Good afternoon. I'm Jason Feldman, Vice President of Investor Relations at Craneco. Welcome to our Aerospace and Electronics Investor Conference. But before we begin, I would like to direct you to the disclaimers regarding forward looking statements that are posted both in our 10 ks and 10 Qs as well as in today's presentation materials, which are available on our website. And just a reminder that we'll be citing non GAAP measures throughout the day.
Those measures and their associated reconciliations to reported results can be found in our non GAAP reconciliations in the appendix of the materials that we've provided today. We wish we could have hosted this event in person at any one of our outstanding aerospace facilities. However, due to COVID, we restricted to a virtual format this year. Because of the virtual format, we'll try to keep things tight, and we do not expect to go beyond two hours. We're gonna start with some updates from corporate.
First, Max Mitchell, our CEO, and then Rich Mowi, our CFO. They will give you an update on current events and also tie today's content directly to the themes we discussed at our February Investor Day event. A strong market recovery has already begun. We are well positioned to outgrow markets given years of consistent focus on investments in technology. We also have substantial M and A opportunities, and we are building on a strong foundation, including CBS, to drive consistent execution and a differentiated culture focused on ethics and integrity.
After Max and Rich, you will hear from Steve Zimmerman, President of Crane Aerospace and Electronics, and four of his executives with a focus on how years of investment are driving above market growth today and why we think that growth will accelerate further. This is an incredible team managing a great business, and we're glad to have the opportunity to share the details of our growth strategy with all of you today. We will have a single q and a session after the last of the presentations about ninety minutes from now. And now it's my pleasure to introduce Max Mitchell.
Thank you, Jason, and welcome, everyone. Let me start by addressing our recent press release. We signed a definitive agreement to sell our engineered materials business. Engineered materials is an outstanding business with more than 500 dedicated and highly capable crane associates. This business was a roll up we completed over the last thirty five years through a long series of acquisitions and facility realignments.
Just one of the many examples that illustrates how effectively we acquire and build businesses here at Crane. But while Engineered Materials is an excellent business, over time, as part of our ongoing portfolio assessment process, we reassessed its strategic fit and feel this business is better served with new ownership. I want to thank the entire team for their unwavering support, understanding, and professionalism throughout this process. This business is being acquired by Grupo Versa Tech, also a well respected enterprise. And I'm confident that the engineered materials team will receive support and focus to be better able to pursue both organic and inorganic growth with this new owner.
In addition, we also announced that we are changing the name of our fluid handling segment to process flow technologies. The fluid handling name is from a legacy era and no longer reflects who we are today nor where we are strategically focused moving forward. Crane process flow technologies better conveys the key strengths and core competencies of our business, providing highly engineered process flow solutions with proprietary technology and differentiated designs. Our market focus is on the chemical, petrochemical, pharmaceutical, water, wastewater, and general industrial markets, which include many of the harshest and most hazardous environments. And our products are used in applications with extremely high costs of failure.
Both our organic and inorganic growth efforts remain concentrated in these areas, and we continue to evaluate the composition of the businesses within this segment in conjunction with our focus on the process portion of the fluid markets. Before we dive into aerospace and electronics specifically, I would like to start by reinforcing the key message from our recent February, inflection. I told you all that Crane was at an inflection point for accelerating growth after years of organic investments, and that we would also create value through acquisitions and continued portfolio management. You saw evidence of that inflection in our first quarter results earlier this month, which were outstanding, solidly beating both internal and external expectations for earnings. We revised our outlook concurrent with those results to reflect our expectation of further acceleration of organic growth.
Our confidence in that momentum is so high that we are maintaining our current earnings outlook even with the divestiture of engineered materials, which was expected to contribute approximately 44¢ of adjusted EPS this year. Again, even with this divestiture, we are holding our most recent guidance of $5.65 to $5.85, effectively a 44¢ raise on a like for like basis. And what you heard with our quarterly earnings results, the recent announcement on engineered materials, and what you will hear throughout today's event is all fully aligned with the four key themes we discussed at our annual February investor event. First, we expect a strong market recovery as we emerge from this pandemic across all of our businesses. In some markets, this will be a return to normal.
In other markets, the post pandemic growth outlook is even better than it was before the pandemic, given our alignment with evolving secular trends. Second, we have consistently invested in organic growth, and we are seeing those results accelerate. We have built upon our outstanding historical positions in key markets, pushing investments in new technologies and platforms across a wide range of time horizons to drive long term value creation. While we continue to invest for the future, we are seeing results of our years of investment today. At Process Flow Technologies, we are seeing above market growth driven by new product development, like our triple offset valve, localization of support in The Middle East and China, and commercial excellence initiatives, which improve the customer experience.
Payment and merchandising technologies, we are winning with our advances in currency security technologies and offering new solutions to meet our customers' evolving needs for automating transactions. And today, you will hear about the technology investments we have made across our aerospace and electronics business. We continue to expand our addressable market through breakthrough innovation, new technologies, and new products and solutions. Third, we have growing opportunities for inorganic growth. We have discussed how we refined our m and a valuation process to better reflect our proven historic ability to over deliver targeted synergies.
Even with that refined process, we are over delivering on both of our most recent acquisitions, Cummins Allison and INS. As previously discussed, our focus for inorganic growth today is in the aerospace electronics and process flow technology segments. In both of those segments, we see substantial opportunities for both bolt on transactions as well as adjacencies. Opportunities for adjacencies will be grounded in our strongest core competencies and particularly in areas where we are able to leverage our best in class technologies to new industries and sectors. Steve will discuss this in more detail during his presentation.
And as we look to acquire and build on our strengths, we will continue our process of portfolio simplification, ensuring that we have the right portfolio to maximize value for shareholders and other stakeholders. And lastly, at Crane, we believe our culture is a differentiator for us and is a critical element of the strong foundation we have built upon at Crane. I'm resolved to conduct my business in the strictest honesty and fairness to avoid all deception and trickery, to deal fairly with both customers and competitors, to be liberal and just toward employees, and to put my whole mind upon the business. These powerful words written 165 ago continue to guide us today, speaking to ethics and integrity and how we conduct ourselves and our business for all stakeholders with a passion for the business. But our culture extends well beyond just the RT Crane resolution, ethics, integrity.
RT Crane himself was a philanthropist, a supporter of his community, and a family man. In that spirit, we have fostered a culture at Crane which embraces these values, honesty and fairness, philanthropy, sustainability, in an environment which embraces equality and respect for all on a global basis. The right behaviors and support for all stakeholders. A culture focused on the right values and on all stakeholders paired with the world class Crane business system, with the power of its disciplined cadence and execution as firmly embedded at Crane as our core values, while also pushing and investing in breakthrough technology and innovation to solve our customers' most difficult problems. As I discussed in February, it's been a fun journey, and we have a lot of exciting opportunities ahead of us.
In addition to these consistent four themes across all of Crane, today, we will show you how aerospace electronics is extremely well positioned for a sustained period of high growth with an extremely attractive margin profile. From several independent p and l's to a unified segment with careful pruning along the way to simplify and focus the business, this has always been a great business, but it has been continually transformed over the last decade, driving excellence in critical technologies that are essential to our customers. In aerospace and electronics, just like all of our businesses at Crane, we have continued to improve the alignment of our r and d efforts with the secular trends in the industry, and our technology and product development road maps have positioned us well ahead of our competition. This transition is dramatically expanding our addressable market and creating numerous exciting opportunities for substantial additional growth, both in our core markets as well as in adjacencies. And these exciting new opportunities are supported by an extremely strong portfolio of content on existing programs that provide stable recurring revenue today.
Our current positioning paired with our ongoing investments give us confidence that we should be able to achieve a sales compound average growth rate of seven to 9% from 2021 through 2030 with sustained growth well beyond that period. Before we turn it over to our president of Crane Aerospace and Electronics, Steve Zimmerman, let me ask our SVP and CFO, Rich Maui, to provide a financial update.
Thanks, Max. Yes. I can't wait to hear from our A and E team today on our outlook, but just a couple of quick updates I would like to cover. What a start to 2021. A very strong financial performance in the first quarter followed by our recent announcement regarding the sale of Engineered Materials.
Like Max said, Engineered Materials is an excellent business that's incredibly well run. But considering where we want to put our capital to work at Crane, a business that's better positioned strategically with Grupo VersaTec, an excellent new owner, and we continue on our simplification journey and now with more capacity to invest and grow in the strategic focus areas of the Crane portfolio. A lot of exciting things happening at Crane as we continue to recover from the pandemic, both core and inorganic, and we look forward to continuing to share more as we move forward. Momentum. Recapping where we've been already this year, at our annual investor day in February, we raised the midpoint of our EPS guidance by 10¢ to $5.10, reflecting modestly stronger demand we were seeing across most businesses through the first two months of the year.
Fast forward two months, with our first quarter results, we increased the midpoint of our EPS guidance by another 65¢, reflecting the strength we saw in the quarter, strengthening of leading indicators and orders, and in particular, how well our teams executed on growth initiatives while also maintaining our strong cadence on cost and productivity. And free cash flow was also notably strong, enabling us to raise our guidance on this very important metric as well. Now having announced the sale of engineered materials and with another month behind us, we are not changing our previously revised guidance intending to deliver inside our previously communicated range even without the 44¢ of full year earnings we expected from Engineered Materials when we started the year. Said another way, this means we are effectively raising guidance today operationally by another 44¢. I am confident we will deliver.
With the sale of Engineered Materials, we have substantially more capital to deploy. That said, our capital deployment priorities have not changed. We will remain disciplined and take a long term view in our decisions. We prioritize internal investments because they have the strongest risk adjusted returns. This is where we will spend most of the time today, showcasing all the exciting initiatives our engineering led organization is driving at Crane Aerospace and Electronics.
Then its acquisitions to enhance growth. Again, our focus will be on deploying capital to our aerospace and electronics and process flow technologies businesses, and we will be seeking to acquire in both our core and adjacent markets. And as I just stated, we have always been and will continue to be disciplined buyers, demonstrating that discipline. As a reminder, last year during COVID, we successfully integrated two acquisitions and delivered 23¢ of accretion versus our initial estimate of 15¢, all that accretion driven by incremental synergy realization. By the end of last year, we had roughly doubled the margins at Crane Currency compared to pre acquisition levels even after the significant intangible amortization that comes with purchase accounting.
