Greetings and welcome to the Crane Holdings Company Third Quarter 2022 Earnings Call. [Operator Instructions] 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..

So thank you, operator and good day, everyone. We've been having some technical issues with the provider. If anyone has any issues, please e-mail me directly and we'll sort them as soon as we can. Welcome to our third 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. We'll start our call this morning 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..

So let me just verify here, Jason, first. We've had -- our provider has had some technical issues. Apparently, we -- Darryl, if you're still there, we -- the webcast is not being....

I am here. I could hear, it coming through the webcast. I do apologize. If people that are joined via the webcast, if you could just refresh your browser….

Well, they may not hear you then. Okay. But those dialed in can hear us..

Correct..

Okay. Well, we will -- and it's being recorded, Jason. So at least we'll have a live..

Yes..

driving growth, advancing technology to position our businesses for the future and preparing for the separation into Crane Company and Crane NXT.

Regarding the separation, everything is on track and progressing towards our targeted early April 2023 separation date and we continue to firmly believe that the separation will unlock shareholder value and permit each post-separation company to optimize investment in capital allocation and further accelerate growth.

Notable progress has been made on several fronts. We have already responded to the first round of comments from the SEC on our initial Form 10 submission. We expect that the Form 10 should be publicly available for the first time in December.

We are making significant progress on the mechanics of the separation, organizational design for both companies and filling key roles. We are continuing to work on our capital structure plans, now substantially simplified following the elimination of our asbestos liability.

Both companies will have significant financial flexibility after the separation with more than $1 billion of M&A capacity at each Crane NXT and Crane Company from day 1. And I’m sure you all saw our announcement last week about the selection of Aaron Saak as the President and I of Crane NXT.

I am extremely excited about Aaron’s appointment and 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.

Aaron brings an impressive pedigree of educational and professional experiences along with a proven track record of driving innovation to accelerate long-term growth and delivering strong operational results.

His experience in fostering high-performance teams and his passion for driving breakthrough innovation, make him a perfect fit for this role and an excellent steward of Crane’s culture.

The Crane Board Search Committee met with many top candidates in an extremely competitive process but we are confident that Aaron has the perfect background and experience to help Crane NXT continue executing on its extremely strong and profitable core business while concurrently pursuing new growth opportunities.

I look forward to seeing him successfully leverage his experiences from 2 prior spin-off transactions and prior success diversifying and expanding portfolios into adjacent high-growth markets with Crane NXT. Aaron is working a transition with his present organization and will join us on November 28.

Onboarding processes have already begun as well as strategic review deep dives moving forward. Aaron will join us on our January 24 earnings call to present an update on Crane NXT and answer questions. Moreover, Aaron will be helping me in preparing for our March Investor Day and roadshow. Stay tuned for more on those specific dates.

So in summary, excellent execution, all efforts on track. At this point, I’ll turn it over to Rich for some additional financial commentary..

Thank you, Max and good morning, everyone. My thanks as well to our teams and all of our associates globally for delivering another quarter of strong results. I will start off with segment comments that will compare the third quarter of 2022 to 2021 excluding special items, as outlined in our press release and slide presentation.

At Aerospace & Electronics, sales of $167 million, decreased 1% compared to last year. Segment margins of 16.9% were lower compared to 19.3% last year, primarily reflecting less favorable mix and lower absorption on reduced volumes, partially offset by strong productivity. Pricing offset fully the impact of inflation in the quarter.

Core orders increased an impressive 30% compared to last year and backlog increased 24% but sales remain constrained by material availability, consistent with conditions across the aerospace industry and supply chain.

Sales improved sequentially from last quarter by 4% and we expect further sequential improvement in the fourth quarter as the supply chain constraints slowly improve. And we expect continued but gradual improvement throughout 2023. In the quarter, total aftermarket sales declined 3%.

Commercial aftermarket sales increased 16%, led by growth in spares and repair and overhaul. Commercial aftermarket demand is very strong, reflecting continued improvement in flight hours and high utilization of an aging fleet, as new aircraft deliveries are not ramping up as quickly as the demand due to the supply chain environment.

Military aftermarket declined due largely to timing and supply chain constraints, although orders for military spares were very strong in the quarter. OE sales were flat year-over-year, with 2% commercial growth offset by a slight decline in military OE sales.

While sales were flat, demand is very strong and will be a tailwind as the supply chain eases throughout 2023. Looking ahead, we expect a sequential increase in both sales and margins for the fourth quarter.

