Crane Company · NYSE:CR
Crane — Crane Company 2023 Investor Conference
30 slides from Crane's conference presentation, Mar 9, 2023
Slide 1: Aerospace & Electronics
AEROSPACE & ELECTRONICS John J. Higgs President
Slide 2: What You Will Hear Today
WHAT YOU WILL HEAR TODAY 1. Confident in 7%-9% sales CAGR over the next decade ▪ Well positioned on all key platforms for post-COVID commercial recovery ▪ Significant new platform wins ramping mid-decade 2. Clear path back to mid-20s margins ▪ Operating leverage on higher volumes 3. Technology roadm
Slide 3: Provider of Highly Engineered Solutions for Mission Critical Aerospace, Defense & Space
A PROVIDER OF HIGHLY ENGINEERED SOLUTIONS FOR MISSION CRITICAL AEROSPACE, DEFENSE & SPACE APPLICATIONS Aerospace & Electronics By Market* By Application* By Solution* ~ $735M Sales, ~20% OP (2023G) Microwave Military Commercial Aftermarket OEM 10% Total Served Market Sensing 28% Fluid 31% ~$7B 43% 1
Slide 4: Portfolio Created by Acquisitions of Leading Brands
PORTFOLIO CREATED BY ACQUISITIONS OF LEADING BRANDS Founded Founded Founded Founded Founded Founded Founded Founded Founded 1943 1956 1904 1957 1969 1958 1982 1947 1954 Acquired Acquired Acquired Acquired Acquired Acquired Acquired Acquired Acquired 1951 1985 1990 1994 1999 2003 2003 2004 2010 Indus
Slide 5: Unique and Proprietary Capabilities…
UNIQUE AND PROPRIETARY CAPABILITIES… Electrical Power Management Sensing & Control Fluid Management Brake Control Signal Processing Ruggedized, High accuracy Pumps and fluid Fast response Complex, high highly efficient wired and management brake control for density, PCBs power conversion wireless se
Slide 6: …and Highly Differentiated Technologies
…AND HIGHLY DIFFERENTIATIED TECHNOLOGIES High Density Vane Type Pumps Wireless Sensors Magnetic Packaging Anti-Skids Algorithms Bi-Directional and Simulation Capability Power Conversion Multilayer Integrated Circuits 6
Slide 7: Serving Attractive, Growing End Markets…
SERVING ATTRACTIVE, GROWING END MARKETS… 10-Yr. Market Market Market Size Growth Rate Commercial $950B 3% - 5% $2T Aerospace Market Defense $700B 2% - 3% ~4% Annual Growth Space $375B 4% - 8% Rate Aerospace, defense and space is a $2T market with ~4% annual growth rate 7
Slide 8: …and "Blue Chip" Customers
…AND “BLUE CHIP” CUSTOMERS Leading OEMs Airlines and Defense Partners Emerging Customers Diverse mix of customers across the breadth of aerospace & defense markets 8
Slide 9: High Visibility to Long-Term Growth
HIGH VISIBILITY TO LONG-TERM GROWTH CRANE A&E Growth (2019-2032) $1,500 Sales 9% CAGR 7% CAGR $1,300 $1,100 $900 $700 $500 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Delivering consistent 7% – 9% growth 9
Slide 10: Multiple High-Confidence Growth Drivers
MULTIPLE HIGH-CONFIDENCE GROWTH DRIVERS 10 Year Market Growth $1,300 Expanding Markets $1,100 Expanding Core $900 $700 Existing / Base Business $500 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Growth from base business, expanding our core and entering new markets 10
Slide 11: Strong Near-Term Outlook
STRONG NEAR-TERM OUTLOOK 2022 Sales Segment Sales Growth 2019 2020 2021 2022 2023G OEM 7% (16%) (3%) 3% 10% Aftermarket 10% (26%) 2% 10% 9% Commercial AM 19% Record Backlog ($M) OEM Commercial Military AM 38% $650 $613 8% $567 $550 $491 $460 $447 OEM Military $450 35% $353 $374 $350 $250 2016 2017 2
Slide 12: Substantial Margin Potential as Volumes Improve
SUBSTANTIAL MARGIN POTENTIAL AS VOLUMES IMPROVE Historical Sales ($M) and Adjusted Margin (%)* $800 25.0% 7% - 9% 22.2% 23.0% Core Growth 21.8% 24.1% CAGR at ~35% - 40% 21.0% $700 18.3% 19.0% 17.2% 19.8% leverage 17.0% 16.5% $600 15.0% 13.0% Mid-20s OP 11.0% $500 9.0% in the Mid Term 7.0% $400 5.0%
Slide 13: Positioned on All Key Commercial Aerospace Platforms
POSITIONED ON ALL KEY COMMERCIAL AEROSPACE PLATFORMS Boeing Boeing 737MAX 787 Airbus Comac A320NEO C919 Strong positions on high volume production platforms 13
Slide 14: Well Positioned in Defense and Space
WELL POSITIONED IN DEFENSE AND SPACE Lower Tier Air and Missile Lockheed Defense Martin F-35 Sensor (LTAMDS) Space Development TPY-4 Agency Multi-Mission Transport Radar Layer Strong positions on strategic defense and space programs 14
Slide 15: Attractive Long-Term Market Outlook
