Earnings Call Transcript - CXT Q1 2024

Operator, Operator

Welcome to the Crane Company First Quarter 2024 Earnings Conference Call. I would now like to turn the call over to Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax. Please, go ahead.

Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax

Thank you, operator, and good day, everyone. Welcome to our first quarter 2024 earnings release conference call. 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'll 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, 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 www.craneco.com in the Investor Relations section. Now let me turn the call over to Max.

Max Mitchell, Chairman, President and CEO

Thank you, Jason. Good morning, everyone. Thanks for joining the call today. We had another impressive quarter with results that exceeded expectations. Adjusted EPS was $1.22, driven by 5% core sales growth, alongside strong leading indicators, core orders, and backlog, both up 11% compared to last year. We have made a great start to 2024. Given that strength, we are increasing our full-year guidance by $0.20 to a range of $4.75 to $5.05, reflecting a 14% EPS growth at the midpoint. This guidance is based on high confidence that we can deliver, assuming somewhat muted industrial activity and continued, but gradual, improvement in the aerospace and electronics supply chain. While this is our best thinking today, we believe there may be upside as the year progresses if those two assumptions prove conservative. If that happens, we are positioned to meet any unexpected increase in demand. There’s also potential for guidance upside from capital deployment if we succeed with further M&A in the upcoming quarters. In addition to our strong first quarter results, I'm pleased to announce that we have signed an agreement to acquire CryoWorks as a strategic addition to our Process Flow Technologies segment. Founded in 2009 and based in Jurupa Valley, California, CryoWorks is a leading supplier of vacuum-insulated pipe systems for hydrogen and cryogenic applications, which aligns well with the ongoing organic development of our CRYOFLO brand. CryoWorks has annual sales of approximately $28 million and about $5 million of adjusted EBITDA. With a purchase price of $61 million before tax step-up benefits and a net present value of around $11 million, we anticipate this transaction will close at the end of this month. CryoWorks significantly and immediately expands our portfolio of cryogenic products and solutions, helping us access several high-growth markets, including complex insulated piping for space launch applications and solutions for cryogenic alternative fuels. Moreover, we will use this team's design expertise to accelerate the development of our CRYOFLO solutions for traditional cryogenic applications and new mobility and transportation uses. We expect this acquisition to exceed 10% return on invested capital with around 10% EPS accretion, excluding intangible amortization, by year five. This is another excellent acquisition that strengthens our existing business and aligns with our strategy. I extend my personal thanks to Donna, Tim Mast, and Tim Mast Jr. for their assistance throughout the diligence process and for entrusting their outstanding organization to Crane moving forward. We look forward to collaborating closely and investing in growth with the entire CryoWorks team. We’ve had a strong start to the year, both in terms of results and with two acquisitions in the first four months. With ongoing progress in our existing M&A pipeline, we anticipate additional opportunities to become actionable over the next year, primarily in smaller and midsized transactions. While we are working on a number of transactions currently, we foresee more opportunities emerging later in 2024 than in the next few months, considering the expected timeline for known processes. Our annual Investor Day event is set for May 14 at 8:30 a.m. in New York City, and we look forward to updating you on our progress in executing the strategy and vision we presented at last year's Investor Day. Specifically, we remain confident in a 4% to 6% long-term core sales growth rate from our resilient and durable businesses, with solid aftermarket and significant operating leverage on top of already strong margins today, which should lead to double-digit average annual core profit growth, with potential upside from capital deployment. With virtually no net debt, the opportunity for capital deployment is substantial. Without undermining our Investor Day, where both Alex and Jay will provide more insights on recent achievements, I want to highlight a couple from this quarter, starting with Aerospace & Electronics. I’m particularly excited that one of our key defense customers has secured an initial contract for a large AESA radar program. Given our positioning on that program, assuming it progresses to full rate production as expected, we estimate that our lifetime sales for this new program will exceed $100 million. This continues our winning streak in the area, where our high-power converters have been chosen for almost every new ground-based AESA radar system developed in the past five years. So far, our awards in this application represent approximately $800 million in lifetime program sales in a sector where, historically, we previously had no position. Additionally, we are confident we will soon secure multiple unidirectional and bidirectional high-power conversion wins on leading military land vehicle demonstrators, with significant positions anticipated with all the major players competing for large programs. We have discussed our product position for the XM-30 optionally manned fighting vehicle, and we are now seeing progress with the common truck program as well, which represents another market where we have not historically had content. However, thanks to our technological investments, we see potential for around $700 million in lifetime program sales. In our Modular Power business, we recently launched the first phase of our new family of DC-to-DC products called xMOR. This range offers a wide input voltage for high-reliability aerospace and military applications, including radiation-tolerant and radiation-hardened versions for space applications. This product family is being developed on a single platform that can be configured for many different markets and applications. We expect to complete the full xMOR launch by the end of this year, which will be followed by the launch of both medium- and low-power products called xMRT in late 2025. Moving to Process Flow Technologies, a few highlights from the quarter include the great progress we've made with our high-efficiency motor platform in the U.S. municipal water sector. We’ve had particular success with this motor platform and recently with the largest frame size in the 75- to 120-horsepower range, which is used in wastewater treatment plants. Based on our progress this quarter, we are on track to double our sales from last year in this product segment. You may recall that last quarter, I discussed a $5 million pharmaceutical order we secured with a new customer due to advances with our EX diaphragm technology, which supports a higher temperature range and a longer product life than our entrenched competitor could offer. Our value proposition continues to resonate with customers, and we won another significant pharmaceutical project for a next-generation cancer drug, where the production process requires temperature ranges where our products excel. We also continue to gain traction with the commercialization of several new key products that we’ve discussed in recent years. One such example is our FK-TrieX, a proprietary innovative triple-offset valve with a groundbreaking design that eliminates the traditional trade-off between flow rate and sealing capabilities. Since its introduction, this valve has gained increasing acceptance, particularly in chlor-alkali, organics, olefin, and fertilizer applications. Launched just two years ago in 2022, we're on track for significant order growth this year, with orders expected to exceed $20 million annually by 2026. We take great pride in our team as we continue to drive our strategic vision through excellent execution. Now let me turn the call over to our dynamic CFO, Mr. Richard A. Maue, who will provide more specifics on the quarter and further details on our guidance.

