Crane Co. (NYSE: CR), a diversified manufacturer of highly
engineered industrial products, reported that first quarter 2011
earnings per diluted share increased 45% to $0.81 compared to $0.56
in the first quarter of 2010.
First quarter 2011 sales of $611 million increased $81 million,
or 15%, compared to the first quarter of 2010, resulting from a
core sales increase of $58 million (11%), an increase in sales from
acquisitions, net of divestitures, of $16 million (3%), and
favorable foreign currency translation of $7 million (1%).
First quarter 2011 operating profit increased 37% to $72.9
million, compared to $53.3 million in the first quarter of 2010,
and operating profit margin increased to 11.9%, compared to 10.0%
in the first quarter of 2010.
During the quarter, the Company sold a building and divested a
small product line. The associated gain of $4.3 million ($0.05 per
share) is included in Miscellaneous–Net on the accompanying Income
Statement.
“I am pleased with our first quarter results as strong core
revenue growth of 11% and solid execution produced a quarter that
was considerably better than we anticipated. The significant
sequential improvement in our monthly sales and earnings during the
quarter gives us increasing confidence about the year,” said Crane
Co. president and chief executive officer Eric C. Fast. “With our
late-cycle Aerospace and Fluid Handling businesses clearly gaining
momentum, we are raising our full year sales, EPS and cash flow
guidance.”
Increased Full Year 2011 Guidance
Sales for 2011 are now expected to increase approximately 10% -
12%, compared to our prior guidance of 7% - 9%, driven by strong
core sales growth. Our 2011 earnings guidance is now a range of
$3.05 - $3.25 per diluted share, compared to our previous guidance
of $2.80 - $3.00 per diluted share, reflecting strengthening
revenue and profit growth across all of our segments. Free cash
flow (cash provided by operating activities less capital spending)
is now expected to be in a range of $130 - $150 million, compared
to our previous estimate of $130 million. (Please see the Condensed
Statement of Cash Flows and Non-GAAP table.)
Cash Flow and Financial Position
Cash used for operating activities in the first quarter of 2011
was $16.2 million, which included higher working capital needs to
support improving sales trends, compared to cash provided by
operating activities of $16.8 million in the first quarter of 2010
(which included $19 million of cash received in connection with the
Boeing agreement). During the first quarter of 2011, the Company
repurchased 634,900 shares of its common stock for approximately
$30 million. The Company’s cash position at March 31, 2011 was $233
million, as compared to $273 million at December 31, 2010.
Segment Results
All comparisons detailed in this section refer to the first
quarter 2011 versus the first quarter 2010.
Aerospace & Electronics
First Quarter Change (dollars in millions) 2011
2010 Sales $ 161.9 $ 133.6 $ 28.3 21 %
Operating Profit $ 34.0 $ 24.5 $ 9.6 39 % Profit Margin 21.0
% 18.3 %
First quarter 2011 sales increased $28.3 million, or 21%,
reflecting a $19.8 million (25%) improvement in Aerospace Group
sales and an increase of $8.5 million (16%) in Electronics Group
revenue. The Aerospace Group sales increase reflected higher OEM
and aftermarket shipments while Electronics Group sales growth was
primarily driven by strength in Power Solutions. Segment operating
profit of $34.0 million increased by $9.6 million, or 39%,
reflecting strong sales growth and margin improvement in both
Aerospace and Electronics.
Aerospace & Electronics order backlog strengthened to $455
million at March 31, 2011, as compared to $431 million at December
31, 2010 and $388 million at March 31, 2010.
Engineered Materials
First Quarter Change (dollars in millions) 2011
2010 Sales $ 61.8 $ 53.8 $ 8.1 15 %
Operating Profit $ 10.1 $ 8.5 $ 1.6 19 % Profit Margin 16.4
% 15.9 %
Segment sales of $61.8 million increased 15% compared to the
first quarter of 2010, as a result of significantly higher demand
from transportation customers, as well as higher revenues across
recreational vehicle and building products end markets. Operating
profit grew 19%, and margins improved 50 basis points as higher
sales more than offset the impact of increased raw material costs.
The Company implemented price increases during the first quarter
and continues to monitor the impact of higher input costs.
Merchandising Systems
First Quarter Change (dollars in millions) 2011
2010 Sales $ 94.9 $ 70.2 $ 24.7 35 %
Operating Profit $ 4.7 $ 5.0 ($0.3 ) (6 %) Profit Margin 4.9
% 7.1 %
Merchandising Systems sales of $94.9 million increased $24.7
million, or 35%, primarily reflecting $16.4 million of sales
associated with the December 2010 acquisition of Money Controls
(23%) and positive core sales growth in our Payment Solutions and
Vending businesses. Operating profit of $4.7 million declined
slightly from the prior year as purchase accounting charges
associated with Money Controls more than offset the impact of
higher sales.