In 2021, we are tracking to substantially exceed the $1 of EPS accretion from Crane Currency that we committed to at the time of the acquisition, delivering on what we say. As we mentioned last February related to our deal math, we have historically overdelivered on cost synergies. We have used that empirical data to better forecast synergies for potential acquisitions, and we are using that new forecasting methodology in our NPV calculations. This allows us to be a little more competitive on value while maintaining our strict discipline, another reason we are more bullish on future inorganic opportunities. And we balance acquisition opportunities with the desire to provide an adequate return of capital to shareholders.
Our m and a capacity is growing very quickly. Just last month, we fully repaid the three hundred and sixty four day term loan that we secured as an insurance policy when the pandemic began. Together with our strong earnings growth to date and our outlook, as well as the proceeds received from the sale of Engineered Materials, we have ample capacity to secure meaningful M and A opportunities today and project our acquisition capacity to exceed $1,000,000,000 by year end. We continue to execute really well every day. We delivered a record quarterly adjusted operating margin of 16.2% despite the fact that most of our end markets are still depressed compared to pre COVID levels.
Results to date are ahead of what we expected with all cost and productivity efforts reading through and complemented by the revenue momentum that enabled us to leverage above our plan. Excellent results across the board, and these results enable us to invest further for growth. We are seeing signs of strong growth returning in our markets. Core sales up 6% at Process Flow Technologies in the first quarter. Not just the shorter cycle portion, but early signals of project activity building as well.
And supplemented by numerous new product development programs and other organic growth initiatives across the business. Our Payment and Merchandising Technologies segment grew core sales by 8% last quarter, and it was led by an outstanding performance at Crane Currency, which continues to win new business across its international markets while continuing to deliver to the US government in line with current demand levels. We are also seeing momentum building at Crane Payment Innovations. While sales were still down year over year, first quarter sales increased materially on a sequential basis from the fourth quarter of last year with solid order momentum supporting our views of more good things to come. And in our longer and later cycle businesses at aerospace and electronics, revenues were modestly better than expected, but still muted because of the magnitude of the impact the pandemic continues to have on the commercial aerospace end markets.
That said, our teams executed really well, delivering a 16% operating profit margin, a substantial 600 basis point sequential improvement. Disciplined execution and with broader signals that airline travel is continuing to accelerate, I look forward to what we will deliver not only this year, but in the next few years. And you will hear all about the above market growth we expect to see in this business in just a few minutes. And that execution goes beyond the p and l to free cash flow generation, where we are converting earnings to free cash flow at a much higher rate today than we have historically. As I explained in February, our free cash conversion has averaged approximately 100% over the last five years, giving us substantial flexibility for further investments internally and for acquisitions.
Together, our capabilities, markets, and financial flexibility create a compelling story. While we have always been intensely focused on maximizing sustainable returns for our shareholders and all stakeholders for that matter, we believe that we are at an inflection point, and the results from years of organic investments, acquisitions, and repositioning our portfolio are gaining traction at an accelerating pace. We are confident we can deliver above market organic growth paired with strong operating leverage as markets recover. We also expect acquisitions in Process Flow Technologies and Aerospace and Electronics will contribute meaningfully, and they will be focused in areas that improve our underlying organic growth profile. Together, we believe this is a formula for long term total shareholder return growth rates well above the average of our peers.
Now let me turn it over to Steve Zimmerman, president of aerospace and electronics, who will discuss the role of his business in achieving Crane's overall objectives.
Good morning. I'm Steve Zimmerman, president of Crane Aerospace and Electronics. As we discussed in our Crane Company Investors Day back in February, we have so much to share with you that this year, we scheduled this dedicated aerospace and electronics investor event to better cover the numerous exciting growth opportunities we're pursuing. The remainder of today's event will be focused on our growth strategy and initiatives that will drive a 7% to 9% organic sales CAGR from 2021 through 02/1930, with margins in our long term targeted range of 21% to 24%. Across the presentations, you'll hear how our business is aligned with the four key themes Max introduced at our annual investors conference.
Specifically, we expect a strong recovery in our end markets with both secular and cyclical drivers, and we are well positioned to benefit from this recovery with content on virtually every major commercial and military platform. Commercial aviation is already rebounding from the impact of COVID and should return to strong long term growth driven by numerous factors, including a rapidly growing global population who can afford air travel. And defense budgets remain strong. Our business is focused on some of the most resilient and highest growth areas of defense spending, including c four ISR and all of the major defense aircraft platforms. We are seeing accelerating growth from consistent and continued investment in technology.
Our growth investments over the last decade have not wavered, and we're seeing the benefit of those investments today. These investments also continue to expand our addressable markets and align our business with accelerating secular trends, most notably electrification. And we're delivering on truly breakthrough innovations that are critical enablers to our customers' growth strategies and that are transforming the growth trajectory of our business. We have a growing opportunity for inorganic growth. Our business was built on acquisitions, and we have opportunities for additional bolt ons as well as adjacencies grounded in our strong core competencies such as power conversion, fluid and thermal management, pressure and flow measurement, and sensing.
And like all of Crane, we're built on a strong foundation, ethics and integrity, sustainability, and disciplined cadence and execution necessary to deliver sophisticated and complex solutions on time with consistency and quality levels that are competitive advantage in our industry. So with those four themes in mind, I will provide an overview of our business, followed by some details on our microwave and landing businesses before I turn it over to four of our leaders to discuss our technology and growth initiatives and our strong operational capabilities. There will be an opportunity to ask questions at the conclusion of the presentations. So let's take a closer look at Crane Aerospace and Electronics. Crane Aerospace and Electronics was assembled through multiple acquisitions over several decades.
In most cases, we invented the fundamental technologies that are now the industry standard, and were known for our performance, reliability and innovation. Given that history, our customers rely on us to solve their most challenging problems with innovative solutions. For example, large commercial aircraft anti skid brake systems that have always been hydraulic based on the system that we invented and introduced more than seventy years ago. For the July, however, Boeing needed a different architecture and lower weight, so they turned to us to design and build the first electric anti skid brake system for commercial aircraft. When geared turbofan engines were introduced, they required lubrication at higher pressure, temperature, and flow rates, and the engine OEMs turned to Crane to develop this solution.
A long track record of delivering innovative, differentiated solutions for our customers that no one else can provide, typically focused on specific technologies where there are a few competitors and where the solutions are mission critical. And after years of operating independently as five separate business solutions, today Crane A and E has been transformed into an integrated operating company, sharing technology, expertise and resources across all of our solutions and serving our customers as a unified company. Because of our strength in this market historically, we have a large high margin annuity like revenue stream derived from our incredibly solid foundation with content on virtually every major commercial and military platform launched over the last several decades. That includes strong presence on older out of production commercial aircraft such as the Boeing classic seven three seven, five seven, and the Airbus a three forty to military aircraft like the c one thirty, b 52, and f 18. That means every day we're selling spares to replace our sole source content as it wears out and needs to be replaced.
A consistent revenue stream from repair services based on flight hours. And opportunities for growth with modernization and upgrade projects across entire fleets. You may recall that we upgraded the brake control systems on the Air Force's entire c one thirty fleet in
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of pressure system across numerous models of business jets, regional jets and large commercial aircraft. These are just a few examples, and we're in pursuit of many more. We have an even stronger position on the current generation of in production aircraft driving revenue today and creating an aftermarket stream for the years ahead. Crane has a proven track record of capturing increasing content on both derivative and brand new models because of the strength of our technical capabilities. Historically, our engineering teams developed new products and technology with a customer specification driven focus with an emphasis on application specific opportunities.
Over the last twenty years, there's been an unprecedented level of OEM specification driven platform development programs. We have substantially more content on the seven thirty seven MAX than on the prior generation of the seven thirty seven NGs. And we have nearly double the content on the A320neo than we had on the prior generation of A320s. We have strong content positions on virtually every other major aircraft platform from Boeing, Airbus, and Embraer. And we have solid content on the Comac c nine one nine, including the brake control system, the door sensing system, and the flight control power conversion.
While still in the certification process, we're looking forward to the first production deliveries and entry into service in 2022. Our position today ensures that our commercial business will benefit as aircraft production rebounds from the pandemic, with each new plane generating revenue today and growing our installed base for a long tail of aftermarket activity over the next few decades. And we are similarly positioned on the military side of the business across all of the major known programs such as the F-thirty five, as well as less known and often classified defense applications. Aerospace is a very long cycle industry with platforms that can last for decades. With a moderately conservative view of air traffic and aircraft production rates, the content and position we have already won should support a 5% to seven CAGR over the next ten years.
This is our high confidence baseline. We have direct line of sight to this level of growth, and it's really only dependent on normal market activity and our continued operational execution. The rest of today's presentation is about how we're driving for growth above that 5% to 7% this decade and how we're investing to ensure that our high growth is sustainable well beyond that 2030 horizon. In addition to the operational discipline of CBS, there is one key driver of our success to date that also gives us confidence in our strong growth outlook, our differentiated technology and engineering capabilities. This business has always been at the forefront of technology and innovation within our solutions, but this strength has become even more important as the pace of change has accelerated.
The strength of our engineering team is unparalleled and our capabilities are differentiated in a number of critical ways. We have decades of experience with our core technologies, in many cases far more than any of our competitors as we were the first to commercialize many of our solutions. We work closely with our extensive customer base and see how our solutions are used by all of the OEMs as well as the Tier one suppliers. That broad view gives us a perspective that captive or in house suppliers don't have. We have large engineering teams focused around core capabilities that understand the technology.
They work closely with our production teams throughout the development process to ensure that the solutions have the right technology and are also designed for manufacturability. In addition to our depth of knowledge within each of our solution, we have extensive experience integrating multiple technologies together. For example, we provide both the microwave components as well as their required power supplies together for various radar programs. Later today, you'll hear about how electrification is creating a need for integration of power, sensing, thermal management systems. Or in a typical landing system, we combine the wheel speed transducers or sensors with sophisticated control algorithms as well as hydraulic or electric actuation systems.
The way we bring these solutions to market has also evolved over time. Historically, like all of the Tier one and Tier two suppliers, we focused on application specific opportunities with a customer specification driven focus. We were extraordinarily good at it, as evidenced by our strong positions on nearly every in production aircraft model. This was a custom design build business. Today at Crane, we've moved to a technology readiness focus, investing in technology and capabilities before it's needed by our customers.
