Good day, everyone, and welcome to Crane's Third Quarter 2013 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to the Director of Investor Relations, Mr. Richard Koch. Please go ahead, sir.

Thank you, operator. Good morning, everyone. Welcome to our third quarter 2013 earnings release conference call. I'm Dick Koch, Director of Investor Relations. On our call this morning, we have Eric Fast, our Chief Executive Officer; Max Mitchell, our President and Chief Operating Officer; and Rich Maue, our Chief Financial Officer. We will start off our call with a few prepared remarks, after which we will respond to questions. Just a reminder, the comments we make on this call may include some forward-looking statements. We refer you to the cautionary language at the bottom of our earnings release and also in our Annual Report 10-K and subsequent filings pertaining to forward-looking statements. Also during the call, we will be using some non-GAAP numbers, which are reconciled to the comparable GAAP numbers in the table at the end of our press release, which is available on our website at www.craneco.com in the Investor Relations section. Now let me turn the call over to Eric.

Thank you, Dick. As outlined in our press release last night, excluding special items, we reported third quarter EPS from $1.04 per share, an increase of 5% versus $0.99 last year. Operating profit increased 4.5% as margins reached 14.4%, an 80 basis point increase over 13.6% last year and in line with our full year guidance of 14.3%. Margin improvement reflected solid performance in Fluid Handling, Payment Solutions and the Engineered Materials businesses. Our third quarter core sales decline was just under 1%, which reflected significantly lower sales in our Vending business and to a lesser extent, the Electronics Group. As a result of the lower-than-expected sales, we have adjusted our earnings guidance, bringing down the top end by $0.05 per share. Our 2013 EPS is now expected to be in a range of $4.10 to $4.20 per share excluding special items, compared to our previous range of $4.10 to $4.25 per share. The 2013 guidance does not include potential impacts from the pending acquisition of MEI. Full year 2013 free cash flow guidance has been updated to a range of $190 million to $210 million. 2013 has been a challenging year as our sales have slightly declined over 2012. This difficult sales environment has been offset by the cost savings from the 2012 European repositioning, significant productivity activities and a cost-conscious culture, which has resulted in year-to-date earnings being up 13%. As we move forward, we are expecting improvement in sales as 80% of our businesses tied to the recovering economies in North America and Europe, and our backlog in our later cycle Aerospace and Fluid Handling business segments remain strong. We have more new product development and growth initiatives in process than at any time in our history. As we previously stated, we are confident that we can leverage incremental sales growth to operating profit at $0.25 on the dollar, creating constant upward pressure on today's operating margin of 14.5%. These factors and our strong market leadership positions are expected to result in year-over-year sales growth of 3% in the fourth quarter and give us confidence as we move into 2014. We also remain excited about the pending acquisition of MEI. The combination of MEI with our Payment Solutions business creates a global platform to drive product innovation and integration for the benefit of customers and developed an emerging markets. We are working actively to complete the remedies required by the European Commission and expect to close the acquisition late in the full fourth quarter. Rich Maue will now take you through the businesses and provide some additional financial information.

Thank you, Eric. I'll turn now to segment comments, which compare the third quarter of 2013 to 2012. Aerospace & Electronics sales decreased 1% to $170 million compared to $171 million in the third quarter of 2012, while operating profit declined 4% to $38 million. Operating margins, while up 90 basis points from the second quarter, decreased to 22.4% from 23.2% in the prior year. Sales in the Aerospace Group were $107 million compared to $106 million last year. Commercial OEM sales increased by 8%, driven by strong OEM sales to large aircraft manufacturers. Total aftermarket sales were lower by 9% compared to the third quarter of 2012, driven primarily by lower military modernization and upgrade sales, reflecting a large carbon brake upgrade program for the U.S. Air Force C-130 aircraft, which had $3 million of sales in the third quarter of 2012. The program was completed in the fourth quarter of 2012 and had $1.5 million of sales in that quarter. Commercial aftermarket sales increased 4% with improvement in spares, modernization and upgrade and repair and overhaul shipments. The OEM to aftermarket mix was 63% to 37% in the third quarter of 2013, which compares to 59% to 41% in the third quarter of 2012, reflecting the aforementioned continued strength in OEM and the lower aftermarket sales. While sales increased $1 million compared to the third quarter of 2012, operating profit in the Aerospace Group decreased by approximately $1.9 million, primarily reflecting the unfavorable OEM and aftermarket mix, which more than offset slightly lower engineering spending. Market conditions in the aerospace industry remain positive. The International Air Transport Association reported global traffic was up 6.8% in August on a capacity increase of 5.6% and a load factor of 83.4%. The August growth in global traffic compares to 4.6% in…

