Crane Holdings, Co. (NYSE:CR) Q4 2022 Earnings Call Transcript

Crane Holdings, Co. (NYSE:CR) Q4 2022 Earnings Call Transcript January 24, 2023

Operator: Greetings and welcome to the Crane Holdings Company Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to Jason Feldman, Vice President of Investor Relations. Thank you. You may begin.

Jason Feldman: Thank you, operator and good day, everyone. Welcome to our fourth quarter 2022 earnings release conference call. I'm Jason Feldman, Vice President of Investor Relations. On our call this morning, we have Max Mitchell, our President and Chief Executive Officer; and Rich Maue, our Senior Vice President and Chief Financial Officer; and Aaron Saak, who is President and Chief Executive Officer of the Future Post separation Crane NXT. 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'll be using some non-GAAP numbers which are reconciled with 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: Thank you, Jason. Good morning, everyone. Thanks for joining the call today. Well, we had an exceptional end of 2022 with outstanding fourth quarter results. Fourth quarter adjusted EPS was $2.13, an increase of 63%, compared to last year. We have broad-based strong operational execution with core sales up 11% and we drove adjusted operating margins up 660 basis points to a record 18.6%. On a full-year basis, adjusted EPS was a record $7.88, up 15% compared to last year, driven by 6.4% core sales growth and 220 basis points of margin expansion to a record full-year adjusted operating margin of 17.7%. Adjusted free cash flow of $395 million was also very strong and above the high-end of our last guidance range. As a reminder, last quarter we reaffirmed and tightened our adjusted EPS guidance range to $7.58 to $7.72 dollars with a $7.65 midpoint.

At that time, we said that we felt that the high-end of guidance could only be achieved, if we had supply chain improvement and an ability to turn specific shipments quickly. We actually saw that play out in each of our businesses with a bit of unanticipated upside all aligning. With the biggest impact in the last few days of the quarter. While there are still broad based and random supply chain constraints across our businesses, we did receive shipments from a number of suppliers that we honestly didn't expect and our teams did an incredible job turning them into sales for our customers quickly. We also had some favourable tax items that contributed about $0.04 to EPS as well. Really just a perfect alignment of unexpected, but good news very late in the quarter and solid work by our teams and my thanks to all of our associates for the year end effort.

To put this annual performance in perspective another way, remember that operationally, we maintained guidance to all year despite numerous headwinds, specifically since 2022 guidance was originally issued last January, we lost $0.25 of contribution from crane supply, which was divested in May 2022. Foreign exchange was an increasing headwind throughout the year and was a $0.19 headwind relative to original guidance, most of it from rate moves during the third quarter. The supply chain environment when '22 was far more challenging than most anticipated a year ago, and there was substantial inflation, spanning materials, freight, labor, energy, and other costs. Even with those headwinds, we held the mid-point of our guidance, while absorbing and offsetting all of these items.

And then on a full-year basis delivered results substantially better, which again is a real testament to the hard work and dedication of our teams around the world. And the strength of the crane business system and our execution. These results should give you even further continued confidence in our execution and our ability to over deliver on our commitments as we turn to our outlook for 2023 and the upcoming strategic separation into two independent public companies. Rich will be providing guidance details for both companies post separation reflecting exciting long-term growth opportunities for each. Specific to demand environment, our leading indicators are still very strong. Core year-over-year orders increased 15% in the quarter and 13% for the full -year.

Core backlog is up 28%, compared to last year. While the present environment is still similar today to what we saw in the second half of '22 and we still see continued robust demand across our end markets, we remain guarded watching carefully for signs of softening. Other than the RV market where the softness is well-known and understood, we are not seeing slowdown in our order rates yet. However, given broader macroeconomic trends, we are planning for slowing short cycle markets, particularly those in the U.K. and Europe, which are most impacted by energy inflation. From a supply chain perspective, material and component availability remain most challenging, but stable in our Aerospace and Electronics segment with continued, but slow improvement in the other segments.

We do expect supply chain constraints to ease over the course of the year, but at a gradual and measured pace. From a cost and inflation perspective, as you can see from our continued margin strength, we've 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. While 2023 macroeconomic planning assumptions are muted, I couldn't be more excited about the growth opportunities that we have in front of us for both Crane Company and Crane NXT. In any type of demand and operating environment, we are positioned to drive above market growth with our strategic initiatives. This is where we are most focused across the organization, driving growth and advancing technology that has positioned our businesses for the future.