And we're developing that readiness early enough that we can influence future specifications and work with our customers understand and serve their needs while helping them develop their next generation solutions. You'll hear about this from the other presenters today, where we are developing the technology today, which will be the critical enablers for the more electric vehicles and aircraft, more advanced radar systems and other C4ISR systems and satellite constellations and space exploration. This work on technology readiness is aligned with our customer future needs, the secular trends in the industry and the core competencies we've developed over the decades. Those core competencies include power conversion with growing capabilities and higher power conversion for new emerging applications that require defense grade reliability and quality and sophisticated magnetics design, delivering higher power in lighter, smaller, more efficient packages and adding bidirectional power conversion capabilities. Sensing capabilities, condition and position sensing, pressure and flow measurement with increasing precision and with wireless capabilities to permit sensors to work independently from aircraft wiring.
Fluid and thermal management, providing the highest reliability and flow rate with a design that reduces size and weight in increasingly challenging pressure and temperature conditions. Landing system based upon our unique dynamic modeling capability. And microwave systems for high frequency signal processing and low noise designs. Our capabilities continue to improve, but they are centered around the same core competencies we've been building upon for decades. Aircraft, electric urban mobile air mobility vehicles, advanced radar and guidance systems, and new satellite networks, there's a massive amount of change that's already occurring today.
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markets, and most of them are growing in importance every day. And our solutions and our customer needs are not just about incremental iterative improvements, but they are requiring true breakthrough innovations with substantial step function changes in technology and performance. You will hear about some of these opportunities in the next few presentations, but this isn't just about a hypothetical futuristic vision. We're engaging with customers and partners on these projects today. Substantial funded engineering to support some of our work in these areas, working prototypes and numerous wins on pilot programs and demonstrators, both for commercial and for defense customers.
These opportunities that will add 2% to 4% to our sales CAGR this decade, taking us to 7% to 9%. As we move beyond our older specification driven approach to a technology readiness model, we're also increasingly exploring adjacent opportunities focused on the same core competencies, taking a hard look at our core capabilities, what we're best at and identifying additional markets where these technologies would be valued. In some cases, that may be an organic exercise, finding new customers in new industries for our existing technologies. This may require additional sales and marketing resources and likely some degree of product modification and redesign, but focusing on areas where our existing technologies will give us a clear competitive advantage in these new markets. In other cases, gaining traction in these adjacencies may require acquisitions, giving us access to new customers and possibly extensions of our existing technology and capabilities.
There are a lot of exciting opportunities we're exploring. We also continue to explore bolt on acquisitions, but we expect most of the inorganic activity at Aerospace and Electronics to be at adjacencies moving forward, substantially expanding our opportunity set and aperture, but always with discipline. Discipline on valuation and discipline in our focus on areas where our existing core competencies will provide us with competitive advantage. We expect that acquisitions will provide meaningful upside to the 7% to 9% organic growth we expect over the next decade. I'm going to briefly cover our Landing and Microwave businesses before turning over the presentation to some of our solution leaders.
We have the leading aircraft landing system solution in the world. This business invented aircraft antiskid braking with the first system produced in 1947 for the Boeing b 47. Every Boeing aircraft manufactured since has had our anti skid brake system, which today incorporates sophisticated sensing technology, complex control systems based on our proprietary algorithms, and mechanical or electric actuation systems. And it's not just Boeing. We have content on the Airbus a 400 ms, the c nine one nine, and numerous regional and business jet models, and many military aircraft, including the b one, b two, b 52, f 15, f 35, the list goes on.
Just a few of the exciting opportunities we're pursuing include an extremely large modernization and upgrade program for one of the highest volume fighter aircraft in service today with a USA fleet of more than 2,000 aircraft and the longer term international opportunity that's also very large. Developing a zero wheel speed transducer, a breakthrough technology that's critical for many unmanned military aircraft or UAVs. It's being first put into service on the m q '25. And developing brake energy management technologies that will be a significant extension of life for aircraft brakes. And we're making further advances in our runway condition monitoring so our anti skid systems can calculate and transmit the actual runway conditions so the next airplane landing on the same field can take advantage of these conditions and improve braking performance.
Our microwave solutions are used primarily in defense applications and provide advanced RF and microwave assemblies. We have expertise with integrated microwave assemblies or IMAS and we have proprietary technology in this business called MultiMix. That's a process for fusing multilayer integrated circuit and micro multifunction modules into self contained modules with substantially reduced size and weight. This solution has a great position on dozens of platforms from missile guidance systems to aircraft radar systems, and increasingly, we're involved in large ground based radar projects like the space fence program we delivered on a few years ago. This business continues to grow, and today, we have more than 20 programs in development compared to an average of five at a time over the last ten years.
In this business, we have a number of strategic initiatives, including constant innovation towards higher density, higher frequency assemblies to support the newer AESA radar systems and expanding our multi mix capabilities to support large low earth orbit communications satellite constellations where we see a sizable opportunity and a unique fit for our proprietary multi mix solution. We hope to have a new win in this area to announce shortly. Really exciting opportunities across both landing and microwave. Let me now turn it over to Trey Ent, who will discuss our power business in more detail.
Thanks, Steve. Welcome everyone to sunny Fort Walton Beach, Florida. My name is Trey Hinn. I'm the vice president and general manager of the defense power business at Crane Aerospace and Electronics. Our Kel Tec, L Deck, and Interpointe brands carry a long legacy of providing a full spectrum of power solutions for aerospace, defense, and space applications.
The growing demand for hybrid and all electric systems from all electric vehicle drivetrains to carbon neutral passenger flight is driving higher power, more efficient power conversion needs that Crane Aerospace and Electronics is uniquely positioned to offer. Crane Aerospace and Electronics supports our customers with custom power solutions ranging from low energy consuming hybrid conversion for space applications to mid range critical power conditioning for aircraft flight controls across large transport, regional, and business jet aircraft. Two, high power conversion for ground based radar systems and other emerging military industrial applications. We are one of the major players in a moderately fragmented power space, and we have a solid growth outlook. You may notice that our expected CAGR through 2030, a solid 66% is a little lower than some of our other businesses.
For context, given the commercial defense mix, remember that our 2021 sales are well above the pre COVID levels, and we are not growing from a depressed base like the more commercial focused businesses. Historically, Crane Aerospace and Electronics has enjoyed a strong market position with a mix of customers, including all of the major tier one suppliers and OEMs. The strength of our position is a result of our reputation for high quality, extremely reliable power dense products with an industry leading size, weight, and power used in mission critical applications. As commercial aviation adopts to hybrid and all electric propulsion systems for carbon neutrality and lower operational costs, the increase in voltage levels generated from the energy source demands, higher voltage and power conversion capability to drive both traditional and higher power loads such as avionics and actuation systems. Recognizing several years ago that this shift would start to be realized within a decade, Crane Aerospace and Electronics accelerated investment in research and development activities to expand and enhance power conversion capabilities.
These investments have already resulted in a number of wins, including a wide input range DC to DC converter that has been delivered to Eviation for their Alice nine c all electric passenger aircraft. This technology is also a core element of our collaboration with BAE Systems to jointly develop high voltage, high power electric systems for the emerging advanced air mobility market. Specific to the defense power business, we have historically held a strong position in providing higher voltage power supplies for use in airborne, ground, and shipboard applications of traveling wave tubes used in mechanically scanned radars. Over the last decade, electronically scanned radars or AISA gained traction due to better tracking speed and the reliability of the radar sensor system. However, AISA systems require substantially more power and as a result, more advanced cooling systems.
These trends were identified years ago through our annual strategy development process, and we developed long term technology and product development roadmaps that we have executed against successfully successfully for years. Specifically, we have improved our power output to 30 kilowatts per line replaceable unit, improved power density, reducing the weight required for each given power range, improved efficiency, reducing heat and cooling needs as power levels increase. And our products are increasingly modular and scalable, providing the building blocks for further improvements. With those building blocks, we have packaged and integrated our converter technology into line replaceable units or LRUs with twice the value and price point per kilowatt. We then move to combining LRUs into full custom power systems for ground based radar applications, which command approximately three times the value per kilowatt.
Our work with Crane Aerospace's fluid technology business has also been a significant competitive advantage. And you will hear more about this from Jay Higgs later today. We are able to provide best in class high power components with increasingly integrated advanced cooling systems as thermal management becomes far more critical at high power ranges. We have also been very successful in driving substantial incremental improvements in our products. And with these advances, we have already more than doubled our addressable market.
This is a higher growth part of the market with a 2020 to 2030 expected market CAGR in the high single digit range. Already today, our AISA business is nearly four times the size of our mechanically scanned radar business, and it is growing rapidly. We are extremely excited about our growth opportunities, but this just isn't a potential distant opportunity. While deliveries will take a few years to ramp up to full rate production, we have already secured several major long term platform wins in this space, ensuring a strong growth trajectory for more than a decade. These wins include Raytheon's high profile LTAMDS program, Lockheed Martin's Sentinel radar program, and other major franchise advanced radar programs that we can't disclose at this time.
This is a large market. There are hundreds of ground based radar systems produced each year with an installed base in the thousands. In the long cycle defense business, our strategy process looks out fifteen plus years, and we continue to refine our technology and product development roadmaps as our markets evolve. In addition to planning for short to medium term incremental product improvements, we are always looking ahead to the next truly breakthrough innovation that is aligned with the industry's secular trends. In this space, there are clearly trends towards a more electric world that will have new and more challenging requirements for power management.
For example, the United States Department of Defense is reimagining how it consumes energy. Globally, the Department of Defense is one of the largest consumers of energy, and the Air Force is the largest user of fuel energy in the US government. The way energy is currently generated, stored, transmitted, and used is critically important, and the system in place today is dependent on a complex logistics chain. From a technology perspective, the focus is moving to even higher power ranges, coupled with the addition of bidirectional power conversion products for the aerospace and defense markets, including combat and tactical vehicle electrification, high energy laser systems, and advanced missile defense radars. The largest of these opportunities is likely to be the hybridization of military and heavy industrial vehicles driven by the needs to improve fuel economy, reduce maintenance, simplify logistics to support those vehicles and reduce the carbon footprint.
We will continue to increase the power ranges of our products to support the needs of our customers and the industry. And while there is a lot of development to do, this is a continuation of the incremental improvements we have made for years. The real breakthrough in this space will be developing bidirectional power conversion capabilities at extremely high power levels with very high reliability for military standards and at an unnecessary size and weight. Let me take a minute to explain why bidirectional bidirectional power conversion is so critical for more electric and hybrid electric vehicles. There are many types of traditional power conversion products that can convert power from one voltage to another, convert from direct current to alternating current or vice versa, and condition or smooth power in many different ways.
