Crane NXT, Co. Q1 FY2023 Earnings Call

Greetings, and welcome to the Crane Company First Quarter 2023 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jason Feldman, Investor Relations for Crane Company. Thank you. You may begin.

Thank you, operator, and good day, everyone. Welcome to our first quarter 2023 earnings release conference call. I'm Jason Feldman, Vice President of Treasury and Investor Relations. On our call this morning, we have Max Mitchell, our 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 will respond to questions. Just a reminder that the comments we make on this call may 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, Form 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 the 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, Jason, and good morning, everyone. Thanks for joining the call today. While we are here, the separation is complete, marking an entirely new beginning for Crane Company. We last updated you on our March 9 Investor Day as we approached our successful separation on April 3, followed by the honor of representing our global team by ringing the opening bell of the New York Stock Exchange on the 4th. It seems just like yesterday that we laid out the case for separation in March of 2022, but here we are, 14 months later, having successfully executed on schedule. The separation was the logical next step in our multi-decade journey from a holding company to an integrated operating company and now into two separate, strong, and focused independent businesses, technology leaders, each well positioned to outperform in its respective markets, and each equipped with strong management teams to drive continued success. I'm incredibly proud of how the corporate organization executed on the separation on schedule and according to plan. My sincere thanks to the entire corporate team for their incredible efforts over the last year and now moving into post-separation support. A quick reminder on why we believe Crane Company is such an exciting opportunity today: We have delivered decades of consistent and differentiated execution. We have an accelerating growth profile after years of relentless investment in our technology roadmaps, each aligned with key secular growth drivers in our end markets. We have a long track record of creating value through acquisitions and capital deployment more broadly. We have a very strong balance sheet today, giving us significant financial flexibility. Now that the separation is complete, Crane Company is a streamlined and more focused leading technology business. The market’s reaction since we announced the separation in March of last year validates our strategy, with substantial value already unlocked, and we are confident that even more significant value creation lies ahead. The new Crane Company, as we described on Investor Day, has about $2 billion in sales and $335 million in adjusted EBITDA this year. A 4% to 6% long-term core sales growth rate from resilient and durable businesses that derive about 40% of strategic growth platform sales from the aftermarket, with substantial operating leverage on top of already solid margins today, should lead to double-digit average annual core profit growth with potential upside from capital deployment. Starting with net debt to EBITDA at about 0.2x, the capital deployment opportunity is significant. Turning to the first quarter, we had a great start to the year, positioning us extremely well for the coming quarters and years ahead. As you saw in our press release last night, we reported adjusted EPS of $1.25, 8% core sales growth, a record 18.5% adjusted operating margin, and we raised the midpoint of our adjusted EPS guidance by $0.20 to a range of $3.60 to $3.90, and we feel very confident in this outlook for the year. We delivered those results in an environment that hasn't changed much since the second half of 2022. We still see continued solid demand across most end markets, but we continue to remain guarded, watching carefully for any signs of softening, particularly in our shorter cycle businesses. From a cost and inflation perspective, as you can see from our continued margin strength, we have been appropriately assertive with pricing actions across all of our businesses, and we continue to fully offset the impact of inflation on both a dollar and margin basis. Overall, we continue to execute extremely well, and we have proven that we can operate successfully in a wide range of market conditions. At Aerospace & Electronics, demand remains very strong. We have seen no slowdown, and sales are still somewhat constrained by the supply chain, particularly around active and passive electronic components needed for printed circuit boards. The supply chain status is generally unchanged compared to last quarter, though mildly improving in some areas. We do expect supply chain constraints to ease over the course of the year, but at a very gradual and measured pace. We remain very comfortable with our forecasted outlook for this business. Over the last 3 weeks, I have visited nearly all of our Aerospace and Electronics sites with Alex Alcala and J Higgs to check in on the fantastic progress our teams continue to drive. Just a few examples of what we saw include our landing brake control solution that continues to track to plan on the new F-16 brake control upgrade design that requires unique packaging requirements to meet the needs of an existing space envelope. Our technologists have clearly differentiated themselves from the competition by developing an innovative solution for that challenge while delivering on significant performance improvement. The factory is progressing with readiness plans to ramp up to immediate full-rate production in 2026, with annual sales of roughly $30 million in the first year and an expected program life of 5 to 7 years. In our Modular Power business, our team continues to win in new space applications, while also continuing to make progress on our development roadmap for a complete family of power conversion