We will provide more detail in March, but just a few recent highlights, include Aerospace and Electronics securing substantial new content on the Army's FLRAA Helicopter platform. The Army's largest Helicopter contract in 40-years. In addition, we have been selected to develop several products and systems for application on the next generation of long-range strike and fighter aircraft including brake. Brake control thermal management and fuel management equipment, this is the direct result of the strategy we shared with you in May 2021 targeting next generation technology demonstrator programs. At Process Flow technologies, we successfully launched the next generation digital transducers driving value and award-winning key OEM accounts in the mobile hydraulic system sector and now testing successfully with OEMs for hydrogen applications.

With product sales set to grow 4 times in 2023, although from a small base today. We also are gaining traction with our new high efficiency motors and non-clog pump performance with 50% sales growth for these products in municipal wastewater applications as customers realize significant energy and maintenance savings. We had new installations in more than 100 municipalities in 2022 with substantial growth expected again in 2023. Just an incredible amount of activity across our businesses focused on growth. And we are making steady progress on the separation. We're on track for completion April 3 of this year. We continue to have high conviction that this separation is going to create value as it increases our operating and financial flexibility to pursue growth opportunities.

It lets us develop capital allocation is for both Crane Company and Crane NXT that are optimized for their individual business and financial profiles. The separation will make it far easier for each company to attract shareholder base fully aligned with each business's strong and distinct value proposition. And we believe it will make M&A more viable at both companies. Simply, the separation will create two more closely aligned pure play companies, each better positioned to deliver long-term growth and sustainable value creation for all of its stakeholders. Significant milestones achieved during the fourth quarter included completion of the organizational design for each company. The announcement of Aaron Saak as CEO of Crane NXT and you'll hear from Aaron shortly this morning.

Public filing of the Form 10 registration statement and completion of the capital structure designed for both companies that Rich will review later. Key upcoming milestones to watch for. We expect the Form 10 registration statement to become effective in February pending SEC approval. We will announce further details of the board composition for both companies, as well as the extended leadership team for Crane NXT between now and separation. We will be hosting separate Investor Day events for both Crane Company and Crane NXT on March 9 in New York City and When-Issued trading will commence in mid to late March. We feel very good about our progress to-date and our ability to achieve our targeted timeline. On last quarter's call, I told you how extremely excited I was about Aaron's appointment as CEO of Crane NXT, and how I was highly confident that he is the right leader to embrace the best of Crane's culture and the Crane business system, while moving NXT strategically in new directions.

After having the opportunity to work with Aaron over the last two months, I'm even more confident and excited that he is absolutely the ideal leader for NXT in this next chapter. We've spent the last few weeks traveling together, visiting nearly all of NXT's sites and his excitement, passion, insights and strategic observations are impressive. I had great fun introducing Aaron to his broader extended global team and they're very excited about this new entity about to be formed and what the future holds. So, with that, let me turn the call over to Aaron for some comments on his first two months at Crane before Rich provides additional financial commentary and guidance details. Aaron?

Aaron Saak: Thank you, Max, and thanks for those kind comments. I am incredibly excited for the future of NXT and would like to thank the Crane Board for their trust in my leadership, and I know they expectations are high and I am confident with the outstanding team we have here at NXT that the future is very bright. As Max mentioned, I've had the opportunity in the past two months to travel to all of our major sites and meet with our NXT associates. Our team has been incredibly welcoming and I appreciate their enthusiasm for our path forward. It's an outstanding team and one that I am honoured and humbled to be part of. Now in terms of my background, I'm an Engineer by training and I've spent my career with diverse well-known industrial technology companies.

This background has given me a depth of experiences that I feel is uniquely positioned to help successfully lead NXT moving forward. In my most recent role, I had direct in-market overlap with NXT, so I'm really hitting the ground running and already working with the team to accelerate existing growth initiatives. I'm also passionate about innovation and delivering technology-based solutions to our customers. And we will continue to drive this focus at NXT and I look forward to sharing more about our strategy at our upcoming Investor Day on March 9. As I mentioned, over the past few weeks, I've visited all of our major NXT sites with Max and the Senior Leaders of the NXT business. During these visits, I've been incredibly impressed with the disciplined cadence and execution of CBS.