Traditional power conversion products, however, work in one direction, permitting flow from a power source to where the power is needed. Bidirectional power conversion, as the name implies, allows power to flow both directions. The same system might convert power from 600 volts to 24 volts traveling in one direction or from 24 volts back to 600 volts when the flow is reversed. This substantially increases the flexibility of the possible electrical architectures that are feasible, And this capability will be required at extremely high power levels as the enabler for military applications. For example, bidirectional power conversion improves efficiency by permitting battery recharging through regenerative activities like braking.
Bidirectional power conversion helps balance loads as power can be shared back and forth between low power and high power systems within a vehicle. Bidirectional power conversion allows for energy to flow from a vehicle to external systems like microgrids or weapon systems while also allowing the vehicle to be charged from that external connection. Basically, with bidirectional power conversion, an electric or hybrid vehicle can be autonomous. It can serve as a electrical power source for another application, or it can function as a battery or an electric storage device. All electric military vehicle applications will require high power bidirectional conversion.
As the market evolves, the addressable market will increase dramatically. Ground vehicles, tactical, combat, etcetera, are moving to hybrid and more electric, and there will be thousands produced each year with an eventual field base in the tens of thousands. Just some of the military platforms we think will have opportunities are the family of multi tactical vehicles, joint light tactical vehicle, heavy expanded mobility tactical truck, the next generation combat vehicle, and the optional manned fighting vehicle. Each system has significant power needs, which we will be able to address, paired with some of the advances you will hear about later where we can also play in this market with motor drives and controllers, pumps and cooling systems. We are uniquely positioned to win in this market because of our industry leading technology based on our IRAD investments and experience in the military market domain.
Our technology is differentiated because we offer higher density and power solutions than our competitors. We are ahead of our competition because of our long term investment in this technology and our focus on this evolving market. Other potential applications of this technology include microgrids. Implementing innovative smart microgrids offers the DOD an excellent solution to many energy challenges it faces. Whether using a generator battery or renewable resources, microgrids offer higher level of resilience given they don't rely on outside fuels.
Other advantages to tactical microgrids includes providing redundancy, decentralized generation generation and distribution, lower fuel consumption, and the ability to redistribute available energy and providing connections for many energy generating resources available in the tactical environment. As military ground vehicles become all or hybrid electric, the vehicles themselves become a source of power generation for remote bases or supporting equipment. Think about the potential applications in a remote potentially hostile environment with each vehicle, radar system, and weapon system being a modular component of a larger system that can be mixed and matched as needed. Each component able to generate power, store it, transfer it elsewhere, at times connected to the larger grid, but also able to operate autonomously. With more than sixty years of experience in power conversion, Crane Aerospace and Electronics offers a total solution for advanced high power microgrid deployment and a full line of designs that include off the shelf and custom power solutions for the commercial aerospace, defense, and space markets.
Crane Aerospace Electronics has developed and continues to develop power supply products that are interactive in all electrical distribution systems. As trusted industry leaders in power and advanced packaging solutions, our products meet the requirements for mission critical applications while delivering the efficiency and the reliability that our customers demand. While an evolving addressable market for bidirectional high power conversion could be in excess of $100,000,000 by 02/1930, and it will not be fully mature market at that point, so we have decades of high growth ahead of us. We continue to invest heavily in research and development, and that is guided by our rigorous and structured strategy development process. Through that process, we identified a need for a high power lab to support our long term growth requirements.
And this new lab opened late last year in Fort Walton Beach, Florida. The lab is capable of testing systems requiring one megawatt of power, and it incorporates the latest in safety, power, and environmental test capabilities to support our customers' high power conversion needs. For a frame of reference, one megawatt powers about 800 homes or the complete operating load of a Boeing seven eighty seven aircraft. We believe the power conversion market has significant growth potential and our unique set of skills and capabilities will allow us to develop a clear market leading position. We expect to be able to expand our defense power addressable market from 400,000,000 today to more than double that size by 02/1930, with accelerating growth beyond 2030 and trends towards electrification strengthening further.
Thank you. And we will now move to Hillary King who will discuss our sensing capabilities.
Thanks, Trey, and welcome everyone to Lynnwood, Washington. My name is Hillary King, and I'm the vice president and general Manager of Crane A and E's Sensing and Power Systems Solution. The Sensing and Power Systems Solution has a rich heritage of providing high accuracy, proximity and pressure sensing systems for commercial and military aircraft since 1964. Our sensors, switches and electronics are highly accurate and ruggedized for installation and operation in harsh environments. These products enable performance of critical systems, providing real time data at the source for performance control and health monitoring.
Today, we have a very strong position in our niche sensing market, with more than onethree of a $300,000,000 served market for our current sensing solutions. Investments we are making today position expand our addressable market substantially solutions. And to gain exposure to the much larger $3,000,000,000 aviation sensing market. We are well positioned to benefit from the market recovery as production rates increase and as the need for spares and repairs grows with increased traffic demand. Based on our current market outlook and the content we have already won, our sales should grow at a 7% CAGR through 02/1930.
Our growth initiatives to expand our addressable market and drive breakthrough innovation should add approximately three points to that growth rate for a total 10% CAGR through 02/1930. We have a long standing reputation for innovation and highly engineered products designed to operate in harsh environments with mission critical applications. The strength of our position in the market is evident from the breadth of our customer base with original equipment and retrofit products on virtually every major aircraft platform from large transport aircraft to regional and business jets to military aircraft. Today, our sensing products can be found as line fit on nearly every major commercial aircraft type, from the A320neo and seven thirty seven MAX and on premier military platforms such as the JSF and V22. Many of our systems have also been certified for retrofit on numerous business and regional jet models.
Applications of our proximity sensing products include detecting discrete positions, for example, open or closed, retracted or deployed. Our active sensors are capable of detecting specific measurements of gap for critical systems, such as landing gear, cargo and passenger doors, and leading edge devices, such as control surfaces and thrust reversers. Our pressure sensing products can be found as mission critical components in engine electronics to detect multistage pressure. Pressure sensors can also be installed in aircraft tires to provide either wired or wireless tire pressure and temperature data to an onboard cockpit system or to a ground maintenance handheld device. In addition to detecting and transmitting data, we offer complex control system hardware and software which controls the position of landing gear, passenger and cargo doors, control surfaces and nose wheel steering.
At Crane, we set ourselves apart from our peer companies by driving continuous improvement with the application of our robust CBS tools. This mindset lends itself well to seeking new and improved ways of designing and manufacturing products for cost reduction. It also provides a structured methodology of strategic deployment, resulting in an expansion of our sensing portfolio to create more value for our customers. We have recently launched several new and expanded products, many of which are entering production this year. These include a rapidly configurable switch or RCS developed with a modular library concept which allows for quick and easy customization and certification compared to a traditional standard product.
New enhancements to our pressure sensors which extend our range of addressable engine and fluid applications. Additions to our SmartStem line of tire pressure sensing solutions that add temperature compensation to support hot check of pressure and shorter aircraft turn times at the gate. These new products expand our addressable market by more than $100,000,000 in the next decade. Early adopters include the Viking CL-four 15 water bomber with a ruggedized version of our proximity sensor for the harsh environment of the bomb bay door. Aviation Allis, all electric subregional, the first application of our rapidly configurable switch, now starting test at the new Ironbird facility in Washington.
Airbus Zero E initiative, evaluating crane A and E high accuracy pressure sensor to replace internal fuel tank probes and eliminate fuel tank wiring. A commercial demonstrator project with a unique application of our Smartstem wireless tire pressure system, driving continued aircraft weight reduction for fuel and emission savings while demonstrating new wireless data applications for commercial aircraft. Just as Trey described the electrification and military applications, commercial aircraft electrification is also a significant trend, driven by the desire to reduce or eliminate dependence on fossil fuels in favor of alternate means of propulsion to reduce footprint of aviation. As hybrid and all electric propulsion technology for commercial flight matures, the demand for the higher power, higher voltage power conversion continues to increase for aircraft as well as ground based applications. But electrification also facilitates new and more efficient aircraft subsystems, and it's driving the rapid escalation of electric air vehicles that can offer low operational costs for short range, point to point urban and intercity travel.
We recognized opportunities to drive lower cost sensing systems, which would support a growing demand for sensing data as novel aircraft systems began to proliferate. For example, use position for flight control creates critical needs for position, rotation and displacement information only accessible external to the vehicle. Anticipating a need for lightweight systems, we heavily in adapting technologies and daily use in commercial electronics to aviation applications. Sensing systems have to be able to support these new types of aircraft, and the critical breakthrough innovation is to develop sensors that have both long range wireless data transmission capabilities and also are wireless in the sense that they can operate independently from aircraft power. These advances are critical.
Elimination of wiring significantly reduces the cost and weight of the installed system. Further, the ability to transmit data wirelessly over several meters combined with our proven ability to develop products that withstand harsh environments outside the pressure vessel allows sensors to be installed in extreme locations. Installation is far simpler and wireless sensing systems can be easily retrofitted onto existing aircraft. We have also applied these technology breakthroughs to our electronic control systems, developing compact, lightweight wireless data concentrators to aggregate sensor data and provide critical system parameters and health to onboard or offboard systems. We have made substantial advances with these new technologies, and we will be starting flight tests and demonstrations in mid-twenty twenty one.
We believe this is well ahead of our potential competition. There are numerous challenges associated with wireless sensing and data transmission on aircraft. These are components of mission critical systems that are exposed to harsh environments, operating at extreme temperatures and surviving lightning strike, high vibration and shock. We have unique experience in this space that positions us for success in a few ways, including our extensive background in both sensing and the power systems needed to support those sensors. We believe the demand for critical systems data will drive a significant proliferation of sensors, and our technology and capability discriminators will allow us to develop a clear market leading position.
We estimate the aviation wireless sensing market to be about $50,000,000 today, more than doubling by 2030 with even more dramatic growth after 2035 as the demand for urban air mobility proliferates. It is our expectation that our game changing applications will enable Crane to capture at least 40% of that market, resulting in cumulative sales growth of $60,000,000 by 2030 with a resulting sales CAGR of 21%. And we think the importance of this capability will increase substantially beyond 02/1930. Crane sensing and power systems will grow significantly above market expectations over the next decade. This includes forward and retrofit opportunities for current and planned sensing components and systems.