products with wide input voltage ranges across high and low power families, and using modular architecture across multiple standards and features focused on military and space applications with radiation-hardened and high-reliability designs. This business has a target to capture more than $125 million in cumulative sales over the next decade with these newer products. In the interim, we're driving enhanced channel management to take share with our existing product offerings. In our Defense high-power solutions, we also reviewed our technology roadmaps and development as well as the facility readiness plans, which are on track to support the significant ramp up in support of the four large AESA radar wins we have secured to date, all ramping up over the next few years. There is also significant traction and progress working on a funnel of new opportunities, many related to defense, electric vehicle readiness, where we already have a substantial presence on demonstrator programs and prototypes, winning our seventh such demonstrator this week with a 120-kilowatt bidirectional DC to DC converter. In our Fluid Management solution, we continue to benefit from steadily increasing aftermarket demand for pump and fuel flow transmitter products used on commercial jet engines and airframes. We continue to successfully progress our many technology demonstrator programs for the sixth-generation fighter fuel, coolant, and lubrication systems, as well as for platforms focusing on demonstrating hybrid and pure electric propulsion. We are also preparing our site for the expected higher volume of repair activity on GTF pumps related to the A320neo engine overhauls ramping up over the next several years. In our Microwave business, we reviewed our continued strong progress on existing program wins with more complex integrated microwave assemblies at increasingly demanding frequencies, as well as our ramp-up plans for increased demand from the Patriot missile program. Just an incredible and exciting set of visits with our teams. The outstanding passion they have for the business and the technology investments we continue to drive support our 7% to 9% growth rate in this business moving forward. At Process Flow Technologies, we are seeing some moderation in order rates, as expected and consistent with what we communicated in March. Core orders still increased about 4% in the first quarter, and we have a very strong backlog, but those order rates have decelerated from double-digit rates in the second half of last year. Most of the slowing has been in the U.K. and Europe, while other regions remain fairly solid. The growth story is no different at Process Flow Technologies, where we have continued to invest for the future with new product introductions released at a record pace and with significantly higher margins. New product vitality metrics continue to improve year after year, and we maintain an extremely strong position in core target markets of chemical, pharmaceutical, water, wastewater, and industrial automation. Those key markets now comprise nearly two-thirds of the business, with accelerating new product development focused on increasing exposure to these target markets and giving us high confidence in the 3% to 5% growth profile through the cycle and the substantial opportunity to further expand margins. A lot of exciting developments in this business as well. We are outperforming the market and gaining share, driven by new product innovations. For example, you may have seen the press release issued yesterday morning by Chart Industries, highlighting a new cryogenic valve for liquid hydrogen applications that we introduced and that Chart tested and validated. This is just another step in building the hydrogen business we discussed at this year's Investor Day event. We are in the process of launching five additional new product lines over the next 12 months, all targeting a market that is growing at more than 15% annually. We are already working closely with several key customers to introduce these products to help solve our customers' ongoing performance challenges. In wastewater, we continue to see adoption of our new high-efficiency NV motor platform, and we are on track to triple NV sales this year with further upside in 2024 after we launch a larger size range of up to 75 horsepower late this year, further strengthening our position in this $1 billion served market. In addition to new products, we are gaining traction with our front-end investments, leveraging our improved product portfolio to upgrade our distribution network into municipal and commercial markets. In the chemical space, we have great momentum with orders up in the double digits, with growth led by our portfolio of new valve and specialty pipe solutions that have differentiated sealing technology to solve reliability challenges in corrosive, abrasive, toxic, and hazardous environments. Our innovative L-TORQ product has just been launched, and it is already installed by key customers in the Americas and Asia. Our recently launched FK-TrieX valve has also continued to gain traction with our project funnel doubling so far this year, given the valve's unique ability to solve leakage and flow problems in severe service applications. In our Pharmaceutical business, we continue to strengthen our position by expanding our product portfolio to solve leakage and reliability problems in process media, steam sterilized applications, and bioprocessing. New products launched this year will include a new hygienic ball valve and expanding operated diaphragms, targeting the high-growth bioprocessing segment and delivering accretive margins—just continued excellent momentum in process flow technologies. In Engineered Materials, there is really no change to our view for the year. So again, off to a fantastic start post-separation and poised to drive accelerated growth, margin expansion, with optionality from our balance sheet strength. Let me turn the call over now to Rich for some more specifics on the quarter.

