Crane Co. Logo

Print Print page   Email Email page   PDF Download PDF
« Previous Release | Next Release »



Crane Co. Reports Third Quarter Results

Third Quarter 2016 Highlights:

STAMFORD, Conn.--(BUSINESS WIRE)-- Crane Co. (NYSE:CR), a diversified manufacturer of highly engineered industrial products, reported third quarter 2016 GAAP earnings of $1.07 per diluted share, compared to $0.97 per share in the third quarter of 2015. Excluding Special Items, third quarter 2015 earnings per diluted share were $1.03. (Please see the attached Non-GAAP Financial Measures tables.)

Third quarter 2016 sales were $694 million, an increase of 4% compared to $670 million in the third quarter of 2015. Core sales increased $37 million, or 5.5%, partially offset by a $12 million, or 2%, impact from unfavorable foreign exchange.

Operating profit in the third quarter was $104 million, up 11% compared to $93 million in the third quarter of 2015. Excluding Special Items, operating profit was $97 million in the third quarter of 2015. (Please see the attached Non-GAAP Financial Measures tables.)

The effective tax rate in the third quarter was 33.0% compared to 32.3% last year. Excluding Special Items, the effective tax rate in the third quarter of 2015 was 31.6%. (Please see the attached Non-GAAP Financial Measures tables.)

Max Mitchell, Crane Co. President and Chief Executive Officer, stated: "We delivered another strong quarter, with solid execution across all segments. We were particularly pleased with our growth and margin performance at Payment & Merchandising Technologies, with solid end market demand and progress on productivity supporting continued momentum into 2017. In addition, our teams across Fluid Handling continued to execute well, with another solid margin performance despite continuing end market challenges. Order activity remains generally stable in Fluid Handling, and although we continue to believe that demand is at a trough, we will exit the year with a lower backlog compared to when we entered 2016. Our Aerospace & Electronics team had an exceptionally strong performance executing on shipments for the Space Fence program in the quarter, though dilutive to margins; we will have lower shipments in the fourth quarter as we close out the program. Overall, we are pleased with our performance year to date and our prospects looking ahead, and we are raising the midpoints of our full-year adjusted EPS guidance by $0.06 and our free cash flow guidance by $5 million."

Segment Results

All comparisons detailed in this section refer to operating results for the third quarter 2016 versus the third quarter 2015, excluding Special Items.

Fluid Handling

     
Third Quarter Change
(dollars in millions) 2016   2015  
Sales $   245 $   265 $   (20 ) (7 )%
 
Operating Profit $ 31 $ 29 $ 1 4 %
Operating Profit, before Special Items* $ 31 $ 31 $

-

(1 )%
 
Profit Margin 12.5 % 11.1 %
Profit Margin, before Special Items* 12.5 % 11.8 %
 
*Please see the attached Non-GAAP Financial Measures tables

Sales decreased $20 million, driven by a $12 million, or -5%, core sales decline, and $8 million, or -3%, of unfavorable foreign exchange. Operating margin improved to 12.5%, compared to 11.8% last year, primarily reflecting the impact of productivity, repositioning benefits and favorable mix, partially offset by lower volumes, and to a lesser extent, competitive pricing. Fluid Handling order backlog was $242 million at September 30, 2016, compared to $267 million at December 31, 2015 and $279 million at September 30, 2015.

Payment & Merchandising Technologies

     
Third Quarter Change
(dollars in millions) 2016   2015    
Sales $   187 $   171 $   16 9 %
 
Operating Profit $ 35 $ 25 $ 10 38 %
Operating Profit, before Special Items* $ 35 $ 27 $ 7 27 %
 
Profit Margin 18.6 % 14.8 %
Profit Margin, before Special Items* 18.6 % 16.1 %
 
*Please see the attached Non-GAAP Financial Measures tables

Sales increased $16 million, or 9%, driven by $21 million, or 12%, of core growth, partially offset by a $5 million, or -3%, impact from unfavorable foreign exchange. Operating margin expanded 250 basis points to 18.6%, driven primarily by integration synergies, the higher core sales and strong productivity.