By leveraging our industry leading proximity and pressure sensing positions combined with our expertise in modular design, rugged packaging, wireless connectivity and battery life management, we will create unique, scalable products for both our existing Tier one aerospace and defense base as well as start ups looking for advanced sensing and control developed with a legacy of aerospace qualification and certification. Thank you so much. And now let me send it over to Jay Higgs.
Good afternoon. My name is Jay Higgs. I'm the vice president and general manager of the fluid management solution at Crane Aerospace and Electronics based in Elyria, Ohio. The fluid management solution with Crane Aerospace and Electronics provides products which handle fluid in aircraft engine and airframe systems, and we've been developing application critical fluid components since nineteen o four. This includes lubrication pumps, fuel pumps, water pumps, coolant pumps and fuel flow transmitters.
Within our $300,000,000 directly addressable market, we have a number one or number two market position in each of the types of products we design and manufacture. Based on our strong portfolio of products and our installed base, we expect to grow at our current market space at a rate of over 10% per year through the end of the decade, reflecting both market growth and share gains from an expansion of our served market. Almost every commercial or military aircraft that flies today is using a crane fluid management product. Our OEM customers include engine manufacturers like General Electric Aviation, Rolls Royce and Pratt and Whitney, as well as major airframers like Boeing, Airbus, Lockheed Martin and Northrop Grumman. These customers rely on us to provide innovative, highly reliable products, which are critical to mission success, can perform in harsh engine and airframe operating environments, and can do so for fifteen thousand to forty thousand hours without need for repair or replacement.
Like you've heard throughout this afternoon's presentations, we have a strong legacy installed base. We are winning new programs and platforms today, and we are making significant progress driving breakthrough innovation to support our customers' future needs. With our strong legacy position, Crane Fluid Management sets itself apart from our competition in several important ways. First, our differentiating technology. Our current pump and fuel flow measurement products have design features and manufacturing processes that cannot be replicated by other suppliers.
One example is Crane's proprietary vein element technology, which is used primarily in our lube and scavenge pumps. This technology offers significant advantages as compared to geared rotor based pumps, dramatically reducing product size and weight while at the same time providing significantly more efficient hydraulic and mechanical operation. These features are increasingly important for lubrication pumps operating at the extremely high oil flow rates required by newer geared turbofan applications like Pratt and Whitney's Pure Power family and the Rolls Royce UltraFan. For context, these geared turbofan designs require up to 75 gallons per minute of lubrication, approximately three times more than a traditional design. Our pumps also provide the necessary high altitude air oil pumping capability demanded by modern day commercial and military engine applications.
Another example of our technology degrees Fahrenheit to 400 degrees Fahrenheit with pressures up to 3,000 psi. This is the standard in our industry for mass fuel flow measurement on today's aircraft, and we have nearly 90% market share for new installations. Every major aircraft engine developed in the last ten years is using our fuel flow measurement device to provide mass fuel flow indication. But it's not just our differentiating product capabilities that sets us apart from our competition. We are a highly vertically integrated manufacturer.
Whereas most of our compares have an assembly and test model with limited, if any, true manufacturing capability in house, we are quite the opposite. We pride ourselves on in house control of our many proprietary manufacturing and test processes. Our manufacturing capabilities are aligned to provide speed and agility, creating products in record times with short development lead times, high levels of customization and optimization, and quick turn of customer design changes. This capability provides a unique opportunity to our customers, allowing them optimize design requirements throughout the course of the development without impact to the overall schedule and provides a highly optimized product at production launch. These high value, highly differentiated products have led to expanded market share in recent years positioned us to be successful on next generation engine and aircraft platforms.
As an example, given our strong incumbent position with all leading engine OEMs, we are participating in several Tier one engine demonstrator programs, including the Rolls Royce UltraFan as well as programs with GE Aviation and Pratt and Whitney. For these applications, we have developed lightweight, high performance lube and scavenger pump solutions with unique capabilities corresponding to the specific and nuanced mission requirements of each platform. Further, we are leveraging our industry leading fuel flow measurement capability to enhance the accuracy of the next generation of aircraft engine fuel control, participating with several leading Tier one customers on demonstrators for future commercial military aircraft. And last, we were recently selected by Airbus to participate in their wing of tomorrow program. We are currently developing a high voltage smart pump to be used in a future aircraft fuel system.
Together, these initiatives will position us to grow share in our addressable market by at least a 100 and 30,000,000 in the next decade, resulting in a 10% compound annual growth rate through the period. You heard about electrification trends and our solutions from Trey and Hillary. More electric solutions produce quite a bit of heat, which needs to be dissipated and managed. As we look beyond our current core products for sales growth, one key market trend that stands out is the need for advanced thermal management in more electric aircraft, more electric vehicles, power generation, hybrid, and pure electric propulsion. These applications require breakthrough innovations, not just incremental iterative improvements to existing solutions.
Specifically, these more electric applications have far more intense cooling needs than in the past, particularly given the move to higher power. Within the thermal management space, our target market is liquid cooling pumps and systems. As a reference point for understanding, you can cool about one to 1.5 watts per square inch with air, less than half that with a conductive heat sink. But with liquid, you can cool up to 100 watts per square inch or better. While liquid cooling is more complex than other more traditional forms of passive cooling, the power densities are rapidly reaching the point where the only way to remove heat is through the use of liquid cooling.
We expect the growth rate of liquid cooling systems to be at least in the high single digits through the end of the decade. Liquid cooling pumps and systems is natural extension of Crane's substantial expertise in pumps, systems, sensing, motor, and motor control. We're investing heavily in the technology building blocks to be successful in this space, including the development of smart pumps with embedded sensors, health monitoring, brushless DC motors in a range of 28 volt to two seventy volt, up to 700 volt, digital and analog motor control, along with reservoirs, valves, and advanced heat exchangers to complete a liquid cooling system. These products combined with our existing vertical integration and advanced manufacturing capabilities provide a speed and agility advantage our competitors can't match. And while there are lots of players in the thermal management space, none has the broad expertise in both pumps and system components as well as motors and motor control, which can deliver a completely integrated solution optimized for each specific application.
One key technical highlight worth discussing in details, Crane's to the motors and motor control portion of the liquid cooling pumps. In the more electric aircraft world, to be a great pump supplier, you must have motor driven pump products that can adapt to a wide range of power sources and voltage levels. While in the past, it may have been sufficient to provide simple 400 hertz AC or low voltage DC motor driven pumps, today's systems and the ones coming later in the decade and beyond will require a high degree of operational flexibility within the multiple different electrical system architectures being deployed. While this will certainly include low voltage DC in a range from traditional 28 volt up to newer 42 volt architectures, it will also require expanded capability on the high end, well beyond 270 volts to five forty, 600, and even 700 volt systems. This is where Crane's power conversion expertise, previously mentioned by Trey, and our sensing control expertise, previously mentioned by Hillary, is being leveraged as we seek to create motor control products to fit any power range in any application.
More specifically, Crane is developing a complete family of motors and motor controls within a modular concept, addressing the various power ranges, voltage levels, and form factors that will be required for pump products throughout the next decade. The modular approach of this motor control platform will print easy transition to other pump types and systems as well supporting other rotating equipment applications as we mature. In terms of how we will attack the market, our initial focus is on liquid for aerospace power and propulsion systems, generator cooling, pure electric, hybrid electric, and fuel cells for aircraft. A step after that will be product adjacencies for ground based radar, defense land vehicles, and other application where Trey's business is most actively engaged. In all applications, we'll be able to provide both highly customized cooling solutions to sophisticated Tier one aerospace and defense suppliers as well as off the shelf configurable solutions for new industry entrants who have less developed aerospace and defense pedigree, but who are still looking for certifiable cooling solutions to enable their disruptive technologies.
An example of the type of disruptive applications we are targeting with our liquid cooling equipment include pure electric and hybrid electric propulsion systems in commercial and general aviation transportation, unmanned air vehicles or UAVs, and urban air mobility solutions or UAMs. We are currently supporting several customers in this space with products for their power generation and propulsion demonstrator programs. We believe the liquid cooling system market has significant growth potential as one of the most critical enablers of more electric world. Importantly, our unique set of skills and capabilities position us to maintain our clear market leading position. We estimate the thermal management market for aerospace, space, and defense to be about 1,100,000,000 today, growing to 1,800,000,000 by 2030, with even more dramatic growth after that, with a percentage of liquid cooling systems in the thermal management space growing from just below 20% share today to over 30% share in that time.
It's our expectation that with the investment and innovation we're driving today, we'll be able to invest in that in that to our significant above market sales growth over the next decade. This includes double the rate of market growth in our currently addressable markets and significant share gain capture within the thermal management space. We will do this by leveraging our industry leading pump and transmitter products, combined with our expertise in power conversion, motors, motor control and sensing to create unique, highly scalable products for both our existing Tier one aerospace and defense space as well as start ups looking for advanced liquid cooling solutions with the built in
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about our opportunities, a business with strong legacy installed base, expanding our core addressable market every day and driving breakthrough innovation to achieve even higher growth rates over time, confident in our ability to achieve 7% to 9% sales CAGR from 2020 to 02/1930, with many of our growth areas accelerating thereafter. New products, technology and innovation are all critical to a reputation for providing our customers with distinctive and value added products, and a passion for driving continuous improvement in both process and results, supported by the structure and discipline of the Crane business system. And as we have discussed in the past, throughout Crane, CBS is far more than lean manufacturing. It's a holistic business system and a key differentiator for us. CBS drive financial discipline, strategic discipline and execution discipline, which together help us consistently deliver profitable growth.
And of course, the benefits of CVS extend well beyond technology and product development. Today, is critical to managing 2,200 associates across our manufacturing sites. But while this is our footprint today, we have spent years optimizing our manufacturing footprint. Ten years ago, we had 12 facilities, and we reduced that by a third while supporting higher sales volumes through CBS driven efficiencies. And we reduced the number of facilities, we increased our capacity, and we're confident that we can support our expected future growth through 2,030 without the need for brick and mortar.
As we consolidated our facilities through CBS deployment, we have also materially improved the efficiency of each site. Let me turn it over to Tony Vallada, our vice president of operations, to discuss two of our more recent facility moves and how CBS was critical to our success.