Thank you, Max, and good morning, everybody. Overall, an outstanding quarter with 8% core sales growth driving 27% adjusted operating profit growth and once again achieving record adjusted margins at 18.5%, which improved 460 basis points compared to last year and was driven by excellent performance across all businesses. I will start off with segment comments that will compare the first quarter of 2023 to 2022, excluding special items, as outlined in our press release and slide presentation. At Aerospace & Electronics, first-quarter sales were very strong, increasing 15% compared to last year to $180 million, and segment margins of 20.9%, increasing 300 basis points compared to last year, primarily reflecting strong leverage on the higher volumes, as well as strong pricing and productivity gains. Despite the impressive increase in core sales growth, we, along with the rest of the aerospace industry, still remain somewhat capacity constrained due to continued supply chain issues as we properly planned for in our guidance. The combination of supply chain constraints and strong demand drove our backlog up another 27% to $645 million. In the quarter, total aftermarket sales increased 21%, with commercial aftermarket up 32% and military aftermarket down 5% on program timing. And OE sales increased 12% in the quarter, with 17% in commercial and 8% in military. At Process Flow Technologies, sales of $271 million decreased 13%, driven by the 20% impact from the divestiture of Crane Supply in May of last year and a 3% impact from unfavorable foreign exchange. Core growth for Process Flow Technologies was very strong at 10%, and was broad-based across the segment. Record adjusted operating margins of 23.4% increased 710 basis points from last year, primarily reflecting strong pricing, leverage on the higher volumes, and delivering on productivity gains. Continued excellent execution by our teams in all areas supported an 80 basis point improvement to our full-year margin guidance, which is now 18%. Compared to the prior year, core foreign exchange neutral backlog increased 9%, and FX-neutral orders increased 4% sequentially compared to the fourth quarter, while FX-neutral backlog decreased 2% with FX-neutral orders up 1%. At Engineered Materials, sales of $62 million decreased 12% compared to the prior year as expected. Operating profit margins decreased 70 basis points to a solid 18.3%, driven by lower volumes but an impressive deleverage rate. Transportation and Building Products markets remained strong, offset by RV, which declined in line with industry production rates. Moving on to total company results. In the first quarter, adjusted free cash flow was negative $69 million, consistent with normal seasonality. We are emerging from the separation with a strong balance sheet and robust free cash flow generation. Our post-separation capital structure is the same as when we described it earlier this year. After separation-related transactions, Crane Company's only debt was a $300 million prepayable term loan with cash on hand of approximately $235 million. We also have a new 5-year $500 million revolving credit facility that is currently undrawn. Very little net debt; we have already repaid $35 million on our term loan earlier this month and have significant financial flexibility with more than $1 billion in M&A capacity today, increasing as much as $4 billion by 2028. While this financial flexibility is more than we have had historically, our capital allocation strategy remains unchanged. We will deploy our capital with the same strict financial and strategic discipline that we have always employed, prioritizing internal investments for growth followed by M&A and returns to shareholders. Of course, the timing of acquisitions isn't predictable, and both actionability and market conditions can change quickly. However, given our robust pipeline of potential opportunities, along with our solid organic growth profile, our internal goal would be to roughly double the size of our growth platforms over the next 5 years. Our teams are motivated and reenergized by our future post-separation, and we look forward to delivering on this vision. We also have a commitment to return cash to our shareholders. As outlined in our press release last night, our initial dividend for Crane Company will be $0.72 per share annually, or $0.18 per share quarterly, which reflects a dividend payout ratio of approximately 20%. We do expect to grow the dividend in line with earnings to provide a stable and attractive return to our shareholders while ensuring that we have the capital flexibility to continue our internal investments and pursue acquisitions. Now turning to our 2023 guidance. I provided a lot of detail on our guidance call in January. For the benefit of my voice and your ears today, I'm just going to highlight the changes. For modeling purposes, I would point investors to the detail in the fourth quarter earnings script as well as the details we provided at Investor Day. We now expect 2023 sales to increase approximately 5%, up from the prior guidance of 3%. That's driven by one point of higher core sales growth, along with foreign exchange that is now neutral compared to last year, rather than the one-point headwind we originally had in our guidance. Segment details have been provided in the slides. While we took up core sales expectations for all three segments, Process Flow Technologies had the largest increase, given the very strong first quarter results. We expect total company adjusted segment margins of 18%, up 60 basis points from our prior view, again led by Process Flow Technologies, with a new expectation for higher growth and continued solid execution. Overall, excellent operating leverage across the businesses. The only other notable change was corporate expense, now expected to be $70 million for the full year. While there are a few components of this change, the biggest driver is higher compensation expense given our revised outlook. Overall, we anticipate adjusted EPS of $3.60 to $3.90, with adjusted EBITDA of $335 million. So a great quarter and an excellent start to the year. We are extremely well positioned today with record margins, leveraging long-term future 4% to 6% core growth at 35% to 40%, demonstrating our execution track record that shows we can deliver in any environment, along with a very strong balance sheet and free cash generation to support value-creating capital deployment.