To put the present supply chain constraints relative to demand in perspective, in an unconstrained environment, there is demand in our current backlog and order patterns to support mid- to high-teens sales growth in 2023.

Based on the incremental content we have won on current and new platforms, that type of growth in 2023 would be followed by high single-digit growth for the remainder of the decade.

We are also confident that our cost base is properly aligned with demand and that we can return to the 21% to 24% margin range on sales comparable to 2019 levels of about $800 million with incremental sales beyond that leveraging in the high 30% range.

While the situation evolves daily, we do expect the supply chain constraints to ease progressively over the course of next year but we don't expect to be in a fully unconstrained environment until at least 2024.

We will have a better handle on 2023 growth rates after our normal plan process in the final months of this year and we'll communicate segment guidance in January. Regardless of the present macroeconomic concerns globally, we see continued strong commercial aerospace demand heading into 2023. Moving to Process Flow Technologies.

Sales of $250 million, decreased 16% but driven by a 20% impact from the May divestiture of Crane Supply and a 5% impact from unfavorable foreign exchange. Core growth for Process Flow Technologies was very strong at 9%. Adjusted operating margins of 16.8% were an impressive new record for the segment, up 130 basis points from last year.

The margin expansion primarily reflected strong productivity and pricing and pricing continues to fully offset inflation. Compared to the prior year, core FX-neutral orders increased 13% and core FX-neutral backlog increased 16%.

Sequentially, compared to the second quarter, core FX-neutral backlog increased 5% with core FX-neutral orders increasing 1%. Leading indicators suggest that we will see strong continued growth throughout 2022, led by strength in chemical, pharmaceutical and general industrial end markets.

From a market and geographic perspective, Americas MRO and distribution remained stable without any signs of slowdown. Projects, particularly those for productivity enhancements, debottlenecking and large maintenance programs have been very strong. Greenfield activity, however, remains limited.

And our municipal business in the United States is also very strong. Trends in China are also strong and there seems to be some catch-up from demand from a slower second quarter which was impacted by COVID shutdowns.

MRO activity is stable and we are seeing accelerating investments in projects, both greenfield and brownfield expansions particularly for applications such as PVC, VCM and MDI.

Europe has weakened a little sequentially on concerns over energy input costs and customer decisions related to global operating schedules but year-over-year growth rates have been fairly stable.

We are beginning to see a few smaller sized and midsized projects get traction, largely expansion and debottlenecking but no major projects or greenfield activity. The softer project activity in Europe may result and a shift to higher investment in other regions, for example, North America and China, where energy and input costs are lower.

In this business, we do continue to see progressive improvement in the supply chain with material availability and lead times improving. We expect a modest sequential decline in sales next quarter, consistent with normal seasonality and some moderation in margins but we continue to expect full year record margins of approximately 16%.

Moving to Payment & Merchandising Technologies. Sales of $335 million in the quarter decreased 8%, driven by a 3% decrease in core sales and a 6% impact from unfavorable foreign exchange.

Demand remains solid but comparisons were difficult against the record third quarter of last year and we continue to expect solid mid-single-digit core growth for the full year. Operating margins improved 330 basis points to a record 25.9%, reflecting strong pricing and productivity, partially offset by the lower volumes.

And remember, there is nearly 600 basis points of depreciation and amortization in this segment, really very impressive performance from our team. Forward-looking demand indicators also remain very strong with 4% core order growth and 40% core backlog growth -- 40%.

The CPI business is still supply chain constrained, mostly around the availability of certain electronic components but we are now beginning to see some improvement again in both availability and lead times. Currency markets are behaving as anticipated and previously communicated. Remember, currency hit new records in both U.S.

and international sales in the third quarter last year. So the full year 2022 will decline modestly as expected. At CPI, broad-based strength continues with mid-teens core growth. Our gaming business has been very strong, vending continues to improve and the level of activity in the retail markets remains very positive.

We continue to see a proliferation of different solutions across the retail space but the common theme is the need for productivity in an inflationary environment with labor shortages. For the segment, we expect sales to increase slightly on a sequential basis from Q3 to Q4.

From a margin perspective, we do expect margins to moderate in the fourth quarter due to anticipated mix but full year margins should be 24% or above, exceeding last year's record levels. And in Engineered Materials, sales of $63 million, increased 4% compared to the prior year. Operating profit margins decreased 10 basis points to 10.8%.