The focus on continuous improvement and operational excellence, absolutely met and in many cases far exceeded my expectations. And it's exactly what I expected to see in joining Crane. I come from companies with a similar approach to driving continuous improvement and I can ensure our investors that we will maintain this capability as a competitive advantage for NXT. Additionally, I'm impressed that the new products and technologies the teams are commercializing. For example, at Crane Payment Innovations, the focus on automation to improve customers' productivity is really outstanding. This includes the Paypod platform with sales on track to double this year, as well as real momentum across the gaming sector where we have an extensive suite of market leading connectivity and service solutions.

At Crane currency, the team has made great progress with our product authentication business, which nearly doubled in sales in 2022 and is on track to double again in 2023. This business is built on our micro-optic technology platform, which also continues to gain share in the banknote market adding 12 new denominations last year and bringing our total specified denominations around the world to 170. So Max, thanks again for the opportunity to introduce myself here today, and I look forward to spending time with investors in the coming months and during our Investor Day in March. And so, with that let me pass the discussion on to Rich.

Rich Maue: Thank you, Aaron, and good morning, everyone. I will start off with segment comments that will compare the fourth quarter of 2022 to 2021 excluding special items as outlined in our press release and slide presentation. At Aerospace and Electronics, fourth quarter sales accelerated increasing 15%, compared to last year to $181 million; segment margins of 20.6% increased 750 basis points from 13.1% last year, reflecting the combination of strong leverage on higher volumes, improved pricing and productivity. Pricing fully offset the impact of inflation in the quarter. Despite the impressive increase in core sales growth, we remain somewhat capacity constrained, due to continued supply chain issues along with the rest of the Aerospace industry and leading indicators reflect that demand continues to outpace the supply chain generally.

Specifically, core orders increased an impressive 45%, compared to last year and core backlog increased 34%. In the quarter, total aftermarket sales increased to 25% with commercial aftermarket sales up 25% and military aftermarket up 23%. OE sales increased 11% in the quarter with 15% commercial OE growth and 7% military OE growth. At Process Flow technologies, sales of $252 million decreased 16%, driven by a 19% impact from the May divestiture of crane supply and a 5% impact from unfavourable foreign exchange. Core growth for Process Flow technologies remained very strong at 8%. Adjusted operating margins of 16.1% increased 180 basis points from last year, primarily reflecting strong productivity and pricing and here as well pricing continues to fully offset inflation.

Compared to the prior year, core FX neutral orders increased 11% and core FX neutral backlog increased 16%. Sequentially, compared to the third quarter, core FX neutral backlog increased 1% and core FX neutral orders declined 3%, reflecting normal seasonality. Moving to Payment and Merchandising Technologies, sales of $338 million in the quarter increased 8%, driven by a 14% increase in core sales, partially offset by a 6% impact from unfavourable foreign exchange. Operating margins improved 740 basis points to 25.9%, the same level as last quarter's record margins. Margin expansion was driven by higher pricing, higher volumes and very strong productivity, another quarter of really impressive performance from the team. Forward-looking demand indicators also remained very strong with 10% core FX neutral order growth and 35% core FX neutral backlog growth.

Specific to the CPI business, the supply chain remains constrained primarily related to certain electronic components, but we continue to see gradual improvement in both availability and lead times. At Engineered Materials, sales of $52 million increased 4%, compared to the prior year as expected. Operating profit margins increased 50 basis points to 11.8%, driven by higher pricing and productivity, partially offset by lower volumes. Growth was led by transportation and building products with RV-related sales down in line with the industry production rates. Moving on to total company results, on a full-year basis, free cash flow was negative $210 million, because of accounting rules, which treat the one-time contribution from the August divestiture of asbestos liabilities as an operating cash outflow and we had additional one-time costs related to both the asbestos transaction itself, as well as the separation.

Excluding those items full-year cash flow, free cash flow of $395 million exceeded the high-end of our guidance range. Our balance sheet is in extremely good shape. We ended the year with $658 million in cash and $1.24 billion in total debt, so our net debt is $585 million a very comfortable level as we prepare to set up the capital structures for both companies post separation. Now turning to our 2023 guidance. I hope you have all seen the earnings presentation on our website that accompanies this call. A lot of important information to help you better understand our guidance and I will be referring to it throughout this section. We are on track with the separation to take place immediately after the first quarter on April 3 of this year, that means we will be reporting the first quarter of 2023 on a consolidated pre-separation basis and the following three quarters reported as two separate companies.