We are now ready to take our first question.

Max, Rich, and Jason, congrats on a really strong start to the year. I want to start by asking you about the PFT margins and the big step up to 23.4%. You basically ripped past your long-term target. So I'm wondering if there was anything one-off or non-repeatable in nature that happened in the first quarter. Just looking at the 18% guidance for the year, I mean, it basically suggests that you go from that 23% down to more like 16% or 17%. So I'm wondering what will drive that margin sequential decline through year-end.

Yes. So thanks, Damian. Yes, look, we obviously are really pleased with the margin performance overall, and we were modestly surprised to the upside, which is why we took up the target by 80 basis points. Much of the outperformance was timing. March was particularly strong for us; the supply chain cooperated, and we were able to get more volumes than we expected. We had a really solid March. I would also point out that we didn't spend at the levels that we planned. It remains a challenging environment to get the right people on board in the quarter. Planned investments for growth will also increase as we progress through the balance of the year. Going back to our Investor Day, we have said this a number of times, including in our prepared remarks: We expect to see short-cycle slowing in PFT as we move through the year. In March, I would say, things continued to be strong, but in April, as expected, we did start to see that short cycle begin to slow. With that lower volume level, we would expect less significant accretion. The mix was a bit of a tailwind in the quarter for sure, and we had a little bit of incremental benefit from inventory revaluation, given the highly inflationary environment we find ourselves in. Those will account for the majority of the gets and takes. I would add that we are being a little cautious here, given the uncertainty in the environment. It's possible we do better than we expect or than what we've outlined, but we want to see a couple of quarters here before we get ahead of ourselves.

Let me add a little bit, Damian. Just to reiterate what Rich said, but say there was no one-off. Everything kind of aligned to come in very strongly here. As Rich mentioned, supply chain and our ability to get product out the door, the mix was favorable. The volume was favorable, and pricing was reading through. The investments that Rich talked about include building this hydrogen business as an example. There are a lot of hires that we have baked into the first quarter that were going to take place, but we are just having some challenges getting everyone aligned in that business along with some of our other growth initiatives. The environment of hiring and finding the right people is taking a little longer than anticipated. That read-through was favorable, but it will reverse in the back half of the year. As Rich mentioned, we still feel firmly that we've got the markets right in terms of how we're predicting a gradual decline year-over-year and sequentially through the back half of the year from order rates. You're seeing some of this—we don’t want to call anybody out—but if you look at some of the major chemical providers today, they’ve talked about it this quarter. It’s just a bit of a slow down that's taking place, and we think we’ve properly accounted for it and are planning for it. So, you won’t quite see that same level of margin performance as we move forward.

Understood. Switching gears to A&E. So you raised the guide by 1 point, which is something like $6 million in sales. I want to ask you about the $50 million of unmet demand. What's your visibility and updated thinking around that? Does that still represent upside to your A&E guidance at this point?

Yes, the $50 million; it’s not that there's a backlog sitting there that we can clearly identify. This is an average that we are saying that if we had improvement in supply chain, we would be able to clear. Right now, we are not seeing significant improvement in the supply chain. We had hoped for it to be better, but quite honestly, in the active and passive components, it is not worsening. I want to ensure that everyone clearly understands it is not worsening. Lead times may be slightly improving, but it is the one-off components that we continue to have to chase. There are surprises in terms of supply-based rescheduling, a printed circuit board waiting on one component. We are active. This has been a couple of years now coming out of COVID, where our teams are doing a phenomenal job scanning the globe, finding components, helping subsuppliers with their supply chain. That is the norm right now, and that is continuing. I just do not see significant improvement yet. I do not see it worsening, and honestly, I think that it is going to continue through 2023, and that is what we have in our outlook.