Aerospace & Electronics

     
Third Quarter Change
(dollars in millions) 2016   2015    
Sales $   198 $   172 $   27 15 %
 
Operating Profit $ 39 $ 37 $ 2 7 %
Operating Profit, before Special Items* $ 39 $ 37 $ 2 6 %
 
Profit Margin 19.6 % 21.3 %
Profit Margin, before Special Items* 19.6 % 21.4 %
 
*Please see the attached Non-GAAP Financial Measures tables

Sales increased $27 million, driven by a 15% increase in core sales. The core sales increase was driven primarily by shipments on the Space Fence program. Operating margin declined 180 basis points to 19.6%, primarily reflecting unfavorable mix. Aerospace & Electronics order backlog was $377 million at September 30, 2016, compared to $436 million at December 31, 2015 and $460 million at September 30, 2015.

Engineered Materials

     
Third Quarter Change
(dollars in millions) 2016   2015  
Sales $   64 $   63 $ 1 2 %
 
Operating Profit $ 11 $ 13 $ (1 ) (9 )%
 
Profit Margin 17.7 % 19.9 %

Sales increased $1 million, driven by higher sales to the Recreational Vehicle and Building Product markets, partially offset by lower sales to the Transportation market. Operating margin decreased 220 basis points to 17.7%, primarily reflecting competitive pricing actions, partially offset by strong productivity.

Raising 2016 Guidance

The Company is raising its 2016 GAAP EPS guidance to a range of $4.07-$4.15, versus a prior range of $3.95-$4.15. Excluding Special Items, EPS is now expected to be in a range of $4.12-$4.20, from the prior range of $4.00-$4.20. Management continues to expect that sales for 2016 will approximate $2.7 billion, now reflecting core sales in a range of flat to +2% compared to 2015. Full year 2016 free cash flow (cash provided by operating activities less capital spending) is now expected to be in a range of $200 to $225 million versus prior guidance of $195 to $220 million. (Please see the attached Non-GAAP Financial Measures tables.)

Non-GAAP Items

Special Items in the third quarter of 2015 included $2 million in after-tax charges, or $0.03 per share, related to repositioning activities, and $2 million, or $0.03 per share, of after-tax restructuring and integration-related charges associated with the MEI acquisition. For additional information, please see the attached Non-GAAP Financial Measures tables.

Additional Information

Additional information with respect to the Company's asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the third quarter financial results on Tuesday, October 25, 2016 at 10:00 A.M. (Eastern). All interested parties may listen to a live webcast of the call at http://www.craneco.com. An archived webcast will also be available to replay this conference call directly from the Company's website. Slides that accompany the conference call will be available on the Company's website.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane provides products and solutions to customers in the hydrocarbon processing, petrochemical, chemical, power generation, unattended payment, automated merchandising, aerospace, electronics, transportation and other markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane has approximately 11,000 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements present management's expectations, beliefs, plans and objectives regarding future financial performance, and assumptions or judgments concerning such performance. Any discussions contained in this press release, except to the extent that they contain historical facts, are forward-looking and accordingly involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the forward-looking statements. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and subsequent reports filed with the Securities and Exchange Commission.

(CR-E)

(Financial Tables Follow)

CRANE CO.

Income Statement Data
(in millions, except per share data)
       
 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

 

September 30,

2016 2015 2016 2015
Net Sales:
Fluid Handling $ 245.1 $ 264.7 $ 759.1 $ 832.2
Payment & Merchandising Technologies 186.7 170.6 551.2 529.0
Aerospace & Electronics 198.2 171.7 559.2 500.4
Engineered Materials 64.2   62.9   197.0   198.4  
Total Net Sales $ 694.2   $ 669.9   $ 2,066.5   $ 2,060.0  
 
Operating Profit (Loss):
Fluid Handling $ 30.7 $ 29.4 $ 91.5 $ 96.2
Payment & Merchandising Technologies 34.7 25.2 97.1 72.5
Aerospace & Electronics 38.9 36.5 110.6 98.2
Engineered Materials 11.4 12.5 38.6 39.0
Corporate (11.9 ) (10.4 ) (45.9 ) * (36.5 )
Total Operating Profit 103.8 93.2 291.9 269.4
 
