First Quarter 2018 Highlights:
- GAAP earnings per diluted share (EPS)
of $1.13 compared to $1.05 last year; excluding Special Items, EPS
of $1.31 increased 25% compared to 2017.
- Raising 2018 GAAP EPS guidance to a
range of $4.75-$4.95 vs. prior range of $4.65-$4.85; excluding
Special Items, raising 2018 EPS guidance to a range of $5.45-$5.65
vs. prior range of $5.35-$5.55.
- Revising 2018 free cash flow guidance
(cash provided by operating activities less capital spending) to
$240-$270 million vs. prior range of $220-$250 million.
Crane Co. (NYSE: CR), a diversified manufacturer of highly
engineered industrial products, reported first quarter 2018
earnings per diluted share (EPS) of $1.13, compared to $1.05 per
diluted share in the first quarter of 2017. Excluding Special
Items, first quarter 2018 EPS increased 25% to $1.31. (Please see
the attached Non-GAAP Financial Measures tables.)
First quarter sales were a record $799 million, an increase of
19% compared to $673 million in the first quarter of 2017. The
sales increase was comprised of a $103 million, or 15%, benefit
from acquisitions, and a $28 million, or 4%, benefit from favorable
foreign exchange, partially offset by a core sales decline of $5
million, or 1%.
Operating profit in the first quarter was $94 million, up
slightly compared to $93 million in the first quarter of 2017.
Excluding Special Items, operating profit in the first quarter was
$112 million, an increase of 16% compared to $97 million in the
first quarter of 2017. (Please see the attached Non-GAAP Financial
Measures tables.)
The effective tax rate in the first quarter was 18.6%, down from
28.1% in the first quarter of 2017. Excluding Special Items, the
effective tax rate in the first quarter was 18.9%. The lower tax
rate in the first quarter of 2018 was a result of the 2017 Tax Cuts
and Jobs Act.
Max Mitchell, Crane Co. President and Chief Executive Officer
commented: "On the heels of record results last year, we are off to
a solid start in 2018. At Fluid Handling, end markets continue to
gradually improve, and we are executing well and gaining market
share. Core margins improved at Payment & Merchandising
Technologies, and sales were in-line with our expectations on
challenging comparisons. Aerospace & Electronics also started
the year strong, with growth across the segment driving good
operating leverage. Overall, we are tracking modestly ahead of the
midpoint of our previously issued guidance, and we continue to
pursue opportunities that could provide further upside."
Mr. Mitchell continued, "beyond the core business, our
repositioning activities and the Crane Currency acquisition
integration are progressing as expected, and we are making good
progress on our growth initiatives. We are pleased with our results
year-to-date and we remain excited about our multi-year earnings
growth outlook, although our optimism is tempered somewhat by
heightened uncertainty related to the global trade environment.
Balancing these factors, we are raising our 2018 EPS guidance,
excluding Special Items, to $5.45-$5.65, from our prior range of
$5.35-$5.55." (Please see the attached Non-GAAP Financial Measures
tables.)
Cash Flow and Other Financial Metrics
Cash provided by operating activities in the first quarter of
2018 was $74 million, compared to $4 million in the first quarter
of 2017. Free cash flow (cash provided by operating activities less
capital spending) was $47 million in the first quarter of 2018,
compared to a use of ($6) million in the first quarter of 2017.
(Please see the attached Non-GAAP Financial Measures tables.)
The Company's cash position was $642 million at March 31, 2018,
compared to $706 million at December 31, 2017. Total debt was
$1,411 million at March 31, 2018, compared to $743 million at
December 31, 2017. The increase in total debt reflects the
financing associated with the January 10, 2018 acquisition of Crane
Currency.
Segment Results
All comparisons detailed in this section refer to operating
results for the first quarter 2018 versus the first quarter
2017.
Fluid Handling
First Quarter Change (dollars in millions) 2018
2017 Sales $
267 $ 240 $ 27 11
% Operating Profit $ 28 $ 24 $ 4 15 % Operating Profit,
before Special Items* $ 32 $ 27 $ 5 19 % Profit Margin 10.5
% 10.2 % Profit Margin, before Special Items* 12.1 % 11.3 %
*Please see the attached Non-GAAP Financial Measures tables
Sales increased $27 million, driven by $14 million, or 6%, of
favorable foreign exchange, $7 million, or 3%, core growth, and a
$6 million, or 2.5%, contribution from acquisitions. Operating
margin increased to 10.5%, compared to 10.2% last year, primarily
reflecting leverage on higher volumes and productivity, partially
offset by unfavorable mix. Excluding Special Items, operating
margin was 12.1%, compared to 11.3% last year. Fluid Handling order
backlog was $281 million at March 31, 2018, $262 million at
December 31, 2017, and $250 million at March 31, 2017.