Yes, I'd just add one thing is that when you look at sales in the first quarter here, we had a fairly easy comp if you look at the quarterly sales from the prior year. So the 14.8%, we're very happy with, but it was a bit of an easier comp.

Our next question comes from the line of Matt Summerville with D.A. Davidson.

With respect to PFT, do we expect an immediate step-function move down in Q2 in margins or more of a gradual step down throughout the year? What I'm trying to get a feel for is that this is probably the biggest swing factor in the model, if you will, between how these quarters kind of cadence out looking forward. If you're able to help frame this up to better help us think about how these quarters should look for CR going forward?

Yes. I would say—and we typically don't give quarterly guidance, right? But if I were to frame it up, it will be more gradual than a big step change. So you'll see it come down a bit in Q2 and a little more from there, but stronger in Q2 relative to the second half, if that helps.

Yes, it does. Just sticking with a process for a moment, I was wondering if you could provide a bit more specific commentary around the key end markets and the relative strength you're seeing there when you think about the 4% order growth you observed FX-neutral in the quarter? What end markets are really leading that? What geographies? You mentioned a bit of slowing in Europe and the U.K. Has that business actually turned negative for you guys? Just trying to get a better geographic kind of end market deep dive for PFT?

Yes, sure. So maybe I'll give some color here. I would say MRO continued to be pretty strong through the quarter, consistent with what we were seeing coming out of the fourth quarter. Projects were down slightly. Overall, tracking to what we had thought coming into the quarter. Compared to last year, in the Americas, we were a bit stronger, as well as in the Middle East, although that's a bit smaller for us, but Europe was down slightly, I would say. China was a bit weaker in the quarter, but again, I would say nothing overly different or concerning relative to what we expected. We still feel like we're going to have that more modest outlook on MRO as we move through 2023. As Max just pointed out in some of the color I provided, we didn't see any order cancellations or major delays in project activity in Europe. To your point, a couple of the key players in Europe continue to look at their cost base and, in some cases, are reducing capacity. It's something we're watching closely. I would also say that in Europe, it is largely MRO-driven at this time for those reasons. So there isn't a lot of project activity that we are seeing in Europe. There's an increased project activity we anticipate seeing in the Americas. No significant impact yet from China reopening, but hopefully, we do see some of that as we may close out the year ahead into 2024. On the commercial side, our wastewater pumps business here in the U.S. is continuing to see, I think, solid demand. I would say they are performing incredibly well from a share perspective. Our growth profile there has been notably greater than the market. In the U.K., I would say more of the same with commercial building applications and water business, where demand just continues to be at pretty depressed levels relative to, say, Q4, so this is pretty consistent thinking there.

Our next question comes from Nathan Jones with Stifel.

This is Adam Farley on for Nathan Jones. I wanted to start with inflation. There's volatility in various raw materials in the quarter. I think steel is up, and maybe some energy costs are down. So are you seeing inflation accelerate, decelerate, or stay about the same?

It's—there's been some movement up and down. I mean, on average in the quarter, we're probably seeing around a 4% increase on a year-over-year basis, with some favorability in freight and resin in our Engineered Materials business year-over-year, offset with probably leading with the electric components, like I mentioned, actives/passives, which continue to see inflationary pressures there. Some of the metals around steel and aluminum are a bit variable, but about 4% in the quarter.

Okay. That's helpful. And then turning to capital deployment. You highlighted a very strong ability, I think, $1 billion in 2023, going up to $4 billion from 2023 to 2028. Could you describe your M&A funnel of opportunities today? With the separation complete, can we expect an accelerated level of M&A activity in the near term? Are there any macro factors maybe putting a damper on any activity in the near term?

Yes, thanks, Adam. Thanks for the question. So, as I have been saying consistently through the separation, we put any M&A on hold. We were active in our continued process, but we waited for the separation. What has increased is our activity now around moving forward with those deals that are active to conduct due diligence and pursue. So, things are active. I would not say necessarily that this will lead to action. We are always going to remain disciplined; we will only do what makes strategic sense as the proper return on invested capital. I would say that the environment is friendly for us right now, making it more difficult for private equity and some of the other strategics where their leverage is our firepower. In terms of market dynamics, the only thing I would say is that we are watching those that have announced some very large deals and learning from that and watching the market reaction. In some cases, there have been very negative reactions. This is just helping ensure we frame up the level of risk we are willing to take on. But all of this is very positive. There is lots of activity, and we are working it hard; however, I couldn't say that this will extrapolate quite yet into completed deals, but we'll see.

