Second Quarter 2023 Highlights
- Earnings from continuing operations per diluted share (EPS) of
$0.75 and adjusted EPS of $1.10.
- Core year-over-year sales growth of 5% and core year-over-year
backlog growth of 15%.
- Year-over-year growth in operating profit from continuing
operations of 44%, and year-over-year growth in adjusted operating
profit from continuing operations of 30%.
- Raising adjusted EPS guidance to a range of $3.80-$4.10, from
prior range of $3.60-$3.90.
- Declaring third quarter 2023 dividend of $0.18 per share.
Crane Company ("Crane," NYSE: CR) today announced its financial
results for the second quarter of 2023 and updated its full-year
outlook.
Max Mitchell, Crane's President and Chief Executive Officer,
stated: “Crane delivered another impressive quarter, its first as a
newly independent company following completion of our April 2023
separation transaction. Core year-over-year sales growth of 5%
drove a 30% increase in adjusted operating profit from continuing
operations, further demonstrating how we have positioned our
businesses to drive accelerated growth along with consistent and
differentiated operational execution. Notably, adjusted operating
margins were at or above 20% in both of our strategic growth
platforms."
Mr. Mitchell added: “Driving long-term, sustainable value
creation is receiving management's undivided attention, including
both organic growth initiatives and the pursuit of attractive,
high-return acquisitions to further accelerate growth and
strengthen our business. As always, we will deploy our capital with
strict financial and strategic discipline, prioritizing internal
investments for growth followed by M&A and returns to
shareholders. Today, we have approximately $1 billion in
acquisition capacity, and we are actively exploring a number of
small and medium-sized bolt-on acquisitions across both of our
strategic growth platforms, each of which have significant synergy
and growth potential."
Mr. Mitchell concluded: “The strength of our strategic growth
platforms, each with proprietary, innovative and differentiated
solutions for our attractive end markets, paired with our proven
execution capabilities give us confidence in our ability to
navigate any potential market conditions. We are extremely excited
about our opportunities and prospects in the quarters and years
ahead; in the near-term, that optimism is tempered somewhat by
persistent supply chain challenges in our aerospace and defense end
markets, as well as signs of expected slowing order activity in a
handful of our industrial and process flow markets and geographies.
Balancing these factors, and supported by our extremely strong
financial performance in the first half of this year, we are
raising our adjusted EPS guidance by $0.20 to a range of $3.80 to
$4.10 from the prior range of $3.60-$3.90."
Second Quarter 2023 Results From Continuing
Operations
Second quarter 2023 GAAP earnings from continuing operations per
diluted share (EPS) was $0.75, and adjusted EPS was $1.10.
Second quarter sales declined 4%, with 5% core sales growth more
than offset by an 8% impact from the May 2022 divestiture of Crane
Supply and a slight impact from unfavorable foreign exchange.
Operating profit from continuing operations of $63 million
increased 44% compared to the prior year, and adjusted operating
profit from continuing operations of $84 million increased 30%.
Operating profit margin increased 420 basis points to 12.4% driven
primarily by higher pricing and productivity. Adjusted operating
profit margin increased 430 basis points to 16.5%.
Summary of Second Quarter 2023 Results from Continuing
Operations
Second Quarter
Change
(unaudited, dollars in millions)
2023
2022
$
%
Net sales
$
510
$
530
$
(21
)
(4
)%
Core sales
25
5
%
Foreign exchange
(2
)
(0
)%
Divestiture impact
(44
)
(8
)%
Operating profit
$
63
$
44
$
19
44
%
Adjusted operating profit*
$
84
$
65
$
19
30
%
Operating profit margin
12.4
%
8.2
%
420bps
Adjusted operating profit margin*
16.5
%
12.2
%
430bps
*Please see the attached Non-GAAP Financial Measures tables
Cash Flow and Other Financial Metrics
During the second quarter of 2023, cash provided by operating
activities from continuing operations was $52 million, capital
expenditures were $12 million, and free cash flow (cash provided by
operating activities less capital spending) was $40 million.