Growth was led by building products and transportation with RV-related sales down in line with industry production rates. Sales will decline sequentially in the fourth quarter, consistent with normal seasonality and with margins down sequentially along with the lower volumes. Moving on to total company results.

Free cash flow was negative $439 million in the quarter, as accounting rules require the onetime contribution for the August divestiture of asbestos liabilities as an operating cash outflow and we had additional onetime costs related to both the asbestos transaction and the separation.

Excluding those items, third quarter free cash flow increased to $137 million from $108 million last year. We believe that we are on track to achieve our full year adjusted free cash flow guidance of $350 million to $390 million after adjusting for onetime cash outflows related to our portfolio actions and the asbestos [indiscernible].

However, as I noted last quarter, it will be more back-end loaded with normal -- than normal given higher working capital related to the market recovery, most notably, some improving inventory and, in many cases, we are making very conscious deliberate decisions to add inventory in the near term to best protect our customers.

Our balance sheet is in extremely good shape. By the end of the year, we expect adjusted gross leverage towards the bottom of the 2 to 3x Moody's gross debt-to-EBITDA target range for our current credit rating. Turning to earnings guidance.

We are maintaining the midpoint but narrowing to a $0.14 range of $7.58 to $7.72 for the full year which implies fourth quarter adjusted EPS of $1.90 at the midpoint. That's a significant narrowing reflecting our high confidence in the midpoint.

It also reflects the fact that there are only 2 months left in the year with supply chains limiting too much upside in that shorter period. That said, any unsatisfied demand in 2022 will just roll into 2023 prolonging the cycle.

Given where we are in the year, to hit the high end of guidance which we don't have visibility into at this time, it would require a significant improvement in the supply chain very soon, given transit and manufacturing lead times.

The path to the low end looks similarly unlikely, requiring either a significant worsening of exchange rates or an unexpected supply chain surprise.

I want to emphasize again that the only change to the midpoint of our earnings guidance for the full year was an increase of $0.45 in May when Engineered Materials was brought back into continuing operations. On an operational basis, we have maintained guidance all year despite numerous headwinds, specifically since guidance was originally issued.

We lost $0.25 of contribution from Crane Supply which was divested in May. Foreign exchange has been an increasing headwind throughout the year and at current rates is a $0.15 headwind relative to original guidance, most of it from rate moves during the third quarter.

The supply chain environment this year has been far more challenging than most anticipated in January and there has been substantial inflation spanning materials, freight, labor and energy and other costs.

We have held our midpoint while absorbing and offsetting all of these items, 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.

Continued outstanding performance and a solid outlook and even more exciting times ahead as we enter 2023 and complete the separation. And a special shout out to the corporate team that is supporting numerous work streams required to enable the successful separation.

We are all very energized at the progress that has been made to date and the opportunities that we are unlocking and pursuing every day. Operator, we are now ready to take our first question..

[Operator Instructions] Our first question come from the line of Matt Summerville with D.A. Davidson..

Maybe first start with the Payments segment and the backlog growth there, Rich, I think you mentioned 40% year-on-year. Can you parse out a little bit? Maybe a little bit more detail around how much of that is being driven by CPI versus Crane Currency? And obviously, that backlog is well, well above prior peak.

How much of that is market versus market share? And then I have a follow-up on that business..

Yes. First, Matt, on the split and I'll let Rich go from there. It was somewhat more on the CPI side than the currency side but they were both up well, well, well, well into the double digits. ..

Yes. So that's -- I was going to head there as well. So nothing more to add to that from what Jason was saying. I would say on the currency side, we continue to see nice wins internationally. We're making great -- continue to make great progress. I forget the number of new denominations we're going to have this year.

I'm sure we'll announce that in January at the end of the year when we recap. And on the Payment side, we're continuing to make excellent progress on all initiatives in retail. North American gaming continues to be a nice success for us. We're continuing to take share actually in that area as well.

And as we mentioned in the prepared remarks, vending is also -- we're making good traction there in terms of year-over-year growth in the backlog.

So it really does kind of span across all of them and really in line with the theme that we've outlined on the payment side in terms of productivity and labor shortages, driving a lot of the demand right now in the market..

And then just as a follow-up, sticking with Payment, maybe just 2 quick ones. Whether or not you guys maybe have an early read on what the federal government print order might look like for its fiscal ‘23, seeing that fiscal ‘23 for the government has already started.