Interest Income 0.5 0.5 1.4 1.4
Interest Expense (9.2 ) (9.1 ) (27.5 ) (28.5 )
Miscellaneous- Net (0.1 ) (0.3 ) (0.6 ) (0.2 )
Income Before Income Taxes 95.0 84.3 265.2 242.1
Provision for Income Taxes 31.3   27.1   77.9   77.7  
Net income before allocation to noncontrolling interests 63.7 57.2 187.3 164.4
 
Less: Noncontrolling interest in subsidiaries' earnings 0.2 0.3 0.5 0.7
       
Net income attributable to common shareholders $ 63.5   $ 56.9   $ 186.8   $ 163.7  
 
Share Data:
Earnings per Diluted Share $ 1.07 $ 0.97 $ 3.16 $ 2.78
 
Average Diluted Shares Outstanding 59.4 58.8 59.2 58.8
Average Basic Shares Outstanding 58.5 58.1 58.3 58.0
 

Supplemental Data:

Cost of Sales $ 449.1 $ 431.1 $ 1,324.5 $ 1,341.9
Selling, General & Administrative 141.2 141.4 450.1 * 431.2
Repositioning Charges (see non-GAAP measures) - 2.0 - 11.7
Acquisition Related Charges (see non-GAAP measures) - 2.2 - 5.8
Depreciation and Amortization ** 16.7 16.5 50.8 49.9
Stock-Based Compensation Expense ** 5.4 5.0 16.8 15.8
 
* Includes a $5 million legal settlement.
** Amount included within cost of sales and selling, general & administrative costs.
 
 
CRANE CO.
Condensed Balance Sheets
(in millions)
             
September 30, December 31,
2016 2015
 
ASSETS
Current Assets
Cash and Cash Equivalents $ 436.3 $ 363.5
Accounts Receivable, net 426.7 397.6
Current Insurance Receivable - Asbestos 20.5 20.5
Inventories, net 372.3 376.9
Other Current Assets 54.1   45.0  
Total Current Assets 1,309.9 1,203.5
 
Property, Plant and Equipment, net 283.0 276.0
Long-Term Insurance Receivable - Asbestos 91.3 108.7
Other Assets 549.4 580.8
Goodwill 1,175.6   1,167.9  
 
Total Assets $ 3,409.2   $ 3,336.9  
 
LIABILITIES AND EQUITY
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt $ 34.0 $ 49.6
Accounts Payable 202.5 223.3
Current Asbestos Liability 75.0 75.0
Accrued Liabilities 230.7 218.6
Income Taxes 14.4   6.3  
Total Current Liabilities 556.6 572.8
 
Long-Term Debt 745.2 744.6
Long-Term Deferred Tax Liability 52.3 50.0
Long-Term Asbestos Liability 411.6 470.5
Other Liabilities 319.5 348.1
 
Total Equity 1,324.0   1,150.8  
 
Total Liabilities and Equity $ 3,409.2   $ 3,336.9  
 
 
CRANE CO.
Condensed Statements of Cash Flows
(in millions)
             
Three Months Ended Nine Months Ended
September 30, September 30,
2016 2015 2016 2015
Operating Activities:
Net income attributable to common shareholders $ 63.5 $ 56.9 $ 186.8 $ 163.7
Noncontrolling interest in subsidiaries' earnings   0.2     0.3     0.5     0.7  
Net income before allocations to noncontrolling interests 63.7 57.2 187.3 164.4
Restructuring - Non Cash - 0.1 - 1.5
Depreciation and amortization 16.7 16.5 50.8 49.9
Stock-based compensation expense 5.4 5.0 16.8 15.8
Defined benefit plans and postretirement credit (2.5 ) (6.1 ) (7.3 ) (9.7 )
Deferred income taxes 8.5 15.4 16.1 23.4
Cash provided by (used for) operating working capital 46.7 8.1 (34.4 ) (46.6 )
Defined benefit plans and postretirement contributions (2.0 ) (7.3 ) (6.4 ) (15.4 )
Environmental payments, net of reimbursements (1.6 ) (6.0 ) (8.2 ) (13.6 )
Other   (2.5 )   (1.9 )   (4.8 )   (17.8 )
Subtotal 132.4 81.1 209.9 151.9
Asbestos related payments, net of insurance recoveries   (15.8 )   (11.4 )   (41.5 )   (36.2 )
Total provided by operating activities   116.6     69.7     168.4     115.7  
 