Fluid Handling
First Quarter Change (dollars in millions) 2011
2010 Sales $ 264.1 $ 247.8 $ 16.4 7 %
Operating Profit $ 35.5 $ 28.0 $ 7.5 27 % Profit Margin 13.4
% 11.3 %
First quarter 2011 sales increased $16.4 million, or 6.6%, which
included a core sales increase of $10.9 million (4.4%), and
favorable foreign currency translation of $5.5 million (2.2%).
Orders strengthened across Fluid Handling end markets and were
particularly strong in ChemPharma and Energy. Sales, operating
profit and margin improvement was broad based across the Group. The
sales increase was effectively leveraged with operating margins
improving from 11.3% to 13.4%. Backlog increased to $305 million at
March 31, 2011, compared to $272 million at December 31, 2010 and
$254 million at March 31, 2010.
Controls
First Quarter Change (dollars in millions) 2011
2010 Sales $ 28.2 $ 24.9 $ 3.3 13 %
Operating Profit $ 3.1 $ 0.1 $ 3.0 NM Profit Margin 11.0 %
0.5 %
First quarter 2011 sales of $28.2 million increased 13%,
primarily reflecting improvement in industrial, transportation and
upstream oil and gas related demand. Operating profit of $3.1
million increased significantly over 2010, reflecting strong
leverage and the absence of the operating losses associated with
divested businesses.
Additional Information
Please see the condensed financial statements and the Non-GAAP
Financial Measures table attached to this press release for
supporting details. 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 first
quarter financial results on Tuesday, April 19, 2011 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.
Crane Co. is a diversified manufacturer of highly engineered
industrial products. Founded in 1855, Crane provides products and
solutions to customers in the aerospace, electronics, hydrocarbon
processing, petrochemical, chemical, power generation, automated
merchandising, transportation and other markets. The Company has
five business segments: Aerospace & Electronics, Engineered
Materials, Merchandising Systems, Fluid Handling, and Controls.
Crane has approximately 11,000 employees in North America, South
America, Europe, 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, 2010 and subsequent reports filed with the
Securities and Exchange Commission.
CRANE CO. Income Statement Data (in
thousands, except per share data) Three Months Ended March
31, 2011 2010
Net Sales: Aerospace & Electronics $
161,936 $ 133,645 Engineered Materials 61,832 53,755 Merchandising
Systems 94,878 70,171 Fluid Handling 264,142 247,789 Controls
28,232 24,931
Total Net Sales $ 611,020
$ 530,291
Operating Profit (Loss): Aerospace
& Electronics $ 34,042 $ 24,489 Engineered Materials 10,143
8,540 Merchandising Systems 4,673 4,969 Fluid Handling 35,453
27,989 Controls 3,111 126 Corporate (14,562 ) (12,833 )
Total
Operating Profit 72,860 53,280 Interest Income 290 225
Interest Expense (6,622 ) (6,726 ) Miscellaneous- Net 3,625
* (21 ) Income Before Income Taxes 70,153 46,758 Provision for
Income Taxes 21,775 13,574 Net income before
allocations to noncontrolling interests 48,378 33,184 Less:
Noncontrolling interest in subsidiaries' losses (89 ) (50 )
Net
income attributable to common shareholders $ 48,467 $
33,234
Share Data: Earnings per Diluted Share
$ 0.81 $ 0.56 Average Diluted Shares
Outstanding 59,552 59,570 Average Basic Shares Outstanding 58,330
58,650
Supplemental
Data:
Cost of Sales $ 397,850 $ 352,271 Selling, General &
Administrative 140,310 124,740 Depreciation and Amortization **
15,774 14,437 Stock-Based Compensation Expense 3,503 3,172 *
Primarily related to the sale of a building and the divestiture of
a small product line in the three months ended March 31, 2011.
** Amount included within cost of sales and selling, general
& administrative costs.
CRANE CO.