And then maybe if you can talk about whether or not you’re starting to see some early successes with some of the products you’ve been launching in product authentication. ..

Yes, Matt, Max here. So we don't have an official [indiscernible] order yet from the Fed but I think it's going to be in a similar range. We'll probably expect to see a range and a lot of uncertainty. The desire is for more.

I think it's going to be similar to this year's story which is BEP somewhat constrained not only with manufacturing capacity but also ongoing trials. So there’s tremendous work being done that we are helping to support on the next series and that’s cutting into some of the capacity as well.

So the best we can say right now is similar to ‘22, probably with a range, desire for more all good news long term, though is what I directionally say also. On successes, yes, our team is doing a great job on product authentication. I think there’s some new opportunities. I look forward to chatting about that.

We continue to have trials, approvals, look to double that business again next year, some significant wins here coming up. So I’m very excited..

Our next question is coming from the line of Damian Karas with UBS..

Wanted to ask you first about the PFT segment. I think you had implied in your prior guidance that volumes would be moderating, maybe down slightly in the second half of this year.

Could you just elaborate on whether that – to what extent that’s faring better than you had expected? And when I look at the 13% order growth which is pretty strong, could you possibly break that out between volumes and price? ..

Yes. Well, I guess what I would say is we are doing a little bit better in terms of overall sales progression in the year without a doubt. Making -- the teams are making excellent progress, whether it's on new product development launches or pricing initiatives, really. So it really does span across the board.

I would say most of what we're seeing right now is price at this point.

But -- and the backlog feels, I think, really good as we're setting ourselves up here for 2023 and it really spans across all areas in PFT from -- I mentioned municipal in my prepared remarks but also chemical, pharmaceutical, industrial demand in the process side of the business..

Okay, great. And just a follow-up on the backlog discussion. For PMT, you mentioned up 40%. I know currency, right, that's -- you got pretty good visibility there. But on the payment side, just curious. That is an area of the business that has tended to be probably a little bit more macro sensitive in past cycles.

So how much confidence do you have that if we are in a recessionary scenario next year, that kind of that backlog, those orders that you won on the payment side will hold firm? Or is there some possible risk of deferral or cancellation there? ..

Well, there’s always risk, Damian. But the strength that we see in gaming continues – people continuing to enjoy getting back out, travel continues. On the retail side, I think – even in a recessionary environment, I think the pressure is – this is a very unique cycle with numerous pressures.

I think productivity drivers, wage inflation, the difficulty of finding labor is driving a productivity trend that we believe retailers will continue to invest in globally for the long term, including through a down cycle, now depending on how severe and significant that is. But we think that trend continues. ..

Yes. And I would just say, particularly on the retail side, a lot of the exposure there when you think about where you're seeing automation.

It's not in highly discretionary areas of retail, typically, right, the sort of retailers that are participating, right? So there's always going to be some macro sensitivity but I think a lot less on the retail side. And on the gaming side, remember, a lot of that growth has been share gain, right? So we feel pretty good about next year. ..

Our next questions come from the line of Nathan Jones with Stifel..

Maybe on the A&E business, obviously some uncertainty there in ‘23 with supply chains. But I think, Rich, you said there’s demand there for mid-teens growth or better next year and then high singles from there. If we look at that maybe over a 2-year period, we should anticipate 20% to 25% growth by ‘24 over ‘22.

And then did you say you anticipate high 30s incremental on that growth? ..

Yes, I did. Yes. I think your math's right. It might be -- maybe a tad on -- it's probably about right, actually. ..

Those are the incrementals..

Yes. And the incrementals is, yes..

Okay. I wanted to ask on something that was written in the press release that noted activity on a number of acquisition.

Are you thinking there could be anything upscale completed before the spin? And if so, how would that impact the capital structures of each company?.

Nothing of scale prior to the spin, Nathan. We're not going to put the spin at risk at all and keep the focus on what we have in front of us. I think there's a significant -- there might be some very -- some small strategic opportunities but even that is questionable.

But the funnel is -- continues to be very, very robust on both the Crane and NXT side, a lot of planning, a lot of continued work and a potential scale would come after -- M&A of scale would come after separation..

Fair enough. I guess you’re probably not going to tell us exactly what the capital structures are likely to be at this point. But I think you said both companies about $1 billion of M&A capacity and they’re going to be relatively close to the same kind of EBITDA.

So should we be just the [indiscernible] kind of thinking that both companies will have roughly the same leverage when they come out?.