Richard Maue, Executive Vice President and CFO

Thank you, Max. But I must say that I think you undersold my excitement and passion, in the words of Ron Burgundy in the movie Anchorman, don't act like you're not impressed. I'm kind of a big deal. People know me. I have many leather-bound books and my apartment smells of rich mahogany. For those who do not know me, I am kidding, but I am embarrassed to say that I do enjoy that movie. And good morning, everybody. Another strong quarter demonstrating accelerating core growth results with continued excellent performance across all businesses despite some persistent supply chain challenges that continue to impact the broader aerospace and defense industry. Core sales growth of 5% reflects continued strong demand and great execution at Aerospace & Electronics. Adjusted operating profit increased 6%, while that reflects leverage more muted than we typically see in our businesses; it was known and due to expected factors that we previously discussed. First, acquired sales always leverage mathematically at their operating profit margin level in the first year. Second, we have a very challenging comparison at Process Flow Technologies to last year's record 23.4% adjusted operating margin, which I'll discuss more in a minute. Adjusted EPS also beat our expectations, and remember that comparing EPS to the prior year is challenging as our capital structure and related interest expense changed materially after last year's separation transaction. From a quarterly perspective, as I just mentioned, there are also a number of timing differences comparing 2024 to 2023, that flattered the first quarter of last year and created difficult comparisons. Looking at our results another way, our first quarter EPS run rate compared to full year 2023 reflects 14% adjusted EPS growth. Importantly, leading indicators were also strong, with core FX-neutral backlog and orders both up 11% compared to last year and, as Max explained, notably better than expected at Process Flow Technologies. Getting into the details, I will start off with segment comments that will compare the first 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. No change in end market conditions, which remain very strong. On the commercial side of the business, aircraft retirements remain very low due to high demand and limitations on aircraft deliveries. This results in an aging fleet that requires more aftermarket parts and service, and air traffic activity also remains strong. On the defense side, we continue to see solid procurement spending and a continued focus on reinforcing the broader defense industrial base, given the heightened global uncertainty today. Overall, just a solid demand environment with no signs of slowing anytime soon. That strong demand was reflected in our first quarter growth rates, with sales of $226 million, increasing 25% compared to last year, with 20% core growth and a 5% benefit from the Vian acquisition. Despite continued high levels of sales growth, our record backlog of $792 million increased 23% year-over-year, including 15% core growth and an 8% contribution from the Vian acquisition. Sequentially, core FX-neutral backlog increased 5%. By category and excluding the Vian acquisition, in the quarter, total aftermarket sales increased 39%, with commercial market aftermarket sales up 34% and military aftermarket up 53%. OE sales increased 14% in the quarter, with 16% growth in commercial and up 11% in military. While the demand environment remains very strong, we continue to remain somewhat supply chain constrained, with steady but gradual improvement over the last few quarters, as we have discussed previously, and this is not just related to on-time deliveries from suppliers, but the broader supply infrastructure spending from raw materials, components and labor, both availability and supplier employee turnover and employee experience levels. Areas of specific shortages continue to shift and evolve, although overall component availability has modestly improved, consistent with our commentary over the last few quarters. We do continue to make investments related to expediting shipments as well as projects to qualify new suppliers and add second sources where it makes strategic sense. Adjusted segment margins of 22.4% increased 150 basis points from 20.9% last year, primarily reflecting higher volumes, productivity and favorable mix, partially offset by the supply chain-related investments I just mentioned. Looking ahead to the remainder of 2024, we are raising our guidance to reflect the strong first quarter and our expectations for continued strength. We now expect core sales growth of 12% for the full year, up from prior guidance of 10% core growth, and we still expect a full year 4.5% favorable benefit from the Vian acquisition. That guidance assumes continued modest sequential growth over the next three quarters, albeit at a decelerating year-over-year growth rate as the comparisons become more challenging. We are also raising our full year margin guidance to 22%, up from prior guidance of 21.5%. That does assume a slight moderation in