Good day, and welcome to the Crane Company Second Quarter 2024 Earnings Conference Call. At this time all participants have been placed on a listen-only mode and the floor will be opened for your questions following the presentation. I'd now like to turn the call over to Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax.

Thank you, operator. And good day, everyone. Welcome to our second quarter 2024 earnings release conference call. I'm Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax. Before we get started, I'm delighted to introduce Allison Poliniak as our new Vice President of Investor Relations. Many of you know her from her time as an analyst following the industrial, technology, and transportation sectors. She brings a wealth of experience into the role, and we're happy to bring her on board. I will continue to oversee the investor relations function, but over the next few months, as she assumes primary responsibility for investor communications, I'll be spending more of my time with tax, treasury and M&A. Allison, let me pass it on to you.

Great. Thank you, Jason. So good morning, everyone. I'm excited to be here and look forward to connecting with everybody in the next few weeks. As Jason mentioned, I spent the last 18 years as an analyst at Wells Fargo covering the industrial, technology, and transportation sectors. That gave me the opportunity to analyze and learn from a lot of great companies, their unique growth strategies, their approaches to drive productivity and sustainable profit improvement, as well as their approach to M&A. Many were successful, but some were not. All that has given me great insights as I step into this role. I have been considering making this move to the corporate side for some time. However, there were three key qualities that the company needed to have for me to join. One, a strong strategic growth vision that I supported that would take the company to the next level. The second is a sound and achievable M&A strategy that would complement that vision; and third, the ability to have a voice as both the inorganic and organic strategies evolved. There were a few opportunities that I did walk away from over the years because those companies did not have those qualities. Crane, however, did tick all those boxes for me. Add to that the respect I had for the management team and it was an easy decision for me to join, and with a little over a month into the role, I can tell you that I'm certainly not disappointed. What I have found is a strong culture focused on executing the team's strategic vision with significant opportunity, both organic and inorganic, to grow Crane and continue to move the earnings profile higher. So on that, let's get started. On our call this morning we have Max Mitchell, our Chairman, President and Chief Executive Officer; and Rich Maue, our Executive Vice President and Chief Financial Officer. We will start off our call with a few prepared remarks, 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. So now, let me turn the call over to Max.