For segment operating results, this is very straightforward. We are providing all segment guidance on a full-year basis, which will be easy to reconcile after we report each quarter this year. Below the segment operating profit line, we are providing guidance on a pro forma basis for corporate expense, interest and non-operating expense, tax and shares as if the separation occurred on January 1 and as if the two companies were separate for the entire year. Before we get into the details of each company's guidance on slide 20, I want to highlight two reporting changes we are going to make concurrent with the separation. First, at Crane Company, we will continue to include service costs for pension and other benefit plans in our adjusted earnings.

Service cost reflects the real ongoing economic cost of providing pension benefits to certain associates. However, starting in 2020, we are going to exclude the components of non-operating benefit costs from adjusted earnings. We are going to treat these non-operating benefit costs as non-GAAP items, because they add volatility to earnings primarily as a result of capital allocation decisions and market performance neither of which are related to the operations of our business and that volatility can obscure our underlying operational performance. On slide 21, you can see that these non-operating pension benefit costs contributed $0.23 to adjusted EPS in 2022. The second change is at Crane NXT. Starting in 2023, we will exclude intangible amortization from adjusted earnings, adjusted operating profit and adjusted operating margin.

This amortization is significantly impacted by the timing, size, number and nature of the acquisitions that we complete and it is entirely non-cash in nature. We think that adjusting for intangible amortization enables more consistent comparisons of operating results over time, as well as permitting better comparisons to peer companies. Importantly, even after this change, we expect approximately 100% free cash conversion at Crane NXT defined as free cash flow divided by adjusted net income. On slide 21, we provide a walk showing our 2022 actual results and recasting them to get a like-for-like comparison to what we are going to report in 2023. Starting with our 2022 adjusted EPS of $7.88 there are three adjustments. First, remember that we divested crane supply in May of 2022.

In the first five months of 2022, that business contributed $0.25 to EPS. Second, the pension accounting change I discussed has the effect of reducing 2022 EPS by $0.23. And roughly offsetting those two items is the intangible amortization adjustment, which would have increased 2022 EPS by $0.61. The far-right bar on this slide showing recast 2022 adjusted EPS of $8.01, now represents 2022 adjusted EPS on an apples-to-apples basis to our 2023 guidance. So, with that context I'm going to start with guidance for Crane Company on slide 22. As a reminder, this business has about $2 billion in sales and is comprised of two global strategic growth platforms Aerospace and Electronics and Process Flow technologies, as well as the smaller and domestic engineered materials business.

On slide 23, you can see that for 2023, we expect 3% to 5% core sales growth driving 8% segment profit growth. With all businesses leveraging at about 35%. This guidance assumes that the overall economy continues to slow with only gradual improvement in supply chain. That said, we are very well positioned to ramp output if macroeconomic and supply chain conditions permit. Specific to the businesses, at Aerospace and Electronics, we are guiding to 10% core sales growth with 35% operating leverage, which should bring margins to just under 20% for 2023. This is the guidance where we have direct line of sight and what we are confident that we can deliver in 2023. However, with 10% sales growth, we would have approximately $50 million of cumulative unmet demand by the end of this year related to supply chain constraints.

Photo by Jonathan J. Castellon on Unsplash

How much of that $50 million gets delivered this year versus in 2024 will depend on how quickly the supply chain improves. However, the overall message for the segment is unchanged, we expect 7% to 9% long-term annual sales growth plus this $50 million catch up of sales in the next year or two with strong operating leverage in the 35% to 40% range, a really fantastic position to be in. Moving to Process Flow technologies. In 2023, we expect 4% core growth with a 2% unfavourable foreign exchange headwind for total sales growth of 2%. The core growth should leverage at 35% driving nearly 10% segment profit improvement with guidance for margins up just over 100 basis points to what will be a record just over 17%. We have a very strong backlog and recent order activity has been strong.

However, given broader macroeconomic trends, our guidance does assume we will be seeing slowing in short cycle activity and decelerating order rates into 2023. Long-term, we believe this is a 3% to 5% core growth business reflecting a combination of lower market growth along with our continued growth through share gains and new product introductions and likely improving over time as our end market mix continues to improve. We should also deliver consistent leverage in the 35% to 40% range. We expect the much smaller Engineered Materials business to see sales decline about 15% in 2023, driven by recreational vehicle OE production cuts, softened by relative stability in the building products and transportation end markets. We expect to hold deleverage to 35%, which equates to margins of approximately 10.5% next year.