Payment & Merchandising Technologies
First Quarter Change (dollars in millions) 2018
2017 Sales $ 292 $
196 $ 97 50 %
Operating Profit $ 37 $ 38 $ (2 ) (5 %) Operating Profit, before
Special Items* $ 49 $ 39 $ 10 26 % Profit Margin 12.5 % 19.6
% Profit Margin, before Special Items* 16.8 % 20.0 % *Please
see the attached Non-GAAP Financial Measures tables
Sales increased $97 million, or 50%, driven by sales from
acquisitions, with $13 million of favorable foreign exchange
offsetting a $13 million decline in core sales. The decline in core
sales was primarily a result of extraordinarily challenging
comparisons to the prior year, with core sales up 18% in the first
quarter of 2017. Operating margin declined to 12.5%, from 19.6%
last year, reflecting the impact of the Crane Currency acquisition,
restructuring and integration related charges, and the impact of
lower volumes. Excluding Special Items, operating margins of 16.8%
declined from 20.0% last year.
Aerospace & Electronics
First Quarter Change (dollars in millions) 2018
2017 Sales $
170 $ 163 $ 7 4 %
Operating Profit $ 34 $ 32 $ 2 8 % Operating Profit, before
Special Items* $ 35 $ 32 $ 3 8 % Profit Margin 20.1 % 19.4 %
Profit Margin, before Special Items* 20.3 % 19.6 % *Please
see the attached Non-GAAP Financial Measures tables
Sales increased $7 million, or 4%, primarily driven by $7
million of higher core sales with a slight benefit from favorable
foreign exchange. Operating margin increased to 20.1%, from 19.4%
last year, primarily as a result of higher volumes and
productivity. Excluding Special Items, operating margin increased
70 basis points to 20.3%. Aerospace & Electronics order backlog
was $381 million at March 31, 2018, $374 million at December 31,
2017, and $352 million at March 31, 2017.
Engineered Materials
First Quarter Change (dollars in
millions) 2018 2017 Sales $
70 $ 75 $
(5 ) (7 %) Operating Profit $ 12 $ 14 $ (2 ) (11 %)
Profit Margin 17.8 % 18.7 %
Sales decreased $5 million, or 7%, driven primarily by lower
sales to the Recreational Vehicle market. Operating margin declined
90 basis points to 17.8%, primarily reflecting lower volumes,
partially offset by strong productivity.
Raising 2018 Guidance
We are raising our 2018 full year GAAP EPS guidance to a range
of $4.75-$4.95, compared to the prior range of $4.65-$4.85. We now
expect 2018 full year EPS, excluding Special Items, of $5.45-$5.65,
compared to the prior range of $5.35-$5.55. Full year 2018 free
cash flow (cash provided by operating activities less capital
spending) is now expected to be in a range of $240-$270 million,
compared to the prior range of $220-$250 million. (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 first
quarter financial results on Tuesday, April 24, 2018 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,
banknote design and production, 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 12,000 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, 2017 and subsequent reports filed with the
Securities and Exchange Commission.
(Financial Tables Follow)
CRANE CO. Income Statement Data
(in millions, except per share data)
Three Months Ended March 31, 2018 2017
Net sales: Fluid Handling $ 266.6 $ 239.6 Payment &
Merchandising Technologies 292.4 195.5 Aerospace & Electronics
170.4 163.4 Engineered Materials 69.7 74.9
Total
net sales $ 799.1 $ 673.4
Operating
profit (loss): Fluid Handling $ 28.1 $ 24.4 Payment &
Merchandising Technologies 36.5 38.4 Aerospace & Electronics
34.2 31.7 Engineered Materials 12.4 14.0 Corporate (16.9 ) (15.2 )
Total operating profit 94.3 93.3 Interest income 0.8
0.5 Interest expense (14.6 ) (9.0 ) Miscellaneous income 3.9
3.1 Income before income taxes 84.4 87.9 Provision for
income taxes 15.7 24.6 Net income before allocation
to noncontrolling interests 68.7 63.3 Less: Noncontrolling interest
in subsidiaries' earnings — 0.2 Net income
attributable to common shareholders $ 68.7 $ 63.1
Share Data: Earnings per diluted share $ 1.13 $ 1.05
Average diluted shares outstanding 61.0 60.3 Average basic
shares outstanding 59.7 59.3
Supplemental
Data:
Cost of sales $ 521.2 $ 429.5 Selling, general & administrative
177.6 150.6 Acquisition related charges 5.2 — Repositioning charges
0.8 — Depreciation and amortization * 27.9 17.4 Stock-based
compensation expense * 5.6 5.6 *Amount included within Cost
of sales and Selling, general & administrative costs.
