that this nonoperating income also includes about $9 million of business interruption insurance recovery recorded in other income expense related to Hurricane Helene, around $6.7 million of which has been recognized year-to-date and with $2.7 million in the quarter.

And last, our tax rate for the full year will be slightly lower with us now estimating a 23% tax rate for the full year versus our prior estimate of 23.5%. Those 3 nonoperational items net to a very slight benefit of about $0.01 with the other $0.19 of the guidance increase at the midpoint coming from the segments. Operationally, we didn't change the full year core growth guidance range of 4% to 6%, but we now expect to be in the upper half of that range given the strength at Aerospace and Electronics, and that growth should leverage at our normal rates on a full year basis.

So given our excellent results to date and our current view on Q4, we are raising adjusted EPS guidance by $0.20 at the midpoint and narrowing the range to be within $5.75 to $5.95, again, reflecting 20% growth year-over-year at the midpoint.

Overall, another outstanding quarter, another outstanding year against a very dynamic macro backdrop. And with that, operator, we are now ready to take our first question.

[Operator Instructions] Our first question is coming from Matt Summerville with D.A. Davidson.

A couple of questions. First on PFT. Can you talk about -- if the expectation is that the business is up organically low single digits for the year, if you look at the nonchemical portion of PFT, how does that look relative to that low single-digit number? And then on the chemical side, what specifically you expect out of that end market this year? And maybe how you're thinking about that exposure, which is fairly large for the segment through, say, an 80-20 type of overlay? And then I have a follow-up.

Yes, Matt, thank you. This is Alex. So just to frame up the markets and what we're seeing and responding to your question, I think regionally different than by market is different. As a reminder, we're in PST, primarily almost half or a little bit over half on Americas-based business, which is a positive in this environment.

So first, speaking to the nonchemical market, wastewater, for example, North America based, we're seeing double-digit growth in that business driven by just investment in the aging infrastructure environmental. So that's been strong. We expect that to continue to be strong going into next year. Cryogenics through our new acquisitions in various applications, semiconductors, electronics and space launch I mentioned last quarter, just driven by that commercial aerospace market of launch, and we participate in the platforms and the build-out of platforms. That's been growing also double digits, and we're gaining significant share as well.

Just recently visited with the team there, and they were highlighting their commercial excellence in the front end where they have a tablet now on their own site, they're able to sketch the project converted into a drawing with this application, send it into the front end and really reduce the lead time, which is important to our customers. So doing very well. Also highlight pharma, in particular, in North America, strong growth there this year. We are seeing this reshoring activity happening in North America. We expect that to continue in the U.S. Big project that we won with a key customer related to the deal P1 drug as they're expanding and producing in the U.S. We expect more of those investments to happen.

And also in power, very North American-based driven just by the demand and power that everybody knows about AI, data centers. So those are all the nonchemical markets that will highlight, that are positive, and we continue to see positive going into next year.

When we think about chemical, also varying by region. So North America, we've seen some good projects this year, good activity on expansions, productivity. So a reminder, in Americas has the advantage of this feedstock cost event. So even though there's capacity globally, customers have advantage to investing in the U.S. and expanding and getting more output. So that's moving in a positive way. And also Middle East, those are the 2 markets that will highlight in chemical that have been positive and then softer Europe and China as well have been down.

As far as our exposure in Chemical, how we think about it, to answer your question -- your second part of your question. Look, the chemical market, there's a lot of things that we like in the applications that we play, very critical, corrosive, toxic abrasive applications that give us an opportunity to differentiate, add value for our customers. And so we like that. Obviously, the cyclicality of the market sometimes is a challenge. So as you know, over the last decades, we've worked to reshape the portfolio, investing in cryogenics, organically and organically wastewater and we'll continue to do so. Highlighting our recent PSI acquisition as well in the markets where they play in nuclear and aerospace, differentiated technology, also wastewater.