Thank you, Steve. In previous conferences, you have seen examples of how the Crane business system drives financial results. Today, in addition to how we leverage CBS to drive results on a daily basis, I am going to highlight how we executed seamlessly on two incredibly complex facility moves. In one, we consolidated two major manufacturing facilities, absorbing our Redmond, Washington facility into our site in Lynnwood. This was made possible after years of and other continuous improvement events that freed up space and eliminated waste across both facilities.
The second facility move was the transfer of our Kaohsiung, Taiwan operations to a new state of the art upgraded facility. In 1996, Crane acquired Interpoint, which is now our modular power business with facilities in Redmond, Washington and Kaohsiung, Taiwan. Modular Power's primary products are DC to DC power converters and EMI filters for commercial and military aircraft, missiles and launchers, and space applications in a variety of grades, including radiation hardened space class, high reliability off the shelf or COTS, and MIL standard specifications. Moving both and Kaohsiung facilities was particularly complex because we needed to retain our highly trained and skilled workforce from each facility. Moving modular power production required recertification for certain classes of products, particularly MIL standard.
And each facility had equipment and processes which were carefully calibrated and could be disrupted by a move. And finally, both facilities were located in challenging real estate markets. First, let me explain the Redmond move. After years of deploying CVS and freeing up thousands of square feet of both manufacturing and office space, we decided to consolidate our Redmond facility into our Linwood site, which is aerospace and electronics' largest manufacturing facility and its headquarters, a 200,000 square foot facility. The two facilities were only 15 miles apart, so we expected to retain our associates.
Moving into Linwood also facilitated a modernization of Linwood's manufacturing and office spaces, reduced overhead to improve profitability, and improved collaboration by colocating teams. The Redmond move first required creation of 20,000 square feet of space in Linwood. We started with the redesign of Linwood manufacturing cells, moving to a modular structure which created the ability for rapid reconfiguration as needs evolved and is part of the ongoing continuous improvement process. Then we outsourced Linwood's sheet metal factory, a low value added activity to make space for a new state of the art clean room for Redmond's operations. The next step was to move our fuel flow testing process to a new building in the creation of a new modular power lab.
Outside of the factory floor, we also upgraded 60,000 square feet of office to a modern open office environment to support collaboration and communication. The move required close collaboration between quality, operations, engineering, and facilities to relocate equipment, validate processes, and then recertify operations. In total, we moved more than 350 pieces of equipment requiring 50 truckloads. Now let me show you the move in Kaohsiung. In Kaohsiung, as we approach the end of a lease, we decided that we needed a larger facility to support growth with modern features and capabilities that we did not have in our existing facility.
Given the lack of suitable facilities in the city, we decided to lease a new facility built to our specifications about a mile and a half away from our former site. In Kaohsiung, we moved into this new 64,000 square foot facility, completed the move in five days from the beginning of the packing process to the delivery of the last shipment of office and production equipment and involved over 74 truckloads. We had front end processes up and running within a week of the start of the move, and full production resumed two weeks the move began. While each of these moves had its own unique challenges, we used the same planning and execution process straight from our CBS toolbox and drawing on experience with other facility moves across Crane. That process included a structured analysis for requirements and all potential alternatives, an extensive risk mitigation plan, and in these cases, months of inventory buffer to ensure no customer disruptions in carefully documented processes to ensure consistency in manufacturing operations in the new location.
These projects also had dedicated full time program directors and engineering support, and a rigorous cadence and schedule of reviews was established involving all levels of management that were actively involved in ongoing problem solving. And the results speak for themselves. Within two months of each move, our facilities had received certification AS 9,100, completed required qualification tests, and received approval from the DLA to begin shipping compliant products from the new locations. Given the success of our planning and risk mitigation process, we had no customer delivery disruptions and zero quality escapes. Washington, we realized annualized cost savings of $3,000,000, and the old Redmond facility was sold for $20,000,000, which more than covered the costs of the move.
These are just two examples that show the value of the CBS approach and how a detailed planning process followed by a rigorous cadence of frequent reviews is critical to our success. But beyond major projects such as facility moves, CBS also provides the foundational principles to achieve our operations at every site aligned with core CBS principles, but with the flexibility and autonomy to support the needs of factories. Each specific solution. We also construct CBS road maps at each facility, a long term holistic plan that drives core initiatives and focused improvement activities within each site. And we then establish a skip schedule of kaizens and other events to drive actions cross functionally throughout the organization in pursuit of breakthrough improvement.
Progress against that long term plan is evaluated and measured. Each site drives a cadence of monthly operating reviews of key business level metrics of our performance compared to plan. This rigor drives a collaborative discussion and understanding fundamental needs and celebration of successes relative to our commitments. Further, these metrics are cascaded into more specific deliverables in our flash reviews conducted at the site level engaging cross functional leadership at each location and their supporting staffs. Finally, daily key performance indicators or KPIs are observed during Gemba at the point of impact in the cells, in the office, in the field where the work is done.
This cycle fuels a collaborative process of continuous improvement that drives incremental gains each and every day. Often, our greatest achievements are seen in the small daily wins we achieve by practicing our core CBS values. Boundaryless is the way I would describe our passion for continuous improvement. Throughout each function in our organization, we emphasize the importance in understanding the score if we're winning every day. In conclusion, CBS provides our framework in approaching business excellence across all functions within the organization from executing major one time projects like facility consolidations to daily execution supporting our customers.
Those outside Crane sometimes think of CBS as primarily operational in nature. However, at Crane, we foster an environment that enables creativity and ingenuity of all associates across each functional area to improve our daily work, work, engage every associate, and to drive innovation and growth to create value for our customers and shareholders. Back to you, Steve.
Thank you, Tony. In summary, Crane Aerospace and Electronics provides our customers with unique Crane Aerospace and Electronics has continued to invest and drive our technology and product portfolio forward. We are expanding our core addressable market every day and driving breakthrough innovation to achieve even higher growth rates over time. We see growth opportunities not only in our traditional markets, but also in areas outside of our core aerospace and defense domains. We see significant opportunities to pursue adjacencies grounded in our technical core competencies, both organically and inorganically.
We're confident in our path forward and are secure in delivering 7% to 9% CAGR through 02/1930. Thank you for spending time with us today. We look forward to your questions.
We will take our first question today from Matt Summerville with D. A. Davidson. Your line is open.
Matt.
Thanks. Hey, how are doing? Thank you for taking the question. Couple of things. First, RD and E as a percent of sales for the A and E segment, can you remind us what that looks like and how that's going to grow relative to the sales CAGR?
I'd be curious as well how much of your RD and E spend today is really geared towards, products focused on electrification? Thank you.
So, Matt, this is Rich. So today, you know, we're roughly at that, I think, seven to 8% range. You know, a good majority of that moving if I look forward now from that seven to eight and as we grow, we're gonna be a little bit efficient. We're not gonna incrementally necessarily add to that the absolute dollar amount today on a gross basis before we get any recoveries from customers. That's roughly on a gross basis about a 100,000,000, which we did not stop all throughout the pandemic last year.
So we maintain those investments all through last year. Looking forward, as revenues grow, I would not expect to keep all of that So maybe it's a couple of points or so, maybe two and a half percentage points of, you know, that we hold.
And then my follow-up question, is in regards to how much of that budget today is dedicated towards electrification and how would that portion scale looking out over the next few years?
Yeah. So, you know, I'd rather not, Matt give you, the specifics on that. I'd be giving you probably a wrong number. I have a rough a rough guess, but I'd rather I'd rather not, I'd rather not, give that to you today.
Got it. And then maybe just I'll throw one more in there then. Maybe can you comment on the M and A environment as it pertains specifically to A and E? Maybe talk about the actionability you see in the funnel and what kind of multiple environment we should be expecting when we see deals here? Thank you.
Yes. So what I would say is it's definitely picking up the activity in the aerospace and electronics or in defense space. We are seeing incremental activity certainly today versus, call it, even three or four months ago. So we are seeing activity pick up. We're optimistic that we'll see we'll be successful here over the next twelve months or so or whatever, that might be.
We have some pretty good confidence in terms of multiples. They are also, relatively frothy, here. But, you know, as we've indicated, we're going to be quite disciplined in our approach as we always have been and make sure that we're not overpaying. What I would emphasize to you, Matt, is our success over the last several years in terms of driving synergies that enable us to have enabled us to see some good returns and to be able to leverage that, as I've indicated in my prepared remarks, to make sure that we are incrementally successful in terms of opportunities that we're going to face in the coming months.
Great. Thanks, Rich.
Sure.
We will take our next question from Tony Bancroft with Gabelli Funds. Your line is open.
Hi, Tony. Thanks so much. Great or hey. How are you? Great great overview.
Thanks for taking my question. Just regarding the fluid and thermal management business, John did a great job talking about that. But could maybe discuss a little more about what's so unique about your products that they can't be easily replicated by, sort of, by your competition?
Eve, you wanna take that? Thanks.
Yeah. Thanks thanks for the the question, Tony. You know, across all of our, solution, you know, one of the things that that that makes us not easily duplicated is is fundamentally two things. One, we we do have, you know, formal intellectual property, but it's also, you know, the in-depth type of our design technology and manufacturing and construction techniques that are really trade secrets.
And I
guess maybe what I'll I'll
do is I'll ask Jay Higgs to to because you've asked specifically about fluids to expand
on that a little bit.
Yeah. Sure. Thanks for the question, Tony. So, yeah, as as Tee said, you know, we're very unique in the type of technologies that we bring to market for our current core products. So, you know, whereas, like, in the lubrication space, there's lots of people doing, you know, I would call more generic to rotor or or gear type products.
We have a very, very specialized vein type product that's been perfected over a number of years, not just in terms of its design, but in terms of its materials of construction, its heat treatments, the way parts get processed, the way they get machined to very high tolerances. And it provides us an advantage in terms of being able to make products which are much smaller, much lighter weight than the competition, but but perform actually well above what the expectations are. And then when you can take those kinds of pumping products and combine them with with, you know, some of the the clear advantages we have in power conversion, whether it be micro power conversion like we do in modular power all the way up through what Trey's doing and some very large power conversion. And then combined to Hillary's control piece to that, you know, now you're talking about electric motor driven products that really we think are gonna have a significant advantage there because they're so well versed in each of those components. Now we tie them together to create a product that really no one else within their entire business has all those pieces of capability to make the single product out of.
That's great. Maybe, so on the motor side, it seems like there are a lot of, control motor control makers. What about the what is what is what makes this your business sort of special in that in that capability, the capabilities in that area?