CRANE CO. Condensed Balance Sheets
(in millions)
March 31,
2018
December 31,
2017
ASSETS Current assets Cash and cash equivalents $
642.3 $ 706.2 Accounts receivable, net 493.5 418.4 Current
insurance receivable - asbestos 25.0 25.0 Inventories, net 406.5
349.3 Other current assets 69.6 19.6 Total current assets
1,636.9 1,518.5 Property, plant and equipment, net 600.8
282.4 Long-term insurance receivable - asbestos 83.3 90.1 Other
assets 726.6 495.6 Goodwill 1,442.9 1,206.9
Total
assets $ 4,490.5 $ 3,593.5
LIABILITIES AND EQUITY Current liabilities Short-term
borrowings and current maturities of long-term debt $ 272.7 $ 249.4
Accounts payable 252.4 247.4 Current asbestos liability 85.0 85.0
Accrued liabilities 300.5 252.1 Income taxes 1.4 3.6 Total
current liabilities 912.0 837.5 Long-term debt 1,138.5 494.1
Long-term deferred tax liability 100.8 44.9 Long-term asbestos
liability 510.6 520.3 Other liabilities 380.5 348.2 Total
equity 1,448.1 1,348.5
Total liabilities and
equity $ 4,490.5 $ 3,593.5
CRANE CO. Condensed Statements of Cash
Flows
(in millions)
Three Months Ended
March 31,
2018 2017
Operating activities: Net income
attributable to common shareholders $ 68.7 $ 63.1
Noncontrolling interest in subsidiaries' earnings — (0.2 )
Net income before allocations to noncontrolling interests 68.7 63.3
Depreciation and amortization 27.9 17.4 Stock-based compensation
expense 5.6 5.6 Defined benefit plans and postretirement credit
(3.9 ) (2.1 ) Deferred income taxes 12.7 (0.1 ) Cash used for
operating working capital (18.6 ) (62.8 ) Defined benefit plans and
postretirement contributions (4.5 ) (2.1 ) Environmental payments,
net of reimbursements (2.3 ) (2.0 ) Other (8.5 ) 1.0
Subtotal 77.1 18.2 Asbestos related payments, net of insurance
recoveries (2.9 ) (14.7 )
Total provided by operating
activities 74.2 3.5
Investing
activities: Capital expenditures (27.5 ) (9.6 ) Proceeds from
disposition of capital assets 0.3 — Payment for acquisition, net of
cash acquired (672.3 ) —
Total used for investing
activities (699.5 ) (9.6 )
Financing activities:
Dividends paid (20.9 ) (19.6 ) Stock options exercised - net of
shares reacquired 4.5 12.8 Proceeds received from issuance of
commercial paper 272.7 — Proceeds received from issuance of
long-term debt 550.0 — Proceeds received from issuance of
short-term debt 100.0 — Repayment of long-term debt (250.0 ) —
Repayment of short-term debt (100.0 ) — Debt issuance costs (5.4 )
—
Total provided by (used for) financing activities
550.9 (6.8 ) Effect of exchange rate on cash and cash
equivalents 10.5 8.0 Decrease in cash and cash
equivalents (63.9 ) (4.9 ) Cash and cash equivalents at beginning
of period 706.2 509.7 Cash and cash equivalents at
end of period $ 642.3 $ 504.8
CRANE CO. Order Backlog
(in millions)
March 31,
2018
December 31,
2017
September 30,2017 June 30,2017
March 31,2017
Fluid Handling $ 281.2 * $ 262.1 * $ 268.8 * $
258.9 * $ 249.8 Payment & Merchandising
Technologies 301.0 ** 76.4 ** 87.6 ** 87.0 ** 85.8 Aerospace &
Electronics 381.2 373.6 348.4 328.2 352.4 Engineered Materials 13.4
13.6 13.9 14.9 17.8
Total
Backlog $ 976.8 $ 725.7 $
718.7 $ 689.0 $ 705.8 * Includes
$4.2 million, $3.4 million, $3.5 million and $4.1 million as of
each of March 31, 2018, December 31, 2017, September 30, 2017 and
June 30, 2017, respectively, of backlog pertaining to the Westlock
business acquired in April 2017. ** Includes $211.2 million
as of March 31, 2018 of backlog pertaining to the Crane Currency
business acquired in January 2018 and $0.2 million, $0.2 million,
$0.2 million and $0.3 million as of March 31, 2018, December 31,
2017, September 30, 2017 and June 30, 2017, respectively, of
backlog pertaining to the Microtronic business acquired in June
2017.