Condensed Balance Sheets (in thousands)
March 31, December 31, 2011 2010
ASSETS Current
Assets Cash and Cash Equivalents $ 233,162 $ 272,941 Accounts
Receivable, net 356,257 301,918 Current Insurance Receivable -
Asbestos 33,000 33,000 Inventories, net 347,813 319,077 Other
Current Assets 75,708 61,725 Total Current Assets 1,045,940 988,661
Property, Plant and Equipment, net 283,006 280,746 Long-Term
Insurance Receivable - Asbestos 174,253 180,689 Other Assets
424,481 446,316 Goodwill 822,516 810,285
Total Assets
$ 2,750,196 $ 2,706,697
LIABILITIES AND EQUITY
Current Liabilities Notes Payable and Current Maturities of
Long-Term Debt $ 916 $ 984 Accounts Payable 173,798 157,051 Current
Asbestos Liability 100,000 100,000 Accrued Liabilities 217,685
229,462 Income Taxes 13,605 11,057 Total Current Liabilities
506,004 498,554 Long-Term Debt 398,780 398,736 Long-Term
Deferred Tax Liability 49,482 48,852 Long-Term Asbestos Liability
600,506 619,666 Other Liabilities 146,964 147,859 Total
Equity 1,048,460 993,030
Total Liabilities and Equity
$ 2,750,196 $ 2,706,697
CRANE
CO. Condensed Statements of Cash Flows (in thousands)
Three Months Ended March 31, 2011 2010
Operating
Activities: Net income attributable to common shareholders $
48,467 $ 33,234 Noncontrolling interest in subsidiaries' losses
(89 ) (50 ) Net income before allocations to
noncontrolling interests 48,378 33,184 Gain on divestiture (4,258 )
- Depreciation and amortization 15,774 14,437 Stock-based
compensation expense 3,503 3,172 Defined benefit plans and
postretirement expense 2,749 2,375 Deferred income taxes 6,893
6,682 Cash used for operating working capital (67,250 ) (31,687 )
Defined benefit plans and postretirement contributions (4,779 )
(1,076 ) Environmental payments, net of reimbursements (4,593 )
(3,200 ) Other 142 4,056 Subtotal
(3,441 ) 27,943 Asbestos related payments, net of insurance
recoveries (12,725 ) (11,125 )
Total (used for)
provided from operating activities (16,166 )
16,818
Investing Activities: Capital
expenditures (8,138 ) (4,119 ) Proceeds from disposition of capital
assets 4,553 - Payment for acquisition, net of cash acquired -
(51,167 ) Proceeds from divestiture 1,000 -
Total used for investing activities (2,585 )
(55,286 )
Financing Activities: Dividends paid
(13,474 ) (11,743 ) Reacquisition of shares on open market (29,999
) - Stock options exercised - net of shares reacquired 12,552 4,714
Excess tax benefit from stock-based compensation 3,952 391 Change
in short-term debt (76 ) (3,046 )
Total used for
financing activities (27,045 ) (9,684 )
Effect of exchange rate on cash and cash equivalents 6,017
(4,978 ) Decrease in cash and cash equivalents
(39,779 ) (53,130 ) Cash and cash equivalents at beginning of
period 272,941 372,714 Cash and cash
equivalents at end of period $ 233,162 $ 319,584
CRANE CO. Order Backlog (in thousands)
March 31, December 31, September 30,
June 30, March 31, 2011 2010 2010 2010 2010 Aerospace &
Electronics $ 454,559 $ 431,467 $ 401,585 $ 394,554 $ 388,169
Engineered Materials 13,826 11,831 11,367 12,496 14,810
Merchandising Systems 25,008
*
30,170
*
18,044 20,346 21,947 Fluid Handling 305,255 271,825 266,578 257,840
253,946 Controls 24,015 22,354 27,575
28,711 26,910
Total Backlog $ 822,663 $ 767,647 $
725,149 $ 713,947 $ 705,782 * Includes Order
Backlog of $5.3 million in March 31, 2011 and $8.4 million in
December 2010 pertaining to the 2010 acquisition of Money Controls.
CRANE CO. Non-GAAP Financial Measures
(in thousands) Three Months Ended March
31, 2011 2010
CASH FLOW
ITEMS
Cash (Used for) Provided from Operating Activities before Asbestos
- Related Payments $ (3,441 ) $ 27,943 Asbestos Related Payments,
Net of Insurance Recoveries (12,725 ) (11,125 ) Cash
(Used for) Provided from Operating Activities (16,166 ) 16,818
Less: Capital Expenditures (8,138 ) (4,119 ) Free
Cash Flow $ (24,304 ) $ 12,699 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 principle 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. Non-GAAP financial measures, which may
be inconsistent with similarly captioned measures presented by
other companies, should be viewed in the context of the definitions
of the elements of such measures we provide and in addition to, and
not as a substitute for, the Company’s reported results prepared in
accordance with GAAP.
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