Thank you, Allison. Welcome and thank you again for joining Crane. Good morning, everyone. Thanks for joining the call today. Yet another excellent quarter with results outperforming expectations. Adjusted EPS was $1.30, driven by an impressive 9% core sales growth, reflecting strength across both aerospace electronics and process flow technologies. That growth was paired with strong leading indicators with core orders up 7% and core backlog up 10% compared to last year, and confidence in our outlook for 2024 remains high. Based on the strength in the first half, we are raising the midpoint of our full year guidance by $0.15 and narrowing our outlook to a range of $4.95 to $5.15, which reflects 18% EPS growth at the midpoint. We have fairly strong visibility to delivering that 18% earnings growth. Our revised guidance continues to assume somewhat muted industrial activity with aerospace electronics, commercial OEM sales growth solid but at slightly lower levels given the changes with OEM build rates. We also assume that the aerospace electronics supply chain continues with similar issues with only very gradual further improvement as the year progresses. But this is also becoming more of the normal state of play honestly, at this point in time. If those assumptions prove conservative, we are structured to be able to satisfy any unexpected upside demand. We've had a strong first half. Our strategy is working. The team is executing, driving improved earnings through its growth and commercial excellence initiatives. We successfully completed three acquisitions over the last year and with continued progress on our existing M&A funnel, we expect additional opportunities to become actionable over the next few quarters, primarily smaller and mid-sized transactions. While we are working on a number of transactions at the moment, we see the opportunities weighted towards the end of 2024 and in the first half of 2025, given the expected timeline for known processes. Longer-term, as we reiterated during our annual investor day last quarter, we remain confident in a 4% to 6% long-term core sales growth rate 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 opportunities from capital deployment, and with virtually no net debt, the capital deployment opportunity is significant. Let me highlight a few recent wins and continued success in the quarter, starting with aerospace electronics. We previously highlighted our wins on NGAD 6th generation fighter aircraft and our strong position on prototype and demonstrator programs. In the quarter, we also saw significant progress on the CCA, or collaborative combat aircraft portion of this unmanned platform, across a number of our solutions. On another significant UAV program unrelated to the CCA, we've also had early success with our landing solution. Other significant negotiations continue to further solidify our already strong position on the next generation demonstrator programs for military and tactical hybrid electric ground vehicle platforms where our high power, unidirectional and bidirectional power conversion capabilities are best in class. We continue to receive significant order support for the known and expected ramp up of the multiple large ground based radar programs we've been awarded and that will be entering full rate production over the next two years. On the longer-term technology development front, we continue to make great progress on our SmartStem long range wireless advances. We've already deployed this solution on a recent demonstrator program with a large commercial OEM, and our latest version of this solution has a new user-friendly app interface that gathers critical tire pressure and temperature measurements quickly and accurately, with simplified installation using wireless technology that has significant weight savings by eliminating wiring. In our landing solution, we also continue to move away from bespoke architectures towards more standardized and modular solutions that are easier to adopt and customize quickly based on our customers' needs, significantly cutting development time and cost. The landing team has also made continued progress advancing our technology for electric brake control actuation, moving quickly towards technology readiness level six by 2025, and positioning us extremely well for the next narrow-body platform that will eventually be developed. And on the acquisition integration front with Vian, we are already seeing sales synergy opportunities. We have strong existing customer relationships in the aerospace fluid solutions market with our vein pump technology that Vian did not have to the same level, and we are now leveraging Vian's G rotor pump technology capabilities to bid and win on opportunities we couldn't effectively address before the acquisition. Stronger together combined and winning already. Overall, another strong quarter for A&E, both in reported results as well as in our activities supporting current and future growth. And just last week, our outstanding A&E team had another very successful air show at Farnborough, UK, meeting with key customers and suppliers, solidifying alignment on a number of key growth initiatives, and next month I look forward to spending a few days with the A&E team as we enter our annual strategy review process, looking at new strategic initiatives from the very near term to well into and beyond the next decade. Moving to process flow technologies in the quarter. Great traction in our wastewater pump business with our new high-efficiency envy motor platform and new higher horsepower offerings introduced late last year on track to double sales for that overall product platform. This year, we're also gaining share in the hydrogen sensing space with our newest pressure transducer technology. Our solution in this space has superior precision and reliability in hydrogen fuel cell applications where we're seeing significant growth opportunities, and again on the acquisition integration front with CryoWorks, we're seeing significant early successes working together in driving sales synergies, particularly in cryogenic space launch fueling applications. We've already booked $7 million in orders this quarter with four different customers, primarily for new rocket launch facilities supporting new satellite constellations with CryoWorks' differentiated capabilities and large bore insulated piping. We are leveraging our combined sales and marketing capabilities to pull through our valve portfolio as well. As mentioned on previous calls, we continue to convert customers to our FK Trix product from competitors due to its reliable zero leak capabilities and fugitive emissions compliance. We also continue to win share with pharmaceutical projects given the superior reliability and capabilities and higher operating temperatures with our diaphragm technology. Excellent progress on all fronts by the process flow technology team. Here too, I'm eager to visit many of our sites next month and review all our exciting strategic growth initiatives.