Thank you, Eric and Rich. This marks the end of our prepared comments. Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from the line of Brian Konigsberg of Vertical Research Partners.

Maybe just first start on A&E. So you mentioned on the Electronics side of the business, you're still seeing some slippages. Maybe if you could just give us an update on how you see kind of the state of the government budgets. Are you anticipating we're going to see incremental slippages because of potential additional sequestration? If you could give us a taste of what we're looking, that would be helpful.

So we do expect the defense-related portion of our Electronics business to improve in the fourth quarter as it relates to sales. We've been talking about project slippage in prior periods or project delays in prior periods. So we do expect to see some increase in Electronics here as we move into the fourth quarter. As I've said, we do expect continued pressure on orders and backlog as we think about moving into 2014, but really mainly related to continued delays in projects and its implications on the business. So it's sequestration. There's a lot of uncertainty. It's really difficult to understand the details at this point in terms of where that's going to fall out, but our experience would tell us that we'll continue to see some pressure on new orders and backlog.

Yes. And then just secondly on Vending. So Q2 was very weak. It looks like Q3 came in fairly weak again, but you're anticipating, I guess, that kind of air pocket of CapEx from the vendors to start coming back. It didn't seem to have materialized. Can you give us an update on how you view that market as just a timing issue, or is there some more kind of fundamental issues in play here?

No, in the last conference call, we did indicate a pretty notable drop compared to our Investor Day guidance. We guided down by about $25 million, I think, at that time. If I look at the sequential revenue from the second quarter, it was slightly up versus the second quarter, but not as high as we would have liked to have seen it. So a little bit less than we expected would be the message there. In terms of overall how we're viewing the business, it's not really any different. Again, the surprise in the second quarter had to do with a couple of key bottlers. Two of our larger customers having significant management changes, we continue to help them through those changes. I think what's important here as well is that we didn't see any share loss as a result of any of these declines either in the second quarter or the third quarter.

Our next question comes from the line of Matt McConnell of Citi Research.

Just a follow-up on that question, was the merchandising decline specific to vending? Or maybe you could give us an update on how Payment Solution markets have been maybe over the past couple of quarters.

Sure. Yes, sure. So yes, it was specific to Vending. We did see improvements again in our Payment Solutions business. Looking on a year-to-date basis, that business from a core growth perspective is up around 6%, 6.5%. So we feel very good about the momentum that we're seeing in our Payment Solutions business, as well as in the margins in that business, which remain in the mid to high teens. So a strong performance in Q3, as well as following the strong performance we saw in the first half of the year.

Okay, great. That's helpful. And switching to Fluid. Any additional insight on the pushouts or project delays that you've mentioned there? And what would you need to see to get to the growth that you're targeting for the fourth quarter?

I think it was -- so it was specific to our core ChemPharma Energy business in terms of the projects. I wouldn't say there's anything too unique. We do expect those to start to read-through in the fourth quarter, which gives us that confidence that you mentioned. I wouldn't say anything specific or anything unique that caused those project delays, mainly customer-driven pushouts, so nothing really unexpected there. And it should contribute to what we're looking to see here in the fourth quarter.

Okay. And I think the margin expectation was for 15% in the back half of the year. Is that still what you're looking for in Fluid?