I think we'll give a little more on capital structure. ..

Yes. So Nathan, so maybe I'll start with just the overall net debt to EBITDA targets that we had talked about previously at Crane Company being just under 1x net debt to EBITDA and at Crane NXT at about 1.5x. So nothing has changed with respect to that.

In terms of sharing just progress on marching towards those numbers come April, our sense is that we've got some pretty -- well, we've got some pretty good clarity with respect to the nature of that debt.

So we would wind up raising some form of a term loan to be determined on sort of the tenure and so forth but, call it, $300 million in the term loan on the Crane Company, that will enable us to dividend monies over to Crane NXT in order to satisfy or to take down the 2023 bonds that are outstanding there on a near-term maturity basis.

And we're also making progress with respect to planned revolving credit facilities that we need to set up at both facilities -- at both companies. It'd also be a minor, I would say, a little bit of a smaller term loan to refinance the existing $400 million that we took out to satisfy asbestos. That's going to remain at NXT.

So all of it progressing, I would say. Hopefully, a little bit more color there for you to understand. We think we're going to the term -- commercial banking market versus the debt -- issuing debt securities at this point..

Just one last one on supply chain.

The disruptions that you’re seeing getting product delivered coming more from your supply chain to you or other issues in your customers’ supply chain that are inhibiting them taking delivery of products you’re producing?.

Say the question one more time. I just want to make sure I understand it, Nathan..

On the supply chain, are you finding more impact coming from your [indiscernible] need to produce products or your customers’ supply chains overall inhibiting their ability to take delivery of products you produce?.

Yes. No, it's much more so our supply chain than the customers in terms of pushing off on existing orders and deliveries. Stabilized -- so again, just in summary, A&E went into it later than the rest as we had supply chain challenges. Things are going to come out a little later as well, lagging. Certainly seeing stabilization.

I mean, it's some very, very extended lead times that we continue to work through. So a very similar environment where you have new surprises in any given quarter that your – the team is doing an incredible job working through and around, not unlike anything else the rest of the industry is seeing.

I mean, we’re triangulating across customers, working closely with customers in many cases, partnering, trying to work through these issues together. We are seeing clearly in A&E a stabilizing and I think it’s going to slowly improve into 2023.

Across the rest of our environment, payment merchandising technologies on the electronics passive actives continues to be problematic but improving. And in general, across the board, outside of A&E, lead times are coming down, material availability more reliably coming in. So we are seeing those signs of improvement. Hopefully, that helps..

[Operator Instructions] Our next questions come from the line of Kristine Liwag with Morgan Stanley..

Max, you mentioned that the search for the I for Crane NXT was very competitive. Now I know it’s a little early and Aaron hasn’t fully onboarded yet but can you provide some color on what you and the Board liked about Aaron’s vision for the business? ..

What we liked is he's got an incredible educational background, number one, Material Science, PhD. That's -- in the micro-optics business alone, it is a material science business. But the breadth of his experience is the number of product solutions background, been with world-class organizations.

So he's incredibly -- has a fantastic general background. Also, from an operating standpoint, with the Danaher-Fortive-Vontier pedigree, very consistent with the Crane Business System mindset, cadence, discipline, execution and there'll be a consistency there.

In addition, I think what we really liked about Aaron's thinking was understanding how in this environment to drive this core business forward and the incredible growth trajectory we have core for decades to come, while also exploring adjacencies that will take Crane NXT into very exciting growth vectors as we move forward.

And that is the focus of these next 5 months for Aaron as well as the Board to really continue to solidify that vision as we move forward. I think it's incredibly exciting, incredibly exciting time. I'm personally very, very energized by where we are at this point. I think everything is playing out exactly as planned..

Great. And on the M&A front, you mentioned that you’re actively pursuing a number of potential opportunities.

Can you provide color on where you’re seeing the strongest opportunities? And in terms of timing, does this mean we could see some of these opportunities materialize before the separation? And is that the case for both businesses?.

Yes, most likely not before the separation, Kristine. They have to be smaller and -- but very strategic for us to do that. We have our sights set on -- staying very focused on the separation but our funnel is very full.

We continue to work on a number of opportunities both across PFT in terms of core and near adjacencies, A&E, core and near adjacencies of all sizes with some very large opportunities that could add significant scale that we would potentially pursue quite soon after separation. Nothing’s given, nothing is certain in the M&A environment.