Thank you, Max, and good morning everyone. We drove 9% core sales growth in the quarter with strength across both primary businesses delivered with strong core operating leverage. Adjusted operating profit increased 22%, driven by volume, productivity and strong net price, and adjusted EPS also beat our expectations. Leading indicators were also strong, with core FX neutral backlog up 10% and core orders up 7% compared to last year, notably better than expected, particularly at process flow technologies. Another strong quarter reflecting our focus on accelerating core growth along with our consistently differentiated execution. I've shared my excitement over the last several quarters regarding how far we have come at Crane. But from the wise words of Jeff Daniels, as Harry done in the classic emotional drama, Dumb and Dumber, according to the map, we've done only 4 inches. A lot of opportunity and excitement ahead for Crane as we head to Aspen. Getting into the details, I will start off with second comments that will compare the second quarter of 2024 to 2023, excluding special items, as outlined in our press release and slide presentation, and then I will comment on our 2024 outlook for each segment and for our overall P&L. Starting with Aerospace & Electronics. Despite the headlines, no material change in the end market conditions relative to our expectations, again, no material change relative to our expectations. On the commercial side of the business, aircraft retirements remained very low due to high demand and limitations on aircraft deliveries resulting from an aging fleet that requires more aftermarket parts and service. On the defense side, we continue to see solid procurement spending and a continued focus on reinforcing the broader defense industrial base given heightened global uncertainty today. Overall, just a continuing solid demand environment. That strong demand was reflected in our second quarter growth rates with sales of $231 million, increasing 22% compared to last year with 16% core growth and a 6% benefit from the Vian acquisition. Despite the continued high level of sales growth, our record backlog of $815 million increased even further, up 21% year-over-year, including 12% core growth and the 9% contribution from the Vian acquisition. Sequentially, core FX-neutral backlog increased 2%. In the quarter, total aftermarket sales increased 33% with commercial aftermarket sales up 28% and military aftermarket up 47%. OEM sales increased 17% in the quarter with 27% growth in commercial and up 6% in military. Adjusted segment margins of 23.8% increased 360 basis points from 20.2% last year, primarily reflecting higher volumes and productivity. Looking ahead to the remainder of 2024, we are maintaining our sales guidance with core sales growth at 12% for the full year in addition to a 4.5% favorable benefit from the Vian acquisition. That guidance assumes continued strong sales levels, consistent with Q2, albeit at a decelerating year-over-year growth rate as the comparisons are more challenging in the second half. While comparisons can create some noise on quarterly growth rates, as we outlined in our May Investor Day event, we expect this year's 12% core sales growth rate to be followed by continued strong growth in 2025 and for the remainder of this decade. We are, however, raising our full-year margin guidance slightly to 22.2%, up 20 basis points from our prior view. That does assume a moderation in margin rates in the second half, driven primarily by mix, which we don't expect will be quite as favorable as it was in the first half as OEM deliveries continue to increase. Margin guidance reflects core leverage, excluding Vian of just about 40%, a little higher than prior guidance and overall on track for another outstanding year. At Process Flow Technologies, we remain well positioned to continue to outgrow our markets, and our market outlook is now a little more positive than it has been over the last several quarters. While we continue to see some softness in the European chemical and general industrial markets, we see continued strength in North America and China projects, particularly in chemical, and we expect this trend to continue. Given the improved performance, we are raising our sales and margin guidance for the year to reflect better-than-expected strength in our orders and backlog year-to-date. In the quarter itself, we delivered sales of $298 million, up 13% driven by strong