margin rates, primarily because we don't expect the mix for the remainder of this year to be quite as favorable as the first quarter. Margin guidance reflects core leverage, excluding Vian, of approximately 37%, a little higher than prior guidance, overall, on track for another outstanding year. From a cadence perspective, sales will increase slightly sequentially across the full year with margins fairly steady over the next three quarters. At Process Flow Technologies, we remain very well positioned to continue outgrowing our markets, and our market outlook is now a little bit more positive than it was over the last several quarters. While we continue to see softness in the European chemical, nonresidential construction and general industrial markets, North America and China projects have now been stronger than we expected for the last few quarters, and we now expect this trend to continue. We believe, part of this may be related to reshoring in the U.S. and localization projects in China, both directly and indirectly, success from our share gain initiatives and a somewhat unique cyclical recovery in the post-COVID global macro environment. While we are still a little cautious in our outlook, 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 $284 million, up 5%, driven by a 6% benefit from the Baum acquisition and favorable foreign exchange, with core sales down 2% as expected. Compared to the prior year, core FX-neutral backlog increased 7% and core FX-neutral orders increased 9%, both driven primarily by North American markets followed by China and Asia Pacific. Sequentially, compared to the fourth quarter, core FX-neutral backlog increased 6%, with core FX-neutral orders up 9%. Adjusted operating margins of 20.8% decreased 260 points, better than we expected, compared to our all-time record margins in the first quarter of last year. Remember that the first quarter of 2023 benefited from an inventory revaluation as well as timing deferred of deferred growth investment spending. For our current volume run rates, we are very pleased with first quarter margins. Turning to our full year guidance. We now expect 2024 sales growth of approximately 7%, up from our prior expectation of 4.5%. Acquisitions now including both Baum and CryoWorks will add about 6 points to our full year growth rate. And excluding acquisitions, we now expect core sales growth of approximately 1%, up from prior guidance of flat and reflecting a modest acceleration in sales growth over the course of the year. We are also raising our margin guidance for the full year to 20.4%, up 40 basis points from prior guidance. That implies slightly lower margins than we delivered in the first quarter, reflecting modest temporary dilution from the CryoWorks acquisition and slightly less favorable mix. For context, remember that, in 2019, just before COVID, margins were 13.6%. The significant step function change in margins reflects deep struggle shifts in the business to higher growth in higher-margin end markets. 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 cost repositioning and productivity. From a cadence or timing perspective, as a reminder, we expect 2024 to be far more level loaded than 2023. At Engineered Materials, sales of $55 million decreased 12% compared to the prior year, as expected. Adjusted operating profit margins decreased 360 basis points to 14.7% on the lower volumes. For the full year 2024, we continue to expect both sales and margins to be flat compared to 2023 as the RV market stabilizes with a normal quarterly cadence with the fourth quarter seasonally slowest. Moving on to total company results. In the first quarter, adjusted free cash flow was negative $86 million, consistent with normal seasonality and better than last year's negative $101 million. For the full year, we are raising our adjusted free cash flow guidance to a range of $250 million to $275 million, up $10 million from prior guidance and still reflecting better than 90% free cash flow conversion. Total debt at the end of the first quarter was approximately $357 million with $219 million of cash on hand at the end of this month. We do expect to draw on our revolver to help finance the $61 million purchase price for the CryoWorks acquisition. 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've had historically, 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. Turning to our 2024 guidance. As Max mentioned, we raised our adjusted EPS range to $4.75 to $5.05 from our prior range of $4.55 to $4.85, reflecting 14% EPS growth at the midpoint. Guidance assumes total core growth of 4% to 6%, up 1 point from our prior guidance and a 5% benefit from acquisitions, also up approximately 1 point from prior guidance. That 4% to 6% core growth will drive approximately 16% growth in adjusted segment operating profit about 3x core sales growth. Most other elements of our full year guidance are unchanged, but we did raise net operating expense by $3 million to $23 million to reflect incremental interest expense associated with the CryoWorks acquisition. Overall, just a great start to the year with incredible momentum.