So we'll continue to invest in these higher growth markets, but maintain our current presence in chemical and keep building on that. And overall, we'll continue to save that underlying growth in our PST segment.

And then just another one on PFT, the margin upside you saw in the quarter, maybe help parse out what the key drivers of that upside may have been, whether it be price/cost mix or just cost out and then how we should be thinking about those various levers at a high level as we think about next year?

Yes. So as we think about PST, the journey we've been on, right, for the last decade growing and delivering more than 100 basis points, or close to 100 basis points on average, those are driven by several factors. One is our continued innovation, new product launches that we've highlighted in the past, our new product sales keeps growing as a percent of our portfolio. The new products are in these target markets more differentiated and we're able to have higher margin because of that. And then we're driving commercial excellence, value pricing, standing up for the technology and the problems we're solving for our customers. And third, this traditional relentless focus on operational excellence and weight elimination, which is -- which is core. So I think that would highlight those 3 elements.

I think what's different in this environment is this tariff dynamic, which I've been very, very pleased with how the teams have been able to manage that through both price and supply chain, which I think is a real differentiator for us to be able to do that and not only maintain, but expand our margins in this environment that speaks to the quality of our portfolio and the quality of execution from our teams.

Our next question comes from Justin Ages with CJS Securities.

I was hoping you mentioned in PFT some softness in chemicals. But just wondering if you could comment, maybe you're seeing signs of ongoing stabilization or maybe return to growth? Just trying to get a sense of when that might rebound?

Yes. So we're definitely seeing it stable, right, throughout the year. In the first half, we hit some big projects, projects continue to move more so in Middle East and North America. MRO globally has been stable throughout the year. So that's been a big part of our success. So definitely no signs of deterioration, stability. And it's just a matter of when this will start recovering at some point, we expect next year for chemical. But no clear inflection yet, but stable. And expect it to improve next year.

Justin, as I think about what's taking place globally, and we've -- and everyone else has had to react to changes in the tariff structure and other news that happens on a daily basis. But again, I'm pleased with how we continue to stay very agile to react as appropriate. I'm one that -- I mean, within our control, I'm incredibly proud of what we continue to drive within our control. If I look at the broader market, I'm more on the bullish end just generally because I believe that while there's a lot of noise right now that we're all having to deal with, I believe that this will be settling out here towards the end of the year into next. Just my own reading of the tea leaves and the administration's approach and I'm more optimistic and planning around it for our teams in terms of what that means.

It's still early days. We have our planned meetings coming up here in the month of November to really kind of lock in what it means for 2026. But I'm more optimistic of where all this shakes up and then what that means for the broader global economy. What that's worth. My opinion is not worth anything more than anyone else.

Yes. That's worth a lot. I appreciate the answer. And then switching to the PSI, just back of the envelope, the margins a little bit under Crane. So can you just talk about applying the Crane business system or the machine to PSI and what you're expecting to see in margin improvements once you've integrated them?

Yes, Justin, this is Alex. So we haven't close the business yet. We haven't closed the deal. We expect that on January 1. So we'll provide more details after. But generally speaking, these businesses have incredible technology, very stable aftermarket. We expect these businesses to become one of our best businesses within Crane from a margin and growth standpoint in our portfolio.

And the improvements that will drive are not different than what we've been able to do, particularly on the PFT side through driving overall CBS. So these will become accretive to our profile over the years. They have all the fundamentals, and I'll speak into more detail of how the different elements will play out or how we see them play out with the coming year. But I can tell you, I'm very, very confident that we will deliver with this acquisition. Very pleased with everything I'm seeing and our preparation flexing it.

We will move next with Damian Karas with UBS.

Congrats on the progress. So I wanted to ask you a follow-up question related to margins. And in particular, your guidance for the year, it seems like it's -- I'm taking in a step down in fourth quarter margins, definitely a notable break from the strength you've been exhibiting so far the first 3 quarters of the year. And I think even on a year-over-year basis, the incremental margin is definitely well below kind of the 35% to 40% plus you guys aspire to. So could you just maybe provide a little bit more color around that margin expectation for the fourth quarter? Any moving pieces there?