core sales growth of 7% in the quarter, along with a 7% benefit from the Vian and CryoWorks acquisitions with a slight offset from the unfavorable foreign exchange we saw. Compared to the prior year, core FX-neutral backlog increased 9% and core FX-neutral orders increased 10%, both driven primarily by North American markets, followed by China. Sequentially, core FX-neutral backlog decreased 1% with FX-neutral orders down 4%, reflecting the strong project orders booked in the first quarter. Adjusted operating margins of 20.5% expanded 50 basis points better than we expected with strong core operating leverage in the quarter, driven by productivity, strong net price and higher volumes offset mainly by the expected dilutive impact of our recent acquisitions. Turning to full-year guidance for Process Flow Technologies. We now expect 2024 sales growth of approximately 10%, up from our prior expectation of 7% with the increase in our growth view coming from our core operations, which are now expected to be up 4% versus our prior 1% view reflecting year-to-date results and again, continued order strength. As we discussed last quarter, acquisitions, including both Baum and CryoWorks, will add about 6 points to our full-year growth rate. We are also raising our margin guidance for the full year to 20.6%, up 20 basis points from prior guidance considering our revised sales outlook. For context, remember that in 2019, just before COVID, margins at Process Flow Technologies were 13.6%. As we noted before, this is a significant step function change in margins, which is reflective of our efforts to structurally shift the business to higher growth and higher-margin end markets. We continue to see opportunity on this journey through the contribution from accretive new product introductions, pricing that is both disciplined and appropriately assertive given the inflationary environment, our continued investments in technology-driven product differentiation, and continued productivity. From a cadence perspective, we still expect third quarter to be the strongest of the year for sales with the fourth quarter seasonally a little softer. Margins in the second half should be very similar to the first half of the year. And Engineered Materials sales of $53 million decreased 8% compared to last year as expected. Operating profit margin decreased 270 basis points to 13.9% on the lower volumes. For the full year, we continue to expect both sales and margins to be flat compared to 2023. Moving on to total company results. In the second quarter, adjusted free cash flow was $57 million, roughly in line with last year. For the full year, we now expect free cash flow in the range of $255 million to $275 million, up $5 million at the low end compared to our prior range. We continue to expect free cash conversion of greater than 90%. Total debt at the end of the first quarter was approximately $377 million with $229 million of cash on hand. We continue to have substantial financial flexibility with more than $1 billion in M&A capacity today and reaching as much as $4 billion by 2028. While this is more financial flexibility than we have historically had, our capital allocation strategy is unchanged. We will deploy our capital with the same strict financial and strategic discipline that we always have employed, prioritizing internal investments for growth, followed by M&A and returns to shareholders. Now turning to our 2024 guidance. As Max mentioned, we are raising the midpoint of our full-year guidance by $0.15 and narrowing our outlook to a range of $4.95 to $5.15, which reflects 18% EPS growth at the midpoint. Guidance assumes total core growth of 5% to 7%, up 1 point from our prior guidance due to the outperformance of Process Flow Technologies and a 5% benefit from acquisitions. That 5% to 7% core growth will drive approximately 18% growth in adjusted segment operating profit, about three times the core sales growth. Turning to the other elements of our full-year guidance, we did raise guidance for corporate expense by $5 million to $80 million, primarily reflecting higher compensation expense given our performance to date and outlook, but this impact was roughly offset by lower net nonoperating expense now at $20 million, $3 million lower than prior guidance and expectation for a slightly lower tax rate and 23% compared to our prior guidance of 23.5%. Overall, a very strong first half with excellent momentum as we enter the second half.