ATTRACTIVE LONG-TERM MARKET OUTLOOK Long-term Market Fundamentals Are Strong COMMERCIAL DEFENSE SPACE 41k AIRCRAFT $162B New Commercial 2023 DoD Research, deliveries 2022–2041 Development, Test & Evaluation 3.8% CAGR 4.8% CAGR Traffic Growth (RPK) Component Maintenance, 2022–2041 Repair & Overhaul 2
Slide 16: Transition to Technology Readiness Strategy
TRANSITION TO TECHNOLOGY READINESS STRATEGY High Voltage Motor Controls Broad Product Offering and Market Expansion Technology Development High Accuracy Proximity Sensing Program Specific Development DC/DC Conversion Bi-Directional Power Conversion Liquid Cooling Systems 16
Slide 17: Product Strategy Aligned with Key Market Trends…
PRODUCT STRATEGY ALIGNED WITH KEY MARKET TRENDS… EXPANDING THE CORE MARKET EXPANSION Position to Win Next Generation Platforms Maximize Content in Emerging Markets Vehicle Next Generation Electrification Commercial Aircraft Advancing Military Capabilities Decarbonization of Commercial Aerospace Comm
Slide 18: …and Aligned with Key Growth Platforms
…AND ALIGNED WITH KEY GROWTH PLATFORMS Next Generation Hybrid and Electric Optionally Manned Air Dominance Propulsion Fighting Vehicles ▪ Innovative SWaP COMMON REQUIRMENTS ▪ Speed & Agility ▪ Reliability, Certification Heritage CRANE A&E Core Growth Areas Electric Brake Thermal Wireless Power Actua
Slide 19: Power Conversion Wins for Evolving Defense Needs
POWER CONVERSION WINS FOR EVOLVING DEFENSE NEEDS ▪ Northrop Grumman AESA ▪ Lockheed Martin Radars ▪ Raytheon ▪ American Rheinmetall OMFV Hybrid ▪ BAE Electric ▪ Blank Point Combat ▪ General Dynamics Vehicles ▪ Oshkosh 19
Slide 20: Winning Products on Next Generation Propulsion
WINNING PRODUCTS ON NEXT GENERATION PROPULSION 20
Slide 21: Capturing Additional Sensing Content
CAPTURING ADDITIONAL SENSING CONTENT Tire Pressure Indication System Rapidly Configurable Switch Wireless Connectivity 21
Slide 22: Systems for the Next Generation Military Aircraft
SYSTEMS FOR THE NEXT GENERATION MILITARY AIRCRAFT Sixth Generation Fighter Concepts Bell V280 FLRAA FARA Competition B-21 Raider 22
Slide 23: Results in Core Solution Growth Through 2032...
RESULTS IN CORE SOLUTION GROWTH THROUGH 2032... 10-YR CAGR 7%-9% $1.3-$1.6B Sales Power 3-YR CAGR 10% $900M Sales Fluid $667M Sales Power Power Fluid Landing Fluid Landing Landing Sensing Sensing Sensing Microwave Microwave Microwave 2022 2025 2032 Technology leadership drives higher than market gro
Slide 24: …and Significant Market Share Gain
…AND SIGNIFICANT MARKET SHARE GAIN A&E Core Products Landing Power Sensing Fluid 60% 50% $9B Served Market (2033) 40% 2033 15% Market Share 30% 20% 2026 11% Market Share 10% 2023 10% Market Share 0% Core solutions will gain share in key market segments 24
Slide 25: M&A to Further Strengthen Our Portfolio
M&A TO FURTHER STRENGTHEN OUR PORTFOLIO Power Higher Conversion, Distribution, and Control Thermal Sensing Space Attractiveness Sensing Condition, Position, Pressure and Flow Electro- Mechanical Power Thermal Management Liquid, Vapor, Components and Systems Electro-Mechanical Single and Multi-Functi
Slide 26: And a Vision for Extension to Related Markets
AND A VISION FOR EXTENSION TO RELATED MARKETS Industrial Automation Medical A vision for extension to related markets 26
Slide 27: Disciplined Cadence & Execution
DISCIPLINED CADENCE & EXECUTION Crane Business System ▪ Rigorous, data-driven management cadence ▪ Continuous improvement focused ▪ Highest integrity/commitment to quality ▪ Empowered, customer-focused BU GMs Extreme accountability in all aspects of our business 27
Slide 28: Investing in Continuous Improvement
INVESTING IN CONTINUOUS IMPROVEMENT Leveraging Crane Business System to Drive Efficiencies 122 Kaizens in 2022 $283K Sales 10% ANNUAL INCREASE per Associate 5% ANNUAL INCREASE 34 New Kaizen Tool Champions 17% ANNUAL INCREASE 28
Slide 29: Well Positioned for Profitable Long-Term Growth
WELL POSITIONED FOR PROFITABLE LONG-TERM GROWTH ▪ Outstanding and differentiated technology in attractive, growing markets ▪ Program wins and new pursuits support confidence in 7% to 9% long-term sales growth CAGR ▪ Well positioned for new technology insertion opportunities and other growth opportun
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Crane Company — Crane Company 2023 Investor Conference on 6ix