Yes, sure. Damian, this is Rich. The primary area would be similar to what we talked about the last couple of quarters with respect to the year-over-year headwinds that we're going to see in commercial aftermarket. Now I would admittedly say that we actually had a little bit of a better quarter here in Q3, and so we didn't see as much of that headwind. We do expect that in the fourth quarter.

A couple of items that I would point to is that we did see a few initial provisioning orders that we benefited from in Q3. We saw a decent claim recovery. So we did see a few things that did benefit us here in the quarter. And then what I would also say is 2 other things. One, we're continuing to see the OE build rates continue. And so that's a natural mix, unfavorable mix element, although we are excited about it. And then the second item would be when you look at the fourth quarter, we tend to have lower production hours. So there's a little bit of seasonality in what we would typically exhibit in the fourth quarter at A&E.

Now all that said, I would tell you that on a full year basis, we're going to probably be at the higher end of our targeted leverage range for A&E and will exceed at PFT. So, Yes, we had a great 9 months. We still expect a great fourth quarter, but it will be a little bit more muted for those reasons.

Understood. That's really helpful. And sorry if I missed any comments related to this earlier kind of hopping around a bunch of calls today, but would you guys give us your thoughts on the U.S. government shutdown? Are you seeing or expecting any impact from that? And just kind of thinking about that, should this continue into the extended future?

Yes. I mean right now, we don't -- it's not impacting us today. So the things that we would look to are paying bills and things like that, and we've got no signals of that at all. So far, so good in terms of any impacts to Crane. And at this point, there's nothing on the horizon that would suggest any impact to us here even as we get into the first quarter.

Our next question comes from Scott Deuschle with Deutsche Bank.

Alex, you mentioned power and data center demand as being a supportive market for PFT in response to Matt's question, I think. I guess, can you share a bit more detail there on what you're seeing in that market and how it's benefiting Crane?

Yes. For sure. So power, primarily U.S.-based for us less than 10% really our portfolio in PST. We've been in this business for a very long, long time with our valve portfolio primarily. And what we're seeing is these power demand that is well documented and the investment in combined cycle -- natural gas combined cycle plant around the country. I think just this year, there's more than close to 30 power plants that are moving forward. So we see content there. Natural [indiscernible] plants are still a very economic ways to produce electricity, very reliable. And as you know, abundance of natural gas in the United States. So that is our participation there with our valve portfolio, and we expect that to continue into next year.

Funnel has been increasing, projects are up.

Funnel has been increasing. I think they can't build them fast enough basically on the natural gas side.

And do you have any content on smaller reciprocating engines like those that Caterpillar makes?

No. No, we don't have content in that.

Okay. And then, Max, are you investing organically at PFT to increase your ship set content on [indiscernible]. Obviously, some big news out this morning. So just curious if that can maybe be a bigger driver for you all than your historical content suggested?

Yes. Thanks, Scott. But you could argue that order stokes long term is absolutely aimed at gaining content on the AP1000. We -- the team is already underway with technology investments to penetrate the pressurized water reactor in addition to boiling water. So long term, absolutely, as we continue -- the current team is doing a phenomenal job and has done as we have when we first won AP1000 content many, many years ago to the tune of about $10 million per ship set. We're identifying another 30% increase in content right now that we're bidding on capturing additional share gain also. So both organically as well as inorganically as we move forward for sure.

And that was an exciting announcement today -- exciting announcement that I think in addition, just the announcement today related to the $80 billion investment that the government announced and support, I think you're just seeing this change over time that will continue this trend of nuclear as part of a broader global solution to clean and efficient power that will continue to bode well for us in our position also.

Our next question comes from Nathan Jones with Stifel.