The floor is now open for questions.

Hi. Good morning, everyone and welcome, Allison.

Thanks.

Good morning. I've got to say those are some pretty big shoes to fill with Mr. Feldman.

I wanted to ask you guys about PSG. That's a pretty notable increase in your sales outlook for the year. Could you just maybe talk about that a little bit more. What's really changed in the business versus a few months ago? Do you feel like it's got pretty good visibility? Or is there maybe still some choppiness on the short cycle side of the business?

Yes, Damian, I think we've been consistent in this, too, and we tried to explain it even in giving guidance for the full year. We've looked at historic trends in the cycle coming out of post-COVID. We predicted a little softer market dynamics than what really has played out, particularly in the Americas. So as the quarters have moved on, I wouldn't say it's been a great growth or any specific momentum. It's just the market overall has been much stronger than we had anticipated, where we planned for, and where we guided for, particularly in the U.S. Projects seem to be coming back a little stronger than we had anticipated, particularly in the chemical space. So it's been more of an alignment to what we're really seeing play out versus our assumptions based on the historical view of the forecast.

The only thing I would add just in terms of the last three months is, again, I would just reiterate, it's not so much changing; just that continued momentum. So that one more quarter under our belt coming out of the first quarter really just allowed us to say, hey, there's no reason why we shouldn't be able to hit the revised guide. So we feel pretty confident here, Damian, as we close out the year and as we think about 2025, frankly.

Understood. That's helpful. And I think it was Slide 9. There's a comment in there that you're well positioned to ramp it macro environment for mix. Could you just elaborate a little bit on your thinking there?

I think we've got, in general, a balanced capacity from a facility standpoint, our ability to leverage our existing resources from an efficiency standpoint as well as being able to ramp up if required. The sum of supply chain dynamics that we see. As we see continued improvement, we feel well positioned to leverage any demand.

Hi, great. This is Megan on for Scott, sorry.

Good morning, Scott.

My question is for Max. Can you characterize where you're seeing the most growth in commercial aftermarket right now? Is it mostly on the engine side, like on the ETF or is it more well balanced across platforms? Or is it more balanced across airframe versus engine? Any thought there would be helpful.

Yes, we're seeing broad growth that isn't limited to just engines. From our perspective, our fluid management is experiencing a nice increase, especially due to developments in engines. However, this growth is quite evenly distributed across our freight control solutions and sensing as well. So, we view it as fairly widespread, and I hope that provides some clarity.

I appreciate it. And then one more question, if I can. Rich, can you characterize the price realizations at both segments?

Sure. So in the quarter, not too much different from what we were experiencing in the first quarter for aerospace and defense. A little bit more than a third of the growth in the quarter came from price. And on the Process Flow Technologies side, it's about mid-single digit in the quarter. Again, fairly consistent with the first quarter and I would say even consistent with how we're thinking about things moving through the balance of the year.

Thanks. A couple of questions. First, maybe just to piggyback off that last one. The price capture you're seeing in TFT and putting that in the context of where you're at with deploying 80-20 in that business. I guess I'm trying to understand, maybe using a baseball analogy, what inning are we in, in terms of Crane realizing at least relative to historical standards, this above trend level of price capture and do that same level of price capture continue down the road? Help me understand that a little bit more.

To address your question about the current status of our pricing strategy using your baseball analogy, I believe it's essential to start by emphasizing what drives our efforts. We focus on the Crane Business System, which encompasses strategy execution, technology, and commercial excellence. We're quite adept at implementing lean practices in various areas. The 80-20 approach is just one of many tools we utilize across the organization to enhance customer satisfaction and drive growth. This includes a more focused strategy for analyzing product lines and customer segments, aimed at delivering exceptional service and making informed pricing decisions. We're performing well and continually improving. While the journey is ongoing, I would liken our current situation to being in the third or fourth inning, which has been our experience for the past three to four years.

Yes. No, that's very helpful. And then as a follow-up, I think, Max, you mentioned maybe the commercial OEM outlook is a little bit lower. I was hoping you could put a little bit of a finer point on that comment you made in your prepared remarks while also maybe providing an assessment in terms of what you see from an inventory standpoint in the channel? And just overall, what your view is going forward on supply chain and where OEM build rates go from here?

I think we're reaching a point where supply chain issues have become the new normal. As we move into 2024 post-COVID, there are dynamics that have changed which we are managing well to meet demand. We are adjusting lead times as needed and satisfying our customers' needs. While there is still some unmet demand, it is less significant now. I believe we have established a new standard for meeting demand expectations. I don't see any inventory concerns on our end. We have always used various factors to forecast effectively, not just OEM build rates, which gives us confidence as we look ahead to our growth rates.

Yes, I would agree with that. Part of the comment was related to one of the OEMs slightly reducing their build rates. However, this will not affect us this year, and I don't believe it will have a significant impact next year or in the years to come when considering the growth potential from Crane. As you may know, much of our growth in the next few years will also come from military contracts, which provides a nice benefit in light of any challenges that others may face due to commercial supply chain issues.

