Moving on to total company results. In the fourth quarter, adjusted free cash flow was strong at $152 million, remember that full year free cash flow is difficult to interpret given the accounting related to the separation following the first quarter. However, I would frame up performance as solid with some modest understandable headwinds due to some supply chain inefficiencies that everyone in the industry is dealing with. Those headwinds, of course, are only timing related and will reverse in the future. Total debt at the end of the fourth quarter was $249 million, with $330 million of cash on hand. At the beginning of January, after the end of the fourth quarter, we drew $100 million on our revolving credit facility to fund the Vian acquisition.
We continue to have substantial financial flexibility, with more than $1 billion in M&A capacity today and reaching as much as $4 billion by 2028. While this is more financial flexibility than we have had historically, our capital allocation strategy is unchanged. We will deploy our capital with the same strict financial and strategic discipline that we always have employed, prioritizing internal investments for growth, followed by M&A and returns to shareholders. Now turning to our 2024 guidance. As Max mentioned, our initial adjusted 2024 EPS guidance is in the range of $4.55 to $4.85, reflecting 10% EPS growth at the midpoint. Guidance assumes total core growth of 3% to 5%, with a 4% benefit from acquisitions, that 3% to 5% growth will drive 11% growth in adjusted segment operating profit.
Additional details of our guidance are included in our press release and the slide presentation on our website, but other key assumptions include: corporate expense of $75 million, non-operating expense, primarily net interest expense of approximately $20 million, tax rate of 23.5% and diluted shares of $58 million. And we expect free cash flow of $240 million to $265 million, reflecting over 90% of free cash conversion. Hey, in my 16 years at Crane, it has never felt better a lot of momentum across the board and looking forward to a continued incredible 2024. Operator, we are now ready to take our first question.
Operator: Thank you [Operator Instructions] Our first questions come from the line of Damian Karas with UBS. Please proceed with your questions.
Damian Karas: Hey good morning guys. Congrats on the quarter.
Max Mitchell: Thank you.
Richard Maue: Thank you, Damian.
Damian Karas: You bet. Maybe we could start on the A&E margins. You’re capturing a little bit less incremental than we’d expect, just given the sales strength. Rich, maybe you can just kind of help us bridge that there? I know you mentioned you’re getting some additional costs related to expedited shipping. Are you not presuming that some of those costs abate in 2024, and that some of these supply chain conditions actually get a little bit worse before they get better?
Richard Maue: Yes. I think we do expect to see some of those headwinds abate as we move forward. It’s a gradual improvement, I would say. In the quarter itself, margins, the leverage was a bit lower, but not too far off what we expected when we issued our revised guidance last quarter. So continuing to see those headwinds from a supply chain perspective. Look, overall, we leveraged at 31% on the full year, which is pretty impressive overall considering the environment we’re in and those supply chain constraints. We’re back to above 20% OP, and we are guiding to some pretty impressive leverage performance next year at 35%, and we have that confidence, Damian. So we see that path. And again, a little bit of improvement gradual as it relates to the supply chain constraints that we’ve seen in those costs that have impacted us here in the second half, or really throughout all of 2023.
Damian Karas: Got it, thanks. And then maybe switching over to PFT. You’ve only seen orders down, really, one quarter, but the last few quarters actually are showing stability or modestly up organic order rates. So could you just help us to understand like the short cycle versus some of your comments on the long cycle, I’m presuming that the orders are still up on the project base. But maybe if you could just give us a sense for like how much the short-cycle volumes have, in fact, kind of come off the peak? And it sounds like going forward, you’re thinking that maybe short cycle is kind of stable, longer cycles down the next couple of quarters, but then starts to improve. Is that how you’re kind of thinking about it?
Richard Maue: Yes. Look, we see — we saw — Max had outlined a number of projects that we won in the quarter again. And yes, they’ve offset some of the underlying trends that we’ve been communicating in terms of weaker demand on the short-cycle MRO portion of the business, where most of the chemical companies that we’re servicing are focused on cost reduction right now still, and we see that happening as we move through the first nine months of 2024. So that trend is continuing. So there was declines in MRO, mainly in Europe, but also a bit in the U.S. But the projects have really been what we’re seeing and what you’re seeing as the uplift, offsetting that underlying demand shortfall. So the new LNG facility, the projects in China and so forth, the pharmaceutical project win. So these are great, great wins and very strategic, but they are offsetting what we’re seeing as a fundamental underlying demand shortfall as we move through the first nine months.
Max Mitchell: Still very consistent, Damian, with the trend that we’re seeing. We just — as we said last quarter, it hasn’t declined quite the rate that we had thought going into 2023. We still see the clear trend to trough, being reached in an inflection point by Q3, Q4 of 2024. So all the underlying data still supports our forecast here in our guidance.
Damian Karas: Okay. But any ballpark number on kind of how much the short-cycle volumes are down from the peak earlier last year?
Richard Maue: I mean the short cycle piece, do we have the breakout of that off hand. It’s probably — it will be low double digit, probably in total, just on that portion. Something like that, Damian.
Damian Karas: Okay, cool. Thanks a lot. Appreciate it guys. I’ll pass it along.
Richard Maue: Thanks Damian.
Damian Karas: Thank you.