I'm finding it a bit hard to concentrate with the promise of a signed Rich Maue Crane coffee mug, I guess. I guess just another question on the PSI businesses. Max, you -- one of the comments you made was that you, from a strategic perspective, are more bullish on that business than you were 3 months ago. Maybe you could just talk a little bit more about what you've learned in the last 3 months that makes you strategically more positive on the outlook for that business?

Well, I'll let Alex chime in as well. But it starts with the team itself. And I think we just continue to be impressed with the caliber of the talent that's going to be joining Crane. I just love the openness and transparency that we've been met with to date. So that feels really good in terms of integration, integration planning, working well together. It's what I know is taking place already. This is not a team that has stood still. They've been investing for growth, and we're going to get -- quickly get aligned strategically as we're moving forward.

It just all feels very, very positive from that standpoint. Sharing of data, kind of getting clarity strategically on what we're going to be working on together from day 1. It's been a fantastic relationship. What else would you highlight, Alex?

Yes. I think over these months, Nathan, just giving more clarity on the specifics of how we're going to collaborate and work together, the detailed plans and the opportunities just having a very clear line of sight to the gains, starting with the Aerospace and [indiscernible] in the nuclear also with Panametrics, and just a level of detail that we've been able to get and the plans of what we're going to prioritize, and we're going to -- where we're going to be able to have quick gains gives us these higher confidence where we were 3 months ago. So it just keeps increasing as those clients get more defined and more details get clarifying.

And I guess I'll just ask a broader question about 2026. You guys have always been pretty willing to share your outlook. So I mean, our -- you're obviously going to get towards the top end of the growth, 4% to 6% growth target this year. We have seen organic growth slow down a bit as we've gone through the year. Maybe you could just talk about do you think we're in the 4% to 6% range next year, maybe it will be a little more towards the middle of next year? Or just any thoughts you have on how the growth outlook might shake out for next year?

Well, it's still early days. We've got our planned meetings coming up. There's a lot to monitor here in the fourth quarter. Having said all that, based on what I know today, based on what we feel today based on thinking through the end markets and how that will continue to play out. It still feels like our investment thesis holds into next year, Nathan, from that standpoint.

Okay. I guess we'll wait for the updates.

Our next question comes from Jordan Lyonnais with Bank of America.

[indiscernible] defense and how should we think about the opportunity for you guys if we start to see announcements for FXX, CCA downselect in some of the larger group 4-5 drones, have been kind of reviewed?

Yes, Jordan, this is Alex. On the FXX or the -- just the AnGes platforms, we are very well positioned on all the demonstrators really. So we've been successful in having multiple horses in the ray. So we're going to see strong benefit from that. On the CCA activity, I think we've mentioned we've already secured a position with one of the leading emerging players in that space with TCA, which is going to start ramping up here in the years to come.

And then in general, in drones, right, we're actively involved overall. I think, as you know, there's a wide range of drones that exists from the small battery powered and launch, those that are called like Switchblade or Phoenix, and we do not participate in that small where we do play is on the medium or larger drones that are part of that CCA, like those that you see called out like [indiscernible] Global Hawk, Predator. So we're well positioned there with various solutions, and we expect to benefit that as that market continues to grow.

Got it. And then on -- for how strong demand has been book-to-bill in Aerospace & Electronics, how are you guys thinking about the current capacity you have in place to meet that demand?

As far as capacity, we're -- we've been -- we're well prepared to meet the demand and the ramp-up rates of the OEMs, both Airbus and Boeing. I think teams have done a really nice job preparing for that, even taking advantage of preparing inventory buffers to execute at a very high level to support those ramp rates. So quite confident in our ability to support.

Our next question comes from Tony Bancroft with Gabelli Funds.