Hey, good morning. This is Nick on for Jeff. Just wanted to ask about the deal pipeline. It sounds like some things may be actionable later in the year. But are you guys seeing any competition sort of heating up, maybe putting pressure on multiples? Or how are you thinking about that?

Yes. Thanks, Nick. Very active, a lot of opportunities, both the things that we've been cultivating for years as well as what's coming out from PE, got some conglomerates that are looking at what no longer makes strategic sense. Some are highly competitive. Some are more cultivated relationships. So we're seeing all of the above. It's very balanced. I'm very encouraged as we're moving forward. In terms of multiples, there's still some upward pressure. Some things are competitive, but we're going to stay disciplined. We're going to make sure that return on invested capital meets our goals. We have a good line of sight to the synergies that we can bring. If a deal makes sense, and we're not afraid to walk away if it doesn't make sense. So I think we feel pretty good overall.

Sure. So yes, some of this in the prepared remarks, but I'll give a little bit more color here. Certainly doing a little bit better than we had anticipated as we move through the year. This is, I think, now the fourth quarter in a row of positive order activity for us, primarily on the project business, largely confined to North America and China and mainly in chemicals and pharmaceuticals, just to give you a little geography and end market. This sets us up nicely for the second half and as we think about 2025 in particular. European chemicals are still quite slow. I would say both projects and MRO, but we think also largely stabilized. So we don't think there's further momentum downward, it's stabilized at a level where we see it today. A handful of project pushouts here and there in North America and China, but we've seen other projects accelerate faster, and that's been a source of some of our confidence overall. So stronger than expected on the project side. And again, largely in pharmaceuticals in Asia, particularly for localization and LNG. And then in North America, we think some of the activity that's been stronger has been related to reshoring and bringing some manufacturing activities back to the U.S., some of that in semiconductor related to data centers and so forth. So some nice strength there.

You are welcome.

How are you doing? Just on PFT, I was hoping you could give us an update on those kind of five focus areas that you've called out before. How much of the sales, how much of margin is related to those?

Five focus areas being chemicals, water, wastewater, pharma, industrial and hydrogen. From a revenue perspective, it's ballpark, a little bit above 60%. From a margin perspective, I don't know if we have exact numbers, but it's higher than that because the profitability of those businesses is above the segment average. I don't know if Max or which of you want to comment specifically about...

We believe that a significant part of the 60% revenue is coming from the chemical sector, which has shown considerable momentum this year. This sector is the primary contributor. In terms of margins, there's not much differentiation among the various sectors; they tend to have similar margin profiles without any clear outlier. The pharmaceutical sector also plays a vital role in our growth and margin performance. Additionally, we are experiencing positive project orders in Cryo, as Max mentioned earlier. Overall, this broad range within two-thirds of our portfolio is fueling both growth and margin improvements.

That's a good question, Justin. We'll focus on that specifically. We haven't done that before. I agree with the previous comments. It's relevant across all five segments. To clarify further, when considering hydrogen, we are committed to long-term technology development. Simultaneously, we are achieving success in cryogenics beyond just hydrogen, including other liquefied natural gas areas. This has been very effective. In water and wastewater, our team has been experiencing outstanding success with initiatives I've mentioned, including the Envy product line. In pharmaceuticals, we are winning new projects with the diaphragm. In chemicals, we are gaining market share through specific actions and successfully competing in the channel, which makes me optimistic. We continue to see momentum in all our key focus areas. No, that's helpful. Thanks. And then one more, if I could. Just on the prepared remarks, on the M&A pipeline back later 2024 right into 2025. So just on capital allocation, are you thinking about any changes in priorities given kind of the amount of capacity you have and maybe the lack of deals this year? The funnel is so large and rich that it would realistically take another 12 to 18 months before I would make any significant changes to our strategy. At this moment, that is our perspective. We see substantial potential ahead with some promising opportunities that are either currently in progress or on the horizon, so we plan to reserve our resources for now. If we encounter any issues such as a stagnant balance sheet with no available opportunities, we will definitely explore other options, as we have shown in the past.