Operator, Operator

We are now ready to take our first question.

Matt Summerville, Analyst

Maybe, first, if we can start with PFT. Can you talk about how much incremental price capture you're expecting in that business in '24 relative to '23? And then you mentioned specifically North America and China seeing some healthy project activity, could you maybe put a little end market color around that and then touch on, more broadly speaking, what you're seeing in the MRO side of PFT? And then I have a follow-up.

Richard Maue, Executive Vice President and CFO

Yes, Matt, just on the first question on pricing and what we expect in '24 relative to 2023, we would expect full year this year to be in the mid-single-digit range, roughly, for overall PFT. I would say that, that's slightly lower than 2023 overall, but still healthy.

Max Mitchell, Chairman, President and CEO

Regarding North America and the state of projects, we previously indicated that orders were expected to decline in Q3, which we did see, but we now anticipate a recovery from that point. The situation has been more favorable than we initially expected, not as severe as our prior forecasts suggested, particularly in this post-COVID landscape. We likely underestimated the influence of reshoring on the strength of both direct and indirect orders in the Gulf Coast's chemical sector. With the updated guidance, we expect the downturn to not be as significant as we first thought and anticipate a recovery. In terms of project and MRO performance, we've observed a general improvement across projects, especially in North America, with China showing some strength as well, albeit to a lesser degree. Europe remains stable. The improvements are driven by expansions, debottlenecking, and reliability enhancements. We're even noticing some positive momentum in semiconductor-related applications, particularly those utilizing corrosive chemicals in the chemical sector. Overall, the performance is exceeding our expectations, leading to a more optimistic outlook.

Richard Maue, Executive Vice President and CFO

I would agree. And I would say that maybe bolstering some of what Max mentioned was just our success in some of the share gain initiatives that we continue to have with our new product introductions across the business, Matt.

Matt Summerville, Analyst

Perfect.

Richard Maue, Executive Vice President and CFO

Yes. I think what I would say is, as it relates to 2024, we don't expect any change for our business relative to any change in outlook for the LEAP. At this point, Matt. Looking out to the extent that it changes a little bit, it would have some impact. But for 2024, we would not expect any. Just given the demand environment that we're in today.

Scott Deuschle, Analyst

Rich, I think hearing you quote Ron Burgundy might end up being the highlight of this earnings season.

Richard Maue, Executive Vice President and CFO

I'm hoping our earnings are a better highlight.

Scott Deuschle, Analyst

No, yes, that's true. Very good. Rich, I guess, my first question would be whether you can give us a sense for what the price realizations were this quarter at A&E and PFT separately?

Richard Maue, Executive Vice President and CFO

Sure, sure. So on PFT, I would just reiterate around mid-single digit is what we're seeing in the business overall. And at A&E, roughly one-third of the growth that we saw in the core growth that we saw in the quarter has been through price with the balance being volumes. Does that help?

Scott Deuschle, Analyst

Okay. Yes, that's very helpful. Max, could you describe the current competitive intensity at PFT, especially in relation to competitors in China? I'm interested to know if the Chinese competitor is advancing in the market or if the competition remains relatively unchanged.

Max Mitchell, Chairman, President and CEO

I don't usually discuss competitors extensively. However, I can say that there haven't been any significant changes. In the past, we were more concerned about Chinese manufacturers entering the U.S. market, but we haven't observed that level of traction. I believe we are in a strong position, and even in China, there is room for global manufacturers alongside local spending. Our customer base continues to value the technology, quality, delivery, and stability that we provide, which differentiates us. We have not seen any dramatic shifts in the competitive landscape over the last year or so.

Scott Deuschle, Analyst

Okay. Great. And then, Max, last question, which is do the midsized deals in the pipeline skew at all more toward A&E or more towards PFT or is it relatively well balanced on the midsized deal?