Our next question is a follow-up from the line of Damian Karas with UBS.

I have a follow-up on your comments regarding short-cycle activity. I was wondering if you could maybe just put any numbers around the volume declines that you are sort of taking into the guide for this year? And if you could just remind us of the margins on the short cycle versus the project side of PFT?

Yes. From a margin perspective, I wouldn't expect any material difference between them. I don't know that we necessarily want to quantify a degree of sequential decline. What I'd say is that you can see what our first quarter core growth was relative to guidance for the rest of the year. Most of that kind of sequential deterioration would be expected to come from the short cycle. On the long cycle side, we're a little more immunized in the near term because of the backlog. So you'd see it in the orders first. On the long cycle side, I don't think we see much slowdown in sales until the tail end of the year and into '24 if that does, in fact, slow down.

Okay, great. And then a follow-up question on capital allocation. Thanks for the color on M&A opportunity. But should deals not materialize in the near future, how are you thinking about pulling some triggers on buyback?

Sure. Great question. It's still too early. We certainly have a history of share buyback when it makes sense. We will certainly consider other options if that is needed. Right now, we think that there will be some M&A opportunities that we will be able to deploy, but of course, Damian, we are going to do the right thing and not allow a lazy balance sheet. We will pursue those options.

Our next question is a follow-up from the line of Matt Summerville with D.A. Davidson.

You mentioned in your prepared remarks, I think it was Max talking about price cost and the impact, the fact that it was not negative on either a dollar or margin basis. I was just wondering maybe for Crane overall if you could talk about whether you had price cost positivity on the margin. On a relative basis, how much that may have driven margin performance in the quarter?

Yes. What I would say, Matt, is yes, it was accretive to margins. I wouldn't say it was incrementally accretive relative to how we were performing last year. We maintained good strong price discipline as we moved through last year. We had targeted price increases that sort of cadenced our way through. We had a couple more that occurred towards the end of last year that we benefited from, coming through the first quarter. So perhaps just a little bit more, but similar to our performance last year. So accretive overall to margins.

Let me add this, Matt, though. I’d like to add on to how to think about this from a historic Crane standpoint. Of course, we've appropriately offset inflation and rightfully so. We've worked hard and executed through '21 and '22. What has taken place over many years is our continued evolution at value-based selling, understanding full value. As we develop stronger technology roadmaps valued more by our customers, we continue with our Crane Business System to put processes around this, to educate our teams on how to price for value. I would say that we've gotten exponentially better, and I have a clear expectation that that will continue as we move forward for sure. So hopefully that adds some clarity.

Yes, I appreciate all that color. Just to make sure that I have it down correctly, remind me; CR is subject to what kind of potential lockups as we think about strategic actions on non-core businesses? Is there anything that precludes you from buying back stock? I realize I think the company can't be sold for 2 years or something like that, but can you just walk through all those things, so we all have that level set, please?

There’s nothing that—yes, from—like you're asking about an approach, Matt?

Yes, there’s nothing that—

No, I guess with the spin—in the tax-free status of the spin, I would imagine there's a 2-year window where things can happen, like I don't think Crane can get sold...

If there were conversations prior, there are some rules that kick in, but we've had no conversations. There's nothing locking us up for any period. There's no constraints that I'm unaware of, Matt.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Mitchell for any final comments.

Thank you very much. So, a solid start in Q1 and excellent results, post-separation. We approached our corporate conscious uncoupling with loving care, and we remain deep friends with our NXT counterparts. Our associates are fine and coping well. But now it is time to go our own ways and new directions of value creation. As the late, great Burt Bacharach said, 'Knowing when to leave may be the smartest thing anyone can learn.' Now, post-separation, new Crane is now turning a fresh course and ready to deliver on accelerated growth and enrichment, and our first quarter results are a testament to our progress while we are also dating again and looking for new partners to join our strategic platforms of Aerospace, Electronics, and Process Flow Technologies. I look forward to speaking to you next on our Q2 call in July. Thank you all very much for your interest in Crane. Have a great day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.