Congratulations on the great quarter and all your great work. I recently toured a new facility and was pretty overwhelmed by the amount of automation that was going into it. And I just want to get your view on sort of automation and you've talked a lot about -- it looks like you guys have a lot of backlog growing and -- I mean, on the commercial side, it sounds like you're ready to go with capacity, but it sounds like there's a lot of growth on both sides of the businesses and in other areas, obviously, things like Golden Dome and all that. Maybe you could just talk about how you view automation in the long term? And what could that get you maybe on a margin basis? And then just maybe overall ability to grow faster?

I'll take a stab and then if Alex says anything else. Look, we've always looked at enhancing productivity, easing the work by trying to error-proof and take out cycle time. What's manual, how can we automate? We have a lot of success with cobots across the organization on a localized level. I would be completely honest, Tony, I'm not sure what the technology is that you saw, what type of facility. There are certain technologies that just warrant themselves to complete automation from start to finish and that level of investment. There is no one Crane site that I can think of that would have that type of vision. It will continue to be -- while automation is clearly a direction that we will go down, it tends to be very spot based and specific to very specific tasks that continue to take out variation overburden on our associates.

At some point in the future, do you link work centers to begin to get flow, sells that flow. The human element for us will always be important in the near future with the type of work that we do across the organization. So I see it as part of the broader strategy for us holistically as we drive productivity on a number of fronts. But that is not one that you would say Crane is going to get down the path of completely automated facilities.

Yes. Just to add to Max's, like he said, very specific areas where work is difficult to make it more reliable. So we have a lot of projects in that, not factory-wide automation. The second area where we're investing in automation is just where skilled labor is difficult to get like welding. So we're trying to get more and more automated and various welding applications. So again, to summarize, more focused on specific tasks that are difficult to maintain and then trying to address skilled workforce gaps more so than fully automating a particular factor.

[Operator Instructions] We have a follow-up from Scott Deuschle with Deutsche Bank.

I'm going to be beat up on Rich with a few follow-ups. First is the F-16 break retrofit program still on track to hit that $30 million revenue target for 2026?

Yes, it is.

Okay. And then for 2025, there's essentially nothing in the base, right?

Correct.

Okay. And then Rich, is it fair to think that any organic growth accelerates next year, given what seems to be a story of acceleration across commercial OE, military and military aftermarket?

I would say that when you think about how our external guidance over the long term has been 7% to 9%. I think it's safe to say we'll be at the high end of that range at this point, Scott.

Commercial OE continues to be positive. I think what we're continuing to -- we're going to be meeting with our teams on a full plan. It's on the aftermarket discussion, right, which is -- it's been much stronger than we even anticipated coming into this year. Does that pace year-over-year on a comp basis continue? Or what does that mix look like? I think that is the unknown for us right now. Is that fair?

Yes, I do think that's fair. I think our algorithm there still holds. But what elements would be OE versus aftermarket is going to be something that we'll be easing out over the next couple of months. But as you're thinking about it, Scott, I would -- I would look at that long-term algorithm in the way I position it where we think we're going to fall.

Okay. And then just one last one to corporate costs. PAUSE Is this level is $85 million number? Is this a level you think you can hold for next year? Or is that going to want to grow next year with PSI coming in? Anything like that?

Yes. No, we don't see it growing next year. To be frank with you. You look at what our rate is today, it's like, I don't know, 3.8%. I would expect that to go down and we're going to leverage the growth and you'll see it closer to 3% next year, all up online.

And this concludes the Q&A portion of today's call. I would now like to turn the call over to Max Mitchell for closing remarks.

Thank you all for joining us today. We often talk about the Crane business system that is our foundational and holistic operating system. Many companies claim to have some form of an operating system, and I often get the question from investors as to what makes ours unique. We believe it is the intensity of the culture, people and processes and how we apply the principles to our processes down to the smallest details, which makes the Crane business system unique. Results are celebrated, but never good enough. And every detail is important to us moving forward. As the late great Giorgio Armani said, to create something exceptional, your mindset must be relentlessly focused on the smallest detail. At Crane, our teams are relentless with the details, building a stronger and more exceptional Crane.

Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

This concludes today's Crane Company's Third Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.