Max Mitchell, Chairman, President and CEO

It's balanced right now, Scott.

Nathan Jones, Analyst

I'm going to start with a bit of a longer-term question. I know you guys have had a high single-digit kind of organic growth rate target out there over the next several years into the next decade. I'm sure that had a number of these projects like the radar one you're talking about this morning in those and probability weighted on the chances that you'd win them and that they come to fruition. Maybe you can just talk about over the last two or three years, have things gone better than you expected in that algorithm, in line with what you'd expected, worse than what you'd expected? And has it changed? Has your outlook changed for the potential on some of those future wins that drive that long-term organic growth rate?

Richard Maue, Executive Vice President and CFO

Yes, that's a great question, Nathan. When we established the 7% to 9% target a few years back, we had certain assumptions in mind regarding project wins in defense, the rollout of commercial projects, and gaining more electric vehicle wins, among other factors. Since then, we've actually exceeded our expectations within that 7% to 9% range. I believe we've successfully secured bids for every AESA platform available. Additionally, we've experienced increased momentum in project wins, which contributes to our outlook. Moreover, we see potential for future success related to pricing. Overall, we believe there are more opportunities now compared to when we initially set the 7% to 9% growth target.

Max Mitchell, Chairman, President and CEO

I think we'll update on the longer-term vision at Investor Day as well, Nathan.

Nathan Jones, Analyst

I wasn't planning to ask you for specific numbers today, thinking we might get that information in May. While we’re having some light-hearted discussions, I have a question about PFT. It seems the situation has shifted a bit, as some of the macro leading indicators we monitor have improved and look more promising. The fundamental outlook appears to be somewhat better, and while you're optimistic, you’re also being cautious. Could you elaborate on what factors are contributing to your caution regarding the outlook? What risks do you see that might prevent it from improving throughout the year or even lead to it coming in below your projections?

Max Mitchell, Chairman, President and CEO

The uncertainty remains largely beyond our control. We have a highly charged political landscape, ongoing wars, and an uncertain inflation environment along with Federal Reserve actions. There's a significant amount of global uncertainty, which justifies a cautious approach and the need to be prepared for various possibilities. However, regarding what we can control and observe right now, I feel highly confident. If current trends persist, there might be some downside risk but also potential upside opportunities, particularly if Europe strengthens a bit. That's my perspective on the situation.

Richard Maue, Executive Vice President and CFO

Yes, I would say the opposite of the question is when we might see positive indicators. We're considering various factors that could go wrong, but if the European chemical sector improves more quickly, that could result in positive outcomes beyond what we've projected at the midpoint.

Damian Karas, Analyst

Firstly, I just want to congratulate Jason on your recent promotion. From my perspective, very, very much deserved.

Richard Maue, Executive Vice President and CFO

Thank you, Damian. Thanks for the comment. Agree.

Damian Karas, Analyst

Could you provide an update on the unmet demand in aerospace, its size, and what it would take to alleviate the current supply chain bottlenecks?

Max Mitchell, Chairman, President and CEO

Yes. Thanks, Damian. So it's still in that $50 million to $60 million range. It's a rough estimate. Remember, this supply chain, we've described, it moved from true supply chain, post-COVID, supplier shortages ramping up, so forth, electrical components. It's improved broadly in terms of just on-time delivery issues to become more general supply chain challenges around everything from capacity to turnover in our supply base, general challenges that moves around. I wouldn't call out any one commodity. I wouldn't call out any one supplier; castings can continue to be problematic over time, things like that. So as we think about this, and it's not the same $50 million or $60 million, our customers were not impacting customer deliveries. It moves to the right. But generally, it's in the same. So that's good news as well. So it's not worsening. It's stable, and we continue to see modest improvement, and that's in our guide, which is just continued modest improvement. So to the degree that things can continue to improve, then we would expect to be able to pull some things in a little sooner. If not, I think we feel confident in how we planned and guided so far.

Richard Maue, Executive Vice President and CFO

Agree. And Damian, the one thing that I would add is the order strength that we saw in the quarter as well, right? Much of it was beyond '24 delivery, right? So where you might say, well, why isn't that $50 million or $60 million getting bigger? A good portion of what we saw on the way of strength is for delivery in '25 and '26, frankly.

Damian Karas, Analyst

Okay. Great. That's really helpful. And then you gave some commentary around PFT in the end market verticals and regions. Would you possibly be able to just give us some numbers around, okay, so European chemicals and construction was a drag on 1Q sales, like how much of a drag was it? And what are you baking into the full year guide, thinking about that 1% organic growth, like how much of a headwind are you currently factoring in for European chem and construction?