So overall, operationally, core growth of about 4% driving 8% segment profit growth and with segment margins increasing 80 basis points to 17.4%. On slide 24, we provide the non-operational elements of Crane Company guidance. Remember, this portion of guidance is provided as if the separation had been completed January 1 of this year. The key items presented on a post separation annualized run rate basis include corporate expense of approximately $65 million in 2023 and declining as a percentage of sales thereafter. Net non-operating expense, which is interest expense and related financing costs of $16 million, a normal post separation adjusted tax rate of approximately 23% and diluted 2023 shares of $57.3 million. We aren't guiding to a specific free cash flow number for 2023, because of complexities of allocating first quarter cash flow to Crane Company and Crane NXT, but free cash flow conversion or adjusted free cash flow divided by adjusted net income should be approaching 100% in 2023 and beyond.

Layering these items on the operational guidance results in expected 2023 adjusted EBITDA of $321 million with an EBITDA margin of 16.2%. For adjusted EPS on a pro forma basis, our 2023 guidance is a range of $3.40 to $3.70. From a cadence perspective, we expect quarterly earnings to be generally even through the year. On slide 25, we provide some more specificity about the post separation capital structure of Crane Company, very consistent with our prior commentary. At Separation, Crane Company's only expected debt is a new $300 million term loan. The proceeds from that term loan will be paid to Crane NXT as a dividend and we expect the initial interest rate on the term loan will approximate 6%. The term loan is variable and will be fully pre payable.

We also expect to have a new revolving credit facility in the range of $400 million to $500 million undrawn at the time of separation and about $150 million to $200 million of cash. That implied net debt of $100 million to $150 million and a net debt-to-EBITDA ratio of less than 0.5 times. With that balance sheet, and cash generation profile, we very comfortably have more than $1 billion of M&A capacity at the time of separation and $2 billion to $2.5 billion in M&A capacity over the next three years. We will provide more details on our capital allocation policy at our March 9 Investor Day. We do expect that Crane Company will pay a competitive dividend, but the overall priority will be on growth both organically and through acquisitions. For Crane Company, the key message to remember for 2023 and beyond, with this business is that we are well positioned for a post-COVID recovery.

Our end markets will see long-term growth driven by favourable secular trends, our investments are driving growth above market rates and given the margin structure of this business, operating leverage should result in segment operating profit growth at twice the rate of sales. Turning to Crane NXT's guidance. Crane NXT has about $1.4 billion in sales and is comprised of the Crane Currency and Crane Payment Innovations businesses. On slide 27, we provide operational guidance in the same format that we did for Crane Company. Overall, we expect 2% to 4% core sales growth and a slight decline in segment profit related to a temporary mix headwind at currency. The underlying assumptions are similar to Crane Company. We expect that the overall economy will continue to slow with only gradual improvement in the supply chain.

Starting with CPI, we expect strong mid-single-digit core sales growth of 5% leveraging at 35% with 29% margins. And remember, those margins now exclude non-cash intangible amortization. Total sales growth of 4% includes a 150-basis point headwind from unfavourable foreign exchange. This growth rate is consistent with the historical long-term growth rate of CPI and driven by broad-based strength across verticals, as well as our market outgrowth initiatives. At Crane Currency, we expect flat core sales and a modest decline in margins to a still very impressive 24% roughly 2 times to 3 times the margin rate when we acquired the business in 2018. While there are few moving pieces, the overall story and positioning for the next several years is extremely exciting.

The product authentication business is expected to double in 2023, albeit off a base that is still relatively small. An exciting growth business that you'll hear more about in March. The international banknote business is also performing extremely well and we have high confidence in our outlook supported by a strong backlog. On the U.S. side of business, the most recent Federal Reserve Yield Currency Order or YCO, which is publicly available, includes a very wide range of potential U.S. currency printing volumes for 2023. There are a few factors at play. Demand for U.S. banknotes remains very hot and we believe actual demand is aligned with the high-end of the YCO range of -- at $8.6 billion notes. However, the low-end of the range of $4.5 billion notes reflects the minimum amount of Bureau of Engraving and Printing committed to providing.