But again, we’re working the process hard. And as I’ve just described on the NXT side, we have an existing funnel that we will be continuing to, in the next 5 months, refining even further the strategy for very meaningful targeted strategic capital deployment, as we move forward or as that entity moves forward with under Aaron’s leadership..

Our next questions come from the line of Elizabeth Grenfell with Bank of America..

I just wanted to clarify one question on the aerospace piece.

I know you said that you expect mid- to high-teens growth next year ex-supply chain issues but how does that jive with supply chain challenges continuing into 2024? So what are you thinking about the net impact would be on sales next year within that?.

I think we need to just clarify that a little bit, Elizabeth. I think what you meant was unconstrained..

Yes. So absent supply chain constraints, that’s – when you look at our backlog, you look at our order flow and what we think, that’s what that at mid-teens. But in terms of absent that and what should we expect given supply chain constraints, we’re not – we’re going to definitely have some – I think some nice growth next year.

We’re not really prepared at this point. I think in January, we’ll provide some good guidance, obviously, as we always do..

We're about ready ahead in November, Elizabeth, to all of our businesses for our operating plan reviews and really syncing up with the teams to understand our expectations.

So I think we're going to need -- I want to continue to just understand how supply chain progresses through the balance of the year before we really dial in our expectations for 2023. But clearly, at a high level, we do feel it's going to continue to slowly -- I mean, it's only stabilized right now in A&E.

So I think it's going to slowly improve through the first half, hopefully accelerating in the second half. And we believe it will be on a more normalized level by 2024. That's our best thinking right now, more to come when we give our guidance in January..

Okay, great.

And then, when you think about the drivers of the growth in the core orders within the aerospace segment for the quarter, what were the different driving – the different pieces that contributed to the strong growth?.

Yes. So well, the commercial recovery, clearly one of the elements that's driving both the core order growth of 30% and the backlog growth but in addition to that, we did see some excellent continued progress, I would say, along the electrification front and strategic direction and investments we've been making there.

So we – this is where we’ve been spending most of our time over the last 5 or 6 years in terms of technology development. We’ve talked about some of these really nice wins recently, particularly in the ground-based radar area.

In the quarter, I would tell you that our defense power business which is the high-power business supporting that initiative, had its best order quarter, I think, ever. So we’re continuing to see some nice traction there and really all supportive of the 7% to 9% that we’ve been communicating for a while.

I would also point to our lower power solution business, our modular power business, that continues to frankly just execute really, really well and take share. So we saw some really nice order growth in that business in the quarter as well. So a combination of those 3 would be the big pieces.

Again, commercial recovery and then really continued good success in power..

Our next questions come from the line of Damian Karas with UBS..

I just had two quick follow-ups.

First is on, yes, just curious, how much price carryover you might be expecting across the business into 2023 given the actions you've already taken this year?.

Yes. So we are absolutely going to have price carryover next year. I think, Damian, I -- similar to the comment or question we just answered with respect to the next year's demand, we're going to be digging in pretty deep here in the month of November and really get that number solidified. But we absolutely will have some carryover.

But remember, we did start off the year pricing, right? And it's just -- it wasn't like we started in the second half and we're going to get a full half recovery -- sorry, overlap. But we do absolutely think we'll have some healthy carryover impact but it's not going to be like double or carrying over 50% or something like that..

Okay. And then just on corporate expense. It seems like you’ve been running a bit higher than the kind of $75 million guide. Sorry if I missed it but what’s your expectation for corporate for the year now? ..

It's -- let me pull up the number but it's unchanged from the prior guidance, right? We're trending a little bit higher, fourth quarter should be a little bit better but no change to the outlook for corporate..

Thank you. There are no further questions at this time. I would now like to turn the call back over to Max Mitchell for any closing comments..

Super. Thank you, operator. Another quarter with solid performance and further steps on our path to separation to drive further shareholder value, pushing ourselves forward into the future while driving excellent results in the present.

As the late and respected Mikhail Gorbachev once said, "If you do not move forward, sooner or later, you begin to move backward." This is the essence of our culture at Crane and the Crane Business System, celebrating our progress to date while constantly pushing ourselves for new growth vectors and improvement.

And what progress we have made just in the last year, simplifying and strengthening our portfolio, driven by our firm commitment to shareholder value creation.

It remains an exciting story and I look forward to sharing updates with all of you over the next several quarters along with Aaron as both companies continue to drive progress, profitable growth and shareholder value post separation. Thank you for your interest in Crane. Have a great day..

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day..