Good morning. You mentioned NGAD during the Investor Day and associated a $300 million life program with it. Given the delay in the downside for the actual event while CCA continues, does this affect your perspective on what that program might mean for Crane?

I think, in the short term, meaning the next few years, there will be minimal impact, and we feel pretty solid about our position. Longer term, if there are significant changes in the platform, it could have an impact.

In the near term, as Max mentioned, all of our efforts are fully funded, so there won't be any impact on the profit and loss statement. Looking to the long term, we are involved with most of the major fighter platforms. Therefore, if there are any reallocations or adjustments to address potential shifts, we believe we are in a strong position.

Got it. Regarding the work you're doing with CCA, do you see the opportunity for technology transfer for EUVs? We're seeing that market starting to come forward now.

Definitely. And our teams are chasing those opportunities today.

Good morning. This is Adam Farley on for Nathan.

Good morning, Adam.

I wanted to follow up on PFT. It sounds really good, continued momentum, and markets look good. So maybe if you look at orders, would you expect higher orders in the second half relative to the first half?

It's important to approach the analysis of orders in PFT with caution due to the project-oriented nature of a significant portion of the business. In the first quarter, we noted that our performance was excellent, and this quarter has also been strong. However, Q1 was particularly robust due to some large projects that we secured, marking it as the highest quarter we've experienced in a while. It's essential to recognize that the shipments connected to many of those orders will contribute to future periods rather than being realized in the current year. If we adjust for this, our order rate in the second quarter remained steady. Looking ahead to Q3 and Q4, I anticipate that Q3 will be similar, while Q4 typically sees a slight seasonal decline. Overall, there’s nothing particularly notable to highlight aside from the unusually strong first quarter we experienced.

I appreciate the color. And then on margins, for both segments, looking at the second half, I mean, should we expect incremental margins in that 35% to 40% range? And if not, what are the variances and what's driving them?

Yes, we will definitely hit that range.

Thanks for taking my question and I remember a lot of people had changed their garage codes after that movie came out. So regarding Farnborough, great seeing you there; just maybe could you give me a quick overview of your feedback from Farnborough, just speaking with customers and, obviously, investors and just anything different than you were expecting.

I would say it met our expectations. The feedback focused on key relationships and engineer-to-engineer selling. The opportunity at Farnborough involved not only top-level relationships but also engaging with teams working on technology road maps today and in the future. We had discussions aimed at gaining insights and promoting our complete range of solutions. We recorded about 150 interactions across various levels and aspects, including supply chain matters and future opportunities, which helped us understand customers' needs and shape our strategy and technology development. Overall, it was very positive and met or exceeded our expectations. However, there were no significant surprises or dramatic new insights beyond that, I would say. Thank you, operator. Again, yet another very solid quarter with results outperforming expectations. Our strategy is working. The team is executing, driving improved earnings through its growth in commercial excellence initiatives. Our M&A pipeline is full and we have the balance sheet capacity to execute. During the Olympics right now and the athleticism that's on display, I want to leave you with this thought from the late great San Francisco Giants baseball star, Willie Mays. One of the hardest parts practice is the criticism a player takes from his coaches. Some players think a coach has it in for them when a flaw in style is pointed out. I know that when things start going wrong, for one, I get the coach to keep his eye on me to see what I'm suddenly doing wrong. I can't see it or I wouldn't be doing it in the first place. At Crane, our leadership constantly practices with detailed hands-on coaching. Our culture thrives on raising the bar of excellence and driving improved customer satisfaction through the solutions we provide. We practice repetition every day with cadence and discipline, always with an eye towards driving profitable growth for our customers first, our associates, our communities and our shareholders. On to the second half of 2024. We look forward to seeing many of you in Q3 at conferences and on the road and look forward to updating you again in October. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

This concludes Crane Company's Second Quarter 2024 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.