Yes. So we delivered 14.5% in the quarter. This was not a surprise to us. We discussed on the second quarter call that we expected Q3 margins to be lower than the second quarter performance that we had, primarily relating to the seasonal nature of our valve services business, which commenced fairly high margins. And we also spoke to a more unfavorable mix in the third quarter related to lower MRO versus project. So those 2 things led us to guide everybody down to a more modest level if you want to call it at 15%. If I look year-to-date, we're at 15 -- I think 15.1% year-to-date in Fluid Handling, which is up from the guidance that we have for our full year of, I think, 14.3%. And we feel confident that we will achieve a similar performance in the fourth quarter to achieve 15%.

Okay. So still more to the year-to-date rate of 15.1%?

Yes.

Our next question comes from the line of Ajay Kejriwal of FBR Capital Markets. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: So just on vending, I know you talked about a couple bottling customers having management issues. Maybe share with us some color on what you expect on the revenues there. Is this just postponement that you expect to recoup in the next few quarters? Or this is hitting a reset button and could be a new plan next year for them?

Yes. So we -- I wouldn't say we expect a significant step change in performance over the run rate that we've seen over the last couple of quarters. It's going to be more of a slow growth environment. I think domestically, bottlers continue to communicate the long-term strategy of the importance to vending in their business. And in addition to the bottler activity that we're pursuing, we see opportunities to develop in emerging markets. We're looking hard at opportunities in Russia, Asia and Middle East. And as we discussed at our Investor Day, our focus on cashless, as well as opportunities to grow in coffee in Europe. So overall, following the comments on the bottlers and the impact that we've seen year-to-date this year, I would say that we don't expect a dramatic step change increase as we think about 2014. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: That's helpful. And then on the Aero aftermarket, I thought I heard a 4% number for the quarter. Maybe just talk about that number in relation to some of the data that we have seen with other companies reporting with numbers have been certainly higher. Maybe it's the mix of customers that you serve or the products. But then also, about your expectation, I thought I heard you say similar level -- similar trends continuing into the fourth quarter, but just maybe clarify on what you saw in the quarter and what expectations are here.

Yes, so on the quarter, we saw -- to your point, we saw a 4% year-over-year improvement in total commercial aftermarket. That followed a second quarter performance that was negative 6% in that same category. So we saw some nice improvements. I would point to the fact that we did see a 2% growth rate over last year specific to our commercial spares business. And that followed, if you do the math, from -- on the second quarter to about a 7% improvement over Q2. So we're starting to see the momentum there.

In commercial.

In commercial spares, and -- as well as in commercial aftermarket overall, because we did also see improvements in M&U and R&O in the commercial space. So overall, we feel good about what we're seeing here. If you -- to answer your other question on comparisons to others, I would just keep in mind that our model is a model of on-condition when products come out of warranty and we replace, whereas other models that you might see in other peer companies, maybe those that are more focused on the engines, it's on -- it's not on-condition. It's pursuant to usage of the aircraft and it's a little bit more predictable and easier to forecast and to see that growth read-through, frankly, a little bit earlier. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: Got it. That's helpful. And then maybe one last one for me on Fluid, could you give us a sense by geography of the underlying performance what you see in Europe versus, say, U.K., U.S. and Canada? Were certain geographies stronger than others?

Yes, I would say that overall in the U.S., we're a little bit softer in our chemical space just given the fact that we're not seeing the demand for the severe service valve applications hit just yet. We're -- what we're seeing the order books, and we're seeing some of the funnel activity increase there, so we'll expect to see benefits reading through from that process valve business, specific to chemical in 2014. In Canada, we continue to see softness in our book/ship business, in our pipes, valves and fittings business, commercial construction starts there slowed. We started to about this at the end of 2012. And it was certainly -- it certainly been a headwind for us through '13 and likely to be a little bit slow as well when we think about 2014. Europe, frankly, has been seeing signs of improvement even in Power and in other markets. So we see Europe sort of bouncing along the bottom and getting better is the way I think we would characterize it. And again, it depends on what sort of applications that we're talking about. But particularly even in Power, which is historically been a little bit weaker, we're starting to see that improve. We feel really good about the Middle East growth rates that we've seen in the business, as well as strong activity in China. Ajay Kejriwal - FBR Capital Markets & Co., Research Division: What about the Building Services business in U.K.?