CRANE CO. Non-GAAP Financial
Measures
(in millions, except per share data)
Three Months EndedMarch 31,
PercentChangeMarch 31,2018
2018 2017
ThreeMonths
INCOME
ITEMS
Net sales $ 799.1 $ 673.4 18.7 % Operating profit 94.3 93.3
1.0 % Percentage of sales 11.8 % 13.9 %
Special items
impacting operating profit:
Inventory step-up and backlog amortization 6.6 — Acquisition
related charges 5.2 — Repositioning charges 0.8 — Impact from
change in accounting principle* 5.2 3.3 Operating
profit before special items $ 112.1 $ 96.6 16.0 %
Percentage of sales 14.0 % 14.3 % Net income attributable to
common shareholders $ 68.7 $ 63.1 Per share $ 1.13 $ 1.05 7.7 %
Special items
impacting net income attributable to common
shareholders:
Inventory step-up and backlog amortization - net of tax 5.1 — Per
share $ 0.08 Acquisition related charges - net of tax 4.0 —
Per share $ 0.06 Repositioning charges - net of tax 0.6 —
Per share $ 0.01 Incremental financing costs associated with
acquisition - net of tax 1.4 — Per share $ 0.02 Impact of
tax law change 0.3 — Per share $ 0.00 Net
income attributable to common shareholders before special items $
80.1 $ 63.1 Per diluted share $ 1.31 $ 1.05 25.5 %
Special items
impacting provision for income taxes
Provision for income taxes - GAAP Basis $ 15.7 $ 24.6 Tax effect of
inventory step-up and backlog amortization 1.5 — Tax effect of
acquisition related charges 1.2 — Tax effect of repositioning
charges 0.2 — Tax effect of incremental financing costs associated
with acquisition 0.4 — Impact of tax law change (0.3 ) —
Provision for income taxes - non-GAAP basis $ 18.7 $ 24.6
Segment
Information:
For the three months ended March 31, 2018
FluidHandling
Payment &MerchandisingTechnologies
Aerospace&Electronics
EngineeredMaterials
Corporate
TotalCompany
Net sales $ 266.6 $ 292.4 $ 170.4 $ 69.7 $ 799.1 Operating
profit - GAAP 28.1 36.5 34.2 12.4 (16.9 ) 94.3 Inventory step-up
and backlog amortization 0.2 6.4 6.6 Acquisition related charges
5.2 5.2 Repositioning charges, net of gain on property sale 0.4 0.2
0.2 0.8 Impact from change in accounting principle* 3.6 0.7
0.2 0.7 5.2 Operating profit
before special Items 32.3 49.0 34.6 12.4 (16.2 ) 112.1 Percentage
of sales 12.1 % 16.8 % 20.3 % 17.8 % 14.0 %
Segment
Information:
For the three months ended March 31, 2017
FluidHandling
Payment &MerchandisingTechnologies
Aerospace&Electronics
EngineeredMaterials
Corporate
TotalCompany
Net sales $ 239.6 $ 195.5 $ 163.4 $ 74.9 $ 673.4 Operating
profit - GAAP 24.4 38.4 31.7 14.0 (15.2 ) 93.3 Impact from change
in accounting principle* 2.7 0.6 0.3
(0.3 ) 3.3 Operating profit before special items 27.1 39.0
32.0 14.0 (15.6 ) 96.6 Percentage of sales 11.3 % 20.0 % 19.6 %
18.7 % 14.3 % * Represents the impact from the change in
presentation of net periodic pension and postretirement benefit
costs.
CRANE CO. Guidance
(in millions, except per share data)
2018 Full Year Guidance 2018 earnings per share
guidance Low High Earnings per share - GAAP basis $
4.75 $ 4.95 Repositioning costs 0.15 0.15 Acquisition
integration costs 0.55 0.55 Earnings per share -
non-GAAP basis $ 5.45 $ 5.65
Three Months EndedMarch
31,
2018 Full Year Guidance
2018 2017 Low High
Cash provided by operating activities
before asbestos-related payments
$ 77.1 $ 18.2 $ 425.0 $ 455.0 Asbestos-related payments, net of
insurance recoveries (2.9 ) (14.7 ) (60.0 ) (60.0 ) Cash provided
by operating activities 74.2 3.5 365.0 395.0 Less: capital
expenditures (27.5 ) (9.6 ) (125.0 ) (125.0 ) Free cash flow $ 46.7
$ (6.1 ) $ 240.0 $ 270.0 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180423006499/en/
Crane Co.Jason D. Feldman, 203-363-7329Director, Investor
Relationswww.craneco.com
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