Richard Maue, Executive Vice President and CFO

I will try to address your question. We do not anticipate significant improvements in repair and maintenance activities in the European chemical sector at this time. Our updated guidance accounts for project activities that have been accumulating over the past few quarters, some of which will extend into the 2024 period, primarily involving opportunities in the U.S. and China. Regarding the overall guidance revision of plus 1%, I would say maintenance and MRO areas remain stable, while there is growth in chemical sectors in North America and China. Jason, do you have anything to add?

Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax

No. I mean, again, the guidance increase was strength of projects. Specifically on European Chemical, I think we've commented that we expect that down double digits this year.

Operator, Operator

Our next question comes from an analyst with Bank of America.

Unknown Analyst, Analyst

On Aerospace & Electronics, could you guys give us some color around how you're thinking about the rest of the year for how long the aftermarket strength can continue for both military and commercial? And if you're seeing even higher pricing being able to get pushed through relative to the whole segment?

Richard Maue, Executive Vice President and CFO

Sure. So well, for military, I'll start there. We entered the year with sort of a double-digit guide on where we thought military aftermarket was going to be, just given what we were saying entering the year, I would say that's largely unchanged. We still see really good strength in that end market, whether that's R&O, spares, retrofit, et cetera. On commercial aftermarket, we did have a really robust quarter this quarter in Q1. Some favorable comps help us there as well. And then as we move through the balance of the year, we still aren't seeing an outlook of basically low double digits, which is what we said coming into the year this year. So you'll see the year-over-year as we move forward be a little bit more muted than what we saw here in Q1, but still pretty strong. From a pricing point of view, we're continuing to seize all those opportunities as you'd expect us to, whether that's through indexing that exists and other opportunities strategically for us to take price up. Jason?

Jason Feldman, Senior Vice President of Investor Relations, Treasury and Tax

No. I mean on the more immediate growth rate as we progress through the year, just remember to look at the comps, right, the comparisons in the second half are a lot more challenging than the first half. If you look at the fourth quarter, two years in a row, 24% in the fourth quarter of '22, 33% up last year. They do get a lot more challenging. But the trend itself on a dollar basis continues to be quite favorable.

Operator, Operator

And our next question will come from Justin Ages with CJS Securities.

Justin Ages, Analyst

Was just hoping you could give us an update on the hydrogen business that was called out as one of the pillars of growth. Does the recent acquisition fit into that? Or is that going to be a separate business because of the end markets served there?

Max Mitchell, Chairman, President and CEO

Yes, that's a great question. Thank you. It definitely aligns with our current strategy. We will provide more details at Investor Day as well. We have previously discussed our investment in the CRYOFLO brand, including the development of our own vacuum-jacketed pipe, valves, and fittings as we enter the market. We have a line of valves and have announced a strategic partnership with Chart in this area. We are currently gaining traction with approvals from major gas producers. Our focus has been on design and launching this business. We have a site in Conroe, Texas, which will serve as our main production facility for CRYOFLO vacuum-jacketed pipes moving forward. The acquisition of CryoWorks gives us a presence on the West Coast. There is typically strong regional demand for vacuum-jacketed and vacuum-insulated piping systems for hydrogen and cryogenic solutions. Our plan is to leverage the existing sales growth investment and technology of the team, while continuing to grow and capture market share from the Texas facility for East Coast and Gulf positioning. This will lead to accelerated product development and sales expansion for CryoWorks in the vacuum-insulated piping solutions. This will enhance our overall offerings, including valves, fittings, and vacuum-insulated piping, creating significant synergies.

Operator, Operator

And with no further questions in queue, this does conclude the Q&A portion of today's call. I would like to turn the floor back to Max Mitchell for closing remarks.

Max Mitchell, Chairman, President and CEO

Thank you, operator. We had a great start to the year. And looking ahead, we've got a great event planned for May 14, and I hope to see many of you there at our Investor Day, where we will further share our growth strategy for the future. In the words of the late great interior and fashion designer, Iris Apfel, you can't go to the future if you haven't come from the past, and past strategic development, deployment and execution has clearly been at the heart of our present performance, and we look forward to explaining our future strategic direction, expectations and path forward for profitable growth in May. Thank you all for your interest in Crane and your time and attention this morning. Have a great day.

Operator, Operator

Thank you. And this does conclude today's Crane Company First Quarter 2024 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.