Building Services in U.K., so that's -- our book/ship business focused on HVAC and some of the general industrial applications. And in there, we are starting to see some improvement as well. We're encouraged by that. It's a little...

More so domestically than in the Middle East.

Right, more so domestically. We target both domestically in the U.K., as well as opportunities in the Middle East. And we are seeing some improvement domestically in the U.K. in that business.

[Operator Instructions] Our next question comes from the line of Matt Summerville of KeyBanc.

A couple of questions. First on Fluid Handling, can you talk about what you're seeing with respect to price environment getting better, getting worse, sort of the same? And then also maybe working raw material cost and to your comment there as well?

So I would say -- this is Eric, Matt. I would say pricing for project remains competitive, and material cost is relatively insignificant one way or the other. Very important in this environment to maintain price discipline on projects, which you've been following us for a long time, you know we're quite disciplined about.

With respect to -- as you think about the amount of quoting activity and how those quotes or the ratio of quotes that are converting to orders and the ratio of orders that are converting to actual deliveries, if you calculate or monitor those ratios or something similar to that, would you say it's improving? It's not improving? It's been stable? I'm trying to get a better sense of the delay, the pushout activity you're seeing, and kind of put that into perspective with frankly the quote activity that you're doing.

Yes, we would say that it's -- when thinking of orders, quote activity, funnel opportunities, from our perspective, we're seeing it increase and getting better, to answer your question. So we're excited to see that particularly in this business.

And then are you seeing more of those quotes actually go through the process and actually get delivered? Meaning, is your conversion rate on those quotes improving?

Our win rates.

Nobody's saying are they actually becoming -- are they actually mandating them as full firm orders.

Yes.

As opposed to the project being delayed. Frankly, I think the better way to say it is that, typically, we see projects in our funnel being delayed prior to getting that quote, okay? Typically, if you quote it, they're at the point where they're going to do it, although there are some delays here, too, in there. Hard to answer that, Matt.

Our next question is a follow-up from the line of Matt McConnell of Citi Research.

Just wanted to follow up, you're in a on net cash position now and I wonder what the status of the M&A pipeline is in Fluid or in Aero. I mean, could you talk about willingness or ability to do deals outside of MEI?

So first off, what I would comment that the cash you see on the balance sheet is largely overseas. That would be my first comment. My second comment, we continue to actively look for acquisitions, both in Aerospace -- particularly in Aerospace and Fluid Handling, and we think that we have room in the capital structure to do that.

Is there -- has the pipeline -- have you been active in cultivating a pipeline while you...

Yes, we've been active in cultivating the pipeline. We've -- we're -- spent a fair amount of time on one particular European acquisition that we've kind of backed away from, but there's others in the hopper. All early days being looked at.

So no different, Matt, really than we have this formal process that we talked about each of the businesses presenting ideas and concepts, and then we have sort of a top-down approach for other types of acquisitions that we look at. No different activity level has been high, remaining the same. We continue to look to deploy our capital that we have available even post the MEI acquisition. And the comment that Eric made with respect to the cash being largely overseas, just be mindful that a good reason for that is because we're going to use a good chunk of that to acquire the MEI business.

Our next question is a follow-up from the line of Brian Konigsberg of Vertical Research Partners.

Just again on Fluid, I'm curious, so you do have quite a robust business on the chemical side in the U.S. and Europe. You said you anticipate more chemical work to kind of emerge in the U.S. markets. But actually, just curious, and it seems like you're not seeing it today, but is this a concern of yours that you might see a negative supply response in the European market to the U.S. capacity build that may kind of net out some of the gains you might see geographically in North America?

I don't know how to answer that. What I would say is, we are seeing several of the large European chemical companies expand with their -- expand their existing facilities in Europe which have driven some very nice order share.

And with no further questions in queue, I'd like to turn the conference back over to management for any closing remarks.

Thank you for joining us today. We appreciate your continued interest in Crane. Goodbye now.