We expect actual production to be somewhere toward the middle of that range. One reason for the large range is that the BEP is allocating production capacity to essential projects, most notably what they referred to as the Catalyst N. This is the redesign of the $10 note is expected to enter production in 2025 with a public release in 2026. The redesigned $10 note is expected to have substantial incremental security content. As we have stated before, while the final selection has been announced, we feel very good about our prospects for securing incremental content on this note given our historical relationship with the Federal Reserve and BEP. Remember, the $10 redesign will be followed by the $50 and the $20 bill later this decade and then eventually the $100 bill.

These redesigns are an extremely exciting growth opportunity for Crane Currency over the course of the next several years. Further, the YCO NXT was heavily skewed to the $100 bill over the last two years, relative to the longer-term average, due to extremely high demand for high nomination store of value notes, particularly those for who want the security of U.S. Currency and other countries dealing with high inflation or hyperinflation, and COVID-related risks. This year the YCO was skewed towards the lower denomination. Transactional notes as in-person transactions continue to increase in a post-COVID environment. The transient headwind from combination potentially lower the U.S. government volumes in 2023 along with the banknote mix is the driver for our 2023 margin guidance.

We are excited about the book of growth prospects, as well as the margin potential for this business as we move into 2024 and beyond. On a total segment basis, pre-corporate margins are expected to be quite resilient at approximately 27%. On slide 28, provide the non-operational elements of Crane NXT guidance. Just like Crane Company, this is being provided on a pro forma basis. items presented on a post separation annualized run rate basis include corporate expense of approximately $50 million in 2023 and declining as a percentage of sales thereafter. Net non-operating expense, which is primarily interest expense and related finance costs of approximately $47 million, normal post separation adjusted tax rate of approximately 20% and 2023 diluted shares of approximately $57.3. Similar to Crane Company, we aren't guiding to a specific free cash flow number at this time.

Because we have to report first quarter on consolidated basis. We do however expect Crane NXT's free cash conversion to be approximately 100% on average over time. Total adjusted EBITDA for 2023 is expected to be $364 million, reflecting a 26.8% adjusted EBITDA margin. Pro forma adjusted EPS is expected to be in a range of $3.65 to $3.95. From a cadence perspective, we expect operating earnings in the first quarter to contribute approximately 21% of the full-year. With the balance fairly evenly spread over the remaining three quarters and this is driven by the timing of currency shift. Slide 29 provides some additional details about the executive post separation capital structure. Crane NXT will retain Crane's existing 2036 and 2048 bonds totalling $545 million.

In addition, we expect that Crane NXT will have an initial term loan in the $300 million to $350 million range for total debt of $845 million to $895 million. The existing 2023 bonds will be repaid with the $300 cash dividend NXT will receive from Crane Company at time of separation. We also expect Crane NXT will have a new revolving credit facility in the range of $400 million to $500 million, undrawn at the time of separation and about $200 million to $250 million of cash. The implied net debt is approximately $650 million, which is between 1.5 times to 2 times net debt-to-EBITDA. With Crane NXT's balance sheet and cash generation profile, we expect Crane NXT to have approximately $1 billion in M&A capacity at the time of separation growing more than $2 billion by 2025.

We will provide more details on capital allocation policy at the March 9 Investor Day. We do expect that Crane NXT will pay a competitive dividend, but with an overall strategic focus on growth both organically and through M&A. The key message for Crane NXT in 2023 and beyond is that it is a very strong, resilient and durable business with a long track record of delivering mid-single-digit organic growth, driving substantial margin expansion and executing on numerous successful high return acquisitions. Looking forward, NXT will continue to deliver profitable core growth, while leveraging its strong free cash flow to expand into near adjacencies where it can directly leverage its differentiated technology and operational capabilities. Moving to slide 30, we show the walk from our recast 2022 EPS on a like-for-like basis to our 2023 guidance and 2023 guidance combined for NXT and Crane Company.

Operationally, Crane Company is guiding to growth of $0.33. Crane NXT for the reasons I just reviewed is seeing a slight operational decline of $0.10 and then we have some known and expected dyssynergies relative to our current structure from post -- excuse me, from post separation corporate costs and interest. Those latter two headwinds corporate and interest costs will continue to decline over time. That was quite a bit to cover, but we really wanted to take the time to clearly explain guidance and assumptions for 2023. Please review our addendum slides in detail and Jason stands ready to assist with any questions after the call. Let's now get on to Q&A.

See also 10 Best Cryptocurrency Stocks To Invest In and 12 Best Blockchain Stocks To Buy.

To continue reading the Q&A session, please click here.