Yeah. Again, uniquely, I mean, certainly, we have a we have we have expertise on the airframe itself in terms of the power conversion. So we understand the way the power is gonna come to the motor controller. And then, again, you know, we've we've had the fortune or un unfortunate, if you will, of of being kind of someone who has to, you know, buy motors and motor controls from others in the past, and, we decided to take the path that we could do it better. We have ex expertise in this way of of bringing the power in, especially as power's now or it's gonna be across multiple different types of architectures, like I said, all the way from, like, 28 volt up to 700 volt.
And and we really feel like we have an advantage there in taking the power conversion front side of that with the power supply expertise we have, combined with the control expertise that Hillary's team can bring to what we're doing to create that one integrated controller that can function across multiple different electrical architectures. And then we're gonna do that in a way where it's very modular so that we're not reinventing the wheel with every single, every single application. And then and that's gonna be very important in our market space where, you know, the tier ones, they know exactly what they're doing, but a lot of the start don't. And they need to have solutions that they can, like, pull off the shelf and can be very flexible even during their development to be to modify quickly to meet their needs, and we think that, you know, we're gonna do very well with that.
Got it. That makes sense. Thanks, Jay. And then, maybe for, Rich and or, Max or anyone else wants to jump in. Maybe, be more specific about what you're talking about with adjacencies that you intend to pursue both organically and or inorganically?
Well, I think, as it relates to aerospace electronics, Steve can can chime
in as well. But if you look
at those core competencies Sure. Let's just take power conversion. So the list of core companies, power conversion, there's a a list of opportunities both in, in in private equity as well as,
this gets to the m and
a question a bit too. What do we see? There's a lot of opportunities that are shaking loose from some of the strategics that have looked at their portfolios that have been consolidated over many years. And what may not be strategic for, them, they are, separating with, and and it's providing opportunities that we're we're looking at. We also see some opportunities, both private as well as private equity, in the power conversion space, as well as others related to thermal management, RF, frequency management, sensing, so forth.
So that's what we're looking at. The adjacencies tend to be in end markets, though, that are still highly demanding. We're not talking about highly commoditized product. We're not talking about automotive products. We're not talking we're it's gonna be areas that require highly regulated environments where the cost of failure is is very high.
And, you know, you tend to see some of that in some niche applications in the medical space a little bit, for example, with myriad products that require power conversion. That that gives you just a hint at at some of, what we've been looking at. I don't know, Steve, if you'd add anything to that.
No. I I would just expand on that, Max, a little bit is that, yeah, it's it's it's it's really when you look at aerospace itself, which is a a very highly regulated environment, it requires super high reliability of products that can fail in in very difficult and challenging environments And and typically has, you know, a relatively, you know, the the the mix of volume in terms of production. It's a high mix environment, and that's what we we are finely tuned, and we can really do that well. And as Max said, you can look at adjacent industries, for instance, in med tech and see a lot of parallels. And so we we're really excited about it.
Yeah. That makes sense. Max, you know, you sort of began talked about the inflection point in February and then again today. You know, what what's changed or what is so different? Maybe you could be specific about what gives you the confidence that, you know, your growth is gonna be something that's sustainable going forward.
Yeah. Oversimplifying is, we've always been good. We've continued our excellence in commercial execution, driving all aspects, you know, a
good solid decade of,
strategic execution on breakthrough initiatives around, new technology, that customer's desire to solve their most difficult problems. So whether it's process flow technologies, we've shown numerous examples in previous, in February as well of the myriad products that we're launching and having success with to, the breakthrough, thread and technology that we have on the currency side to payment and merchandising technologies, winning in in gaming in a consolidated connected environment. And and it's just been incredibly exciting, all in, this steady, relentless pursuit of breakthrough technology. And that's what you heard today from the team. Just an incredible series of holistic vision on where we're going, where the end markets are going to be positioned in the future, and investing in the r and d now to position us.
And this has been a solid decade. And so you're seeing that read through. We're on the demonstrators. We're on the the pilot projects. So we've got this solid base, core base delivering revenue today that's growing as well as well positioned for the future.
So that that's the story across all of the strategic segments.
That makes sense. Then maybe, Mel, maybe back to Steve or Max or Rich, as all these growth initiatives do gain traction, seems like that's going to be happening and you see higher growth in these new products that look pretty interesting. What implications do they have for your margin profile? Or how should we look at it in general, broad strokes?
Yeah. No. I I think broad strokes more of the same is what I would say, Tony. So, you know, pre pandemic, we were at 24 OP. Right?
Before and I think it was '20 19, 24 and change percent OP. You know, building on Matt's question before on continued investments, we're gonna continue to invest. But I think, you know, as we're continuing to gain scale with the growth on a percent basis, we'll probably see a little bit of improvement there. So that'll just continue to read through to the bottom line. So I would say that our overall long term margin targets are just they're not changed with respect to the segment and feel pretty good about what we're going to be able to deliver.
You know, these are all capabilities that we're talking about today. If you think about everything that you heard, it was all very high value technology. Right? This is not
us being ready here for a Right.
You know, a commodity product launch. Right? So this is gonna command a nice margin profile for the business as we look out.
Yes. And maybe lastly, Steve, could you size sort of the you were talking about the military modernization upgrade program. When do you expect that this that delivery to start, and how confident are you about securing that contract?
So so so, yeah, that's a really exciting opportunity. You know, we're we're currently in a competition to support a a major upgrade for the f 16 program, as a matter of fact. It's and, you know, we're our confidence is pretty high. We're, you know, the world leading brake control technology combined with our, really, our long heritage of supporting the air force across a number of programs. So it's an exciting opportunity, and we expect it to provide, you know, in the neighborhood of 150,000,000 in sales.
Right? Now there would be a development program, which would last two to three years, and then subsequent to that, probably, you know, five to seven years, it it would be the the the retrofit program ourselves. And it really it builds upon our successful wins on similar retrofit programs that we've already done on the the same type of retrofit program on the c one thirty, which we executed, and the b 52. So it demonstrates the value of our technology and and really the the strong annuity like revenue streams that that the business enjoys.
Yeah. And would that could that translate? I mean, obviously, it's the most I think we're gonna we're gonna need Sure. I'm so sorry. Yep.
Thank you so much.
If but you can get back in
queue if you if you have if you have some more questions. I think it'd
be typically good.
We should let others Thanks so much.
A few. Thanks, Tom. Oh, thank you, Tony. Thanks, Tony. And
we will move next to Christine Lewok with Morgan Stanley. Your line is open.
Hey. Good afternoon, guys.
How are you? Hi, Christine.
Great. Hey, Rich. When you guys look at the capacity for acquisitions, you've got a billion dollars this year and 2 and a half billion by 2023. I mean, Max and Rich, it doesn't seem like a bolt on acquisition in aerospace or even in the in your former fluid handling segment would need all that capacity. So what's your appetite for a larger type aerospace acquisition?
I think we're looking at all we continue we have been, so there's nothing change there's no new change here, Christine. We continue to look at all options, large and small. So, you know, I think the appetite is there if the opportunity exists. That's the simple answer.
Yeah, I think that's right. The only thing, you know, as we do look forward, you know, this increased emphasis in the adjacent spaces will, I think, offer us a little bit more in the way of opportunities versus historically. That's true. So I think the combination of those those two things, I think, are gonna present quite a number of opportunities for us.
And when you guys talk about that opportunity set for the adjacent pieces, should we think about the business that you're targeting to be similar to the businesses you have today in terms of where you are in the supply chain, meaning tier one or tier three, or do we expect you to move up one way or another in that vertical for the the aerospace supply chain?
So what I would say, Christine, is more along the same lines in terms of being a component largely a component provider. There could be, you know, variants of that, whether it's some subassembly type product offerings, but mainly components is what I would say in terms of what
we're gonna be looking for.
Great. And lastly for me, and I'll I'll jump back into the queue. When you look at the breakthrough technologies that you guys highlighted, how much of that do you think you can capture from internal r and d versus through bolt on acquisitions?
Well, all of it. Everything we highlighted today would be through internal that we've invested in. And then nothing here includes the acquisitive opportunities that we're gonna be chasing. So our core growth is we feel pretty, yeah, solid about.
You know, I would say that our our funnel of opportunities, we're obviously always looking at things that would would help supplement if they're if they make sense, but nothing that you heard today had to do with anything on the come for an acquisition.
Thank you.
Thanks, Christine.
And we will move now to Nathan Jones with Stifel. Your line is open.
Good afternoon, everyone.
Nathan, how are you? Nathan.
I would just do a couple high level questions. I'm having looked back at organic growth over about the last decade, excluding 2020 because that's obviously a bit of a weird year. You guys had grown organically in ANA about 4% over the ten years ending 02/2019. You're now looking at a a revenue growth rate organic revenue growth rate that's gonna be double that. Maybe you can just break down into the the larger buckets what's driving the outgrowth relative to the previous decade over the next decade.
You know, given the 2010 to 2020 was was a pretty good decade for commercial aerospace production and post the sequester was a pretty good decade for for military spending growth as well.
Yeah. So that's good.
Oh, why we take a shot and then if Yeah.
And then you you could you could add if that would be great. So just, you know, looking looking historically, I think I would I would sort of stepping back, Nathan, you know, we went through, what I would say is a pretty unprecedented level of investments over the last several years, right, on program specific opportunities that you're all familiar with, all the narrow body and other other opportunities that we've chased and won, over the years. And so and, yes, over the last few years, what I would say is even in I think in 2019, we were as high as I wanna say it was a little over 6% core growth pre pandemic. So we started to see, I think, lot of the a lot of the momentum building through those years of investments with some of these narrow body launches then picking up. As we, you know, through that same period of time, I would say maybe in the last seven years in particular, we focused quite a bit of our investments, not only on those programs specific opportunities, but these more focused investments on electrification or increased electrification that we're pointing to today in terms of what our growth profiles can look like in the future.
So while we might have been at that 4% to feel that and now looking at that and comparing to the seven to seven to nine, you know, we feel really confident is what I would say. You know, if you break that seven to nine down, five to seven of that being really the core that we've already we're already frankly have won and then coming off of, you know, coming off of the 2020 base feel, you know, confident on. And so then it's really about this incremental 2% in terms of what we're going to gain from our technology leadership position and these years of investments as electrification picks up. So that would be the broad strokes, I would say. Steve, did you want to can you anything you want to elaborate on there?