Investing Activities:
Capital expenditures (11.9 ) (8.1 ) (38.5 ) (28.2 )
Proceeds from disposition of capital assets   0.1     -     0.8     1.9  
Total used for investing activities   (11.8 )   (8.1 )   (37.7 )   (26.4 )
 
Financing Activities:
Dividends paid (19.3 ) (19.2 ) (57.8 ) (57.4 )
Reacquisition of shares on open market - - - (25.0 )
Stock options exercised - net of shares reacquired 7.4 0.3 9.6 7.3
Excess tax shortfall from stock-based compensation - - - (0.2 )
Repayment of credit facility - - - (100.0 )
Proceeds from issuance (repayment) of commercial paper   (66.9 )   (25.0 )   (15.6 )   97.0  
Total used for financing activities   (78.8 )   (43.8 )   (63.8 )   (78.3 )
 
Effect of exchange rate on cash and cash equivalents   1.4     (8.8 )   5.9     (22.1 )
Increase (decrease) in cash and cash equivalents 27.4 8.9 72.8 (11.1 )
Cash and cash equivalents at beginning of period   408.9     326.3     363.5     346.3  
Cash and cash equivalents at end of period $ 436.3   $ 335.2   $ 436.3   $ 335.2  
 
 
CRANE CO.
Order Backlog
(in millions)
           
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
 
Fluid Handling $ 241.6 $ 246.3 $ 263.4 $ 267.2 $ 278.6
Payment & Merchandising Technologies 65.6 65.8 60.4 62.6 55.5
Aerospace & Electronics 377.1 435.9 418.7 436.4 459.9
Engineered Materials   12.3     15.4     16.0     15.2     13.7  
Total Backlog $ 696.5   $ 763.5   $ 758.6   $ 781.5   $ 807.8  
 
 
CRANE CO.
Non-GAAP Financial Measures
(in millions, except per share data)

INCOME ITEMS

           
Three Months Ended Nine Months Ended Percent Change Percent Change
September 30, September 30, September 30, 2016 September 30, 2016
2016 2015 2016 2015 Three Months Nine Months
 
 
Net Sales $ 694.2 $ 669.9 $ 2,066.5 $ 2,060.0 3.6 % 0.3 %
 
 
Operating Profit 103.8 93.2 291.9 269.4 11.4 % 8.4 %
Percentage of Sales 15.0 % 13.9 % 14.1 % 13.1 %
 

Special Items impacting Operating Profit:

 

MEI Acquisition related integration charges

- 2.2 - 5.6
 

MEI Acquisition related restructuring charges

- - - 0.2
 
Repositioning charges - 2.0 - 11.7
 
Legal settlement charge - - 5.0 -
       
Operating Profit before Special Items $ 103.8   $ 97.4   $ 296.9   $ 286.9   6.6 % 3.5 %
 
Percentage of Sales 15.0 % 14.5 % 14.4 % 13.9 %
 
 
Net Income Attributable to Common Shareholders $ 63.5 $ 56.9 $ 186.8 $ 163.7
Per Share $ 1.07 $ 0.97 $ 3.16 $ 2.78 10.4 % 13.5 %
 

Special Items Impacting Net Income Attributable to Common Shareholders:

 
MEI acquisition related integration charges - Net of Tax - 1.4 - 3.7
Per Share $ 0.02 $ 0.06
 
MEI acquisition related restructuring charges - Net of Tax - 0.2 - 0.3
Per Share $ 0.00 $ 0.00
 