Yes. I would just I would
just add one thing. In addition to what you said, Rich, about complementing our purpose built new business pursuit and and product development, you know, where we move to increase that by by really developing basic technologies and product architectures in advance of customer needs. I'd say another very powerful driver that's happened, you know, over the last half a dozen years at least is, you know, historically, the company's really operated as separate business solutions, and we're really transformed into a single integrated company. So now we're sharing technology expertise and resources across all of A and E, and this has resulted really in in our ability to secure ever larger content on programs. In fact, you probably caught today where, you know, Jay talks about the thermal management systems and then in our electric power part of the business where we're pulling in the controllers as well.
And and for instance, on our radar systems, you know, now we not only provide the beamformers, right, but also the high voltage power converters, and these are from separate solutions of our business. So the integration of our company really helps leverage and buttress this confidence in the growth we expect over the coming decade.
Just one other thing I would add, Nathan, is, you mentioned defense. If you if you look back over the last, I don't know, eighteen months or so, we announced some pretty exciting defense wins that are incremental to it's not programs that we need to replace. These are new incremental programs that we're winning because of these investments. And they were sizable program wins, in excess of $100,000,000 right? And so that's incremental to what we historically would have seen during the period that you mentioned.
And those were highlighted by Trey today.
You still there, Nathan? Operator, are we still on?
I can hear you, Max.
Okay.
Yes. We are still connected here. Looks like Nathan has rejoined the queue. One moment, please.
K.
Nathan, your line is open.
Hey. Thanks, guys. I'll go back through the replay and listen to the answer thing as I got cut off and I'll back in.
Shoot. Wow. It was a great
answer. Yeah.
I'm I'm one of my One of my best ever.
I got cut off about seven words into the answer, so I'll I'll listen to it, later. My follow-up is gonna be another a pretty high level one on the margins. You know, Steve has talked about 21 to 24% margins out about ten years. I look back historically at your contribution margins over the last nine years. They've been in the upper thirties.
If I build your revenue growth rate even off the depressed twenty twenty levels, it gets me into the upper 20, kind of, margin level. Can you talk about what are the offsets to that leverage that you might get on that revenue growth, whether there's higher R and D investments ahead, whether or not we're just being relatively conservative on that kind of outlook as we go forward long term?
Yeah. I think it's a good question. It's probably a little bit of conservatism and being a little bit cautious about going that far. To the extent that we see opportunities to continue to invest to grow, we'll take those as well, and it's kinda hard to, take full credit for what that math would suggest, which I don't disagree with, Nathan.
Hey. Hey. I'll pass it on before Max cuts me off.
Nice, Nathan. And
as a reminder, if you would like to ask a question today, please press star one on your touch tone keypad. We'll go next to Cliff Ransom with Ransom Research. Your line is open.
Hi, Cliff. Good good afternoon, folks. I am it's wonderful seeing the game plan gel like this. It's been almost preordained, but it's really coming through as a vengeance. So thank you.
With respect to Nathan's always good questions on operating margins, you've got such opportunities to spend the money for future growth that I hope you don't show too big an operating margin. But let me ask a different question. I think I knew this before, but I'm really struck today that I should take extra confidence in your prognostications on some of these programs because these are relatively small programs. You're talking a 100,000,000, a 150,000,000, 30% of a billion, that kind of thing. So that your competition is not gonna be able to meet your manufacturing rigor and operating rigor.
I guess my question is, should I feel comfortable about these because of the kind of unusual way you've gone about building your business?
Steve, you wanna take it take it?
Well, you know, I I'd say that, you know, you you mentioned the the the the size of the programs that that we go after. I mean I mean, clearly, we have a product portfolio and a technology suite, right, focused on areas where we are are clearly either number one or or if not number one, you know, a a close close number two. So our ability to go after these programs, win them, beat the competition, and then and then having the the process rigor, right, through our CBS to drive both the technical performance and the financial performance is really the sweet spot for us. That's the size of programs that we're we're good at, and and that's what we really call home base, and we expect to continue to do that.
Steve, let me ask a quick question so that Max doesn't get mad at me because I ask it all the time. When I look at your very nice balloon describing a Crane business system, I'm I'm looking for where employ where employees fit on that balloon diagram.
Well, it
To me to me, everything starts with the engaged employee. I know that's a bias of my own, but I'm struck that there's no kind of where do they get lumped into your various parts of that balloon?
Well well, I Cliff, I I would my my first answer to you is that has is, hey. Our employees are are core to our whole business. And at the beginning of the presentation, you know, when when Max cited the the RT Crane resolution, I mean I mean, clearly, to be liberal and just toward employees, this is something that we take extremely seriously across the business. It's not only, you know, the responsibility of management. In fact, it's courage employee to employee.
So it's, you know, in various companies I've worked at, it's it's it's really a breathtaking and solid difference that Crane drives is is really the the treatment of employees and the the mutual respect. It's a great place to work and develop a career. So that's that's what I would offer.
Yeah. Okay. Thank you.
I'm sorry. If I could jump in just real quick. So, you know, Cliff, this is Tony Vilana. So thank you for asking the question. I think Steve articulated it well.
But, you know, you almost see it twice on that on that presentation. Right? We we we tend to, when we when we present this to our associates, right, we talk about the voice of the customer taking us to the sun, and the sun is, representative of, obviously, the customer, shareholders, and and, of course, ourselves and associates. And then when we look at the balloon and we examine, you know, the fabric of the balloon is supporting really all of us, the team the team that drives it, the principle is safety, quality, delivering cost as we build out our road maps. And, you know, we'd look to align with the the strategies that you've heard from the solution leaders today.
So that's that's pretty much how we talk about it.
Got it, Tony. Thank you very much, and I'm always pleased to see you start with safety. Thank you.
Thanks, Cliff. And
we will take a follow-up question from Christine Lejwag with Morgan Stanley. Your line is open.
Yes, Christine.
Hey. Hey, guys. So this question is for Steve and Trey on electrification. Can you guys give us an idea of where we are in the electrification journey? Are we on the third inning, the sixth inning of this?
And then, also, as we see more electrification, does that increase your need for semiconductors?
Well okay. Okay. So I'll start off and then then ask Traded to expand on it. In terms of where we are in the journey, of course, you know, when you look at globally, the idea of more electric, this has been around for some time, and I think all of us can see that it's that it's even starting to dramatically impact our personal lives. The cars that we're gonna be driving are rapidly moving there.
You know, with respect to aerospace, it's it's lagging the general move to electrification. I'd say that we're probably in, you know, closing out the third or fourth inning right here and with a lot of potential in front of us. And it really you know, what's so exciting about it is it really plays into Crane's strength in our core businesses, not only you know, we we make power conversion products across the wide range of power levels from five watts to a to, as Trey mentioned, to to a kilowatt. Right? Excuse me.
A megawatt. So we we find our core competency is right in the heart of where not only aerospace is moving, but the the whole globe in terms of more electric. So we we see pretty, wonderful opportunities there. Trey, could I ask you to expand upon?
Sure. Thanks, Steve. And and I would say, I I had a a line with Steve on, I I think I'd be closer to the third inning than the fourth. But in terms of it's still pretty early. And then in terms of the demand for semiconductors, that would clearly be going up.
And we talked about the increasing power levels and increasing thermal management. I think that technology, as it evolves, is going to be really important to our success. And and the demand for, semiconductors is clearly gonna go up for us.
Great. And right now, there's discussions of shortages of chips. So how do you guys think about managing your supply chain, especially if this is the direction where the industry is moving?
So I guess I'll I'll Christine, I'll I'll answer, and then maybe Tony will expand. We do some see some areas of tight supplies, but but I'll tell you, one of the traditional strength of Crane is our proactive and and really diligent management of both our not only our internal manufacturing capacity, but that of our extended supply chain partners. So Tony's got both a tactical supply chain team, which is really all over the the near managing the near term needs of the business as well as a strategic supply chain team that's not only creating relationships with our long term suppliers, but working very closely with the front end to take a look at long range forecast of product needs and making sure that we have the rate readiness and partnerships necessary to support the business. So it's it's really one of the fundamental strengths of our business. Tony?
No. I think you I
think you said it pretty well, Steve. I think, you know, our process around anticipating anticipating where where we're we're gonna gonna have some difficulties, I think, is we we certainly got out in front of several things, when the pandemic first hit out in the Far East, and we talked about, you know, how do we anticipate what's going on with the markets in Malaysia, India, China. And and, you know, I think that process that we've used, we were able to kind of identify, hey. Semiconductors may be a problem, in the short term, right, but not necessarily long term. And then, you know, we talk about the differentiation of our vertical integration and some of the unique designs that we have, and we we take a look at the landscape and recognize that, hey.
Some of the semiconductors that we may not have buffered against, going into some of the situation that we've had has has less of an impact to us. So so we we feel pretty good that we're gonna manage through this. We think we'll come out of this, you know, pretty well, actually. And by the time, some of the projects that Trey and the team have spoke of, you know, we'll be out in front of semiconductor demand.
Well, great. Thank you very much, guys.
Thanks, Christine. Thanks, Christine.
And there are no more questions at this time. I will now turn the call back over to Max Mitchell.
Well, super outstanding. Thank you so much. Thanks, everyone. Just an incredible day. I continue to be so proud and impressed with the technology, the journey we've been on, the opportunities.
I really wanna send, my thanks to Steve, Trey, Hillary, Jay, Tony for representing your extended teams, our teams across A and E and Accrae so well today and sharing our updates. Really outstanding. I appreciate Rich, Jason for coordinating the event. Really well done. I'm incredibly proud of our team's accomplishments, and I hope today gives you a better appreciation for the outstanding position we have now and moving forward.
Inflection at Crane. Inflection in aerospace and electronics. Over a decade of pursuing excellence in critical technologies that are essential to our customers. Alignment of R and D efforts with secular trends in the industry, clear proof of that today. Technology and product development roadmaps that have positioned us ahead of our competition, we feel strongly on that.
While an extremely strong portfolio of content on existing programs providing stable recurring revenue today, resulting in our expectation of a 7% to 9% CAGR this decade. In addition, we announced continued efforts to shape our portfolio with the divestiture of Engineered Materials while still holding guidance inflection, excitement, value creation. We look forward to speaking with you all again when we report our second quarter results in a few months. Thank you again for your time and interest in Crane today, and have a great day. Thanks, everyone.