Repositioning charges - Net of Tax - 1.9 - 9.0
Per Share $ 0.03 $ 0.15
 
Legal settlement charge - Net of Tax - - 3.3 -
Per Share     $ 0.05    
 
Net Income Attributable To Common Shareholders Before Special Items $ 63.5 $ 60.3 $ 190.1 $ 176.7 5.4 % 7.6 %
Per Share $ 1.07 $ 1.03 $ 3.21 $ 3.00 4.2 % 6.9 %
 
 
 
 

Special Items Impacting Provision for Income Taxes

 
Provision for Income Taxes - GAAP Basis $ 31.3 $ 27.1 $ 77.9 $ 77.7
 
Tax effect of MEI acquisition related integration charges - 0.7 - 1.8
 
Tax effect of MEI acquisition related restructuring charges - - - -
 
Tax effect of repositioning charges - 0.1 - 2.7
 
Tax effect of legal settlement charge - - 1.8 -
       
Provision for Income Taxes - non-GAAP Basis $ 31.3   $ 27.9   $ 79.7   $ 82.2  
 
 
           

Segment Information:

For the three months ended September 30, 2016
 
Fluid Handling Payment & Merchandising Technologies Aerospace & Electronics Engineered Materials Corporate Total Company
Net Sales $245.1 $186.7 $198.2 $64.2 - $694.2
 
Operating Profit - GAAP 30.7 34.7 38.9 11.4 (11.9) 103.8
Percentage of Sales 12.5% 18.6% 19.6% 17.7% 15.0%
 
 
For the three months ended September 30, 2015
 
Fluid Handling Payment & Merchandising Technologies Aerospace & Electronics Engineered Materials Corporate Total Company
Net Sales $264.7 $170.6 $171.7 $62.9 - $669.9
 
Operating Profit - GAAP 29.4 25.2 36.5 12.5 (10.4) 93.2
Acquisition related integration charges - 2.2 - - - 2.2
Repositioning Charges 1.7 - 0.2 - - 2.0
Operating Profit before Special Items 31.1 27.4 36.7 12.5 (10.4) 97.4
Percentage of Sales 11.8% 16.1% 21.4% 19.9% 14.5%
 
 

CRANE CO.

Guidance

(in millions, except per share data)

             
2016 Full Year Guidance
2016 Earnings Per Share Guidance Low   High
 
Earnings Per Share - GAAP basis $ 4.07 $ 4.15
 
Legal settlement charge - Net of Tax 0.05 0.05
   
Earnings Per Share - Non-GAAP basis $ 4.12   $ 4.20  
 
 
 
 
CASH FLOW ITEMS
 
Three Months Ended Nine Months Ended
September 30, September 30, 2016 Full Year Guidance
2016 2015 2016 2015 Low High
Cash Provided by Operating Activities
before Asbestos - Related Payments $ 132.4 $ 81.1 $ 209.9 $ 151.9 $ 305.0 $ 330.0
Asbestos Related Payments, Net of Insurance Recoveries   (15.8 )   (11.4 )   (41.5 )   (36.2 )   (55.0 )   (55.0 )
Cash Provided by Operating Activities 116.6 69.7 168.4 115.7 250.0 275.0
Less: Capital Expenditures   (11.9 )   (8.1 )   (38.5 )   (28.2 )   (50.0 )   (50.0 )
Free Cash Flow $ 104.7   $ 61.5   $ 129.9   $ 87.4   $ 200.0   $ 225.0  
 

Certain non-GAAP measures have been provided to facilitate comparison with the prior year.

 
 

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that non-GAAP financial measures which exclude certain non-recurring items present additional useful comparisons between current results and results in prior operating periods, providing investors with a clearer view of the underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating, planning and compensation decisions and in evaluating the Company's performance.

In addition, Free Cash Flow provides supplemental information to assist management and investors in analyzing the Company's ability to generate liquidity from its operating activities. The measure of Free Cash Flow does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on the Company's long-term debt. Non-GAAP financial measures, which may be inconsistent with similarly captioned measures presented by other companies, should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP.

Crane Co.
Jason D. Feldman, 203-363-7329
Director, Investor Relations
www.craneco.com

Source: Crane Co.

News Provided by Acquire Media

Close window | Back to top