Adjusted free cash flow (free cash flow excluding cash outflows
related to the separation transaction) was $60 million. (Please see
the attached non-GAAP Financial Measures tables.)
As of June 30, 2023, the Company's cash balance was $219 million
with total debt of $262 million.
Second Quarter 2023 Segment Results
All comparisons detailed in this section refer to operating
results for the second quarter 2023 versus the second quarter
2022.
Aerospace & Electronics
Second Quarter
Change
(unaudited, dollars in millions)
2023
2022
$
%
Net sales
$
189
$
162
$
28
17
%
Operating profit
$
38
$
28
$
10
36
%
Operating profit margin
20.2
%
17.5
%
270bps
Sales of $189 million increased 17% compared to the prior year.
Operating profit margin of 20.2% increased 270 basis points from
last year, primarily reflecting the impact of higher volumes and
productivity. Aerospace & Electronics' order backlog was $675
million as of June 30, 2023 compared to $613 million as of December
31, 2022, and $534 million as of June 30, 2022.
Process Flow Technologies
Second Quarter
Change
(unaudited, dollars in millions)
2023
2022
$
%
Net sales
$
263
$
296
$
(33
)
(11
)%
Core sales
13
4
%
Foreign exchange
(2
)
(1
)%
Divestiture impact
(44
)
(15
)%
Operating profit
$
51
$
41
$
10
25
%
Adjusted operating profit*
$
53
$
46
$
7
14
%
Operating profit margin
19.2
%
13.7
%
550bps
Adjusted operating profit margin*
20.0
%
15.6
%
440bps
*Please see the attached Non-GAAP Financial Measures tables
Sales of $263 million decreased 11%, with 4% core sales growth
more than offset by a 15% impact from the divestiture of Crane
Supply and a 1% impact from unfavorable foreign exchange. Operating
profit margin increased 550 basis points to 19.2% driven by strong
pricing, productivity and execution. Adjusted operating profit
margin increased 440 basis points to 20.0%. Process Flow
Technologies order backlog was $353 million as of June 30, 2023
compared to $369 million as of December 31, 2022, and $349 million
as of June 30, 2022.
Engineered Materials
Second Quarter
Change
(unaudited, dollars in millions)
2023
2022
$
%
Net sales
$
57
$
73
$
(16
)
(21
%)
Operating profit
$
10
$
7
$
3
34
%
Adjusted operating profit*
$
10
$
11
$
(1
)
(12
%)
Operating profit margin
17.1
%
10.0
%
710bps
Adjusted operating profit margin*
16.6
%
14.8
%
180bps
*Please see the attached Non-GAAP Financial Measures tables
Sales of $57 million decreased 21% compared to the prior year.
Operating profit margin improved 710 basis points to 17.1% driven
by strong pricing net of inflation and productivity, partially
offset by lower volumes. Adjusted operating profit margin improved
180 basis points to 16.6%.
Raising 2023 Outlook and Guidance
We are raising our adjusted EPS from continuing operations
guidance by $0.20 to a range of $3.80 to $4.10, from the prior
range of $3.60 to $3.90.
Key assumptions for our revised guidance include:
- Total sales growth of approximately 6% (prior 5%) and core
sales growth of approximately 5% to 7% (prior 4% to 6%).
- Adjusted operating margin of ~15.0% (prior 14.5%).
- Corporate cost of ~$70 million (unchanged).
- Net non-operating expense of ~$15 million (prior ~$16
million).
- Adjusted tax rate of ~23% (unchanged).
- Diluted shares of ~57.3 million (unchanged).
Additional details of our outlook and guidance are included in
the presentation that accompanies this earnings release available
on our website at www.craneco.com in the "investors" section.
Declaring Third Quarter Dividend
Crane announced its regular quarterly dividend of $0.18 per
share for the third quarter of 2023. The dividend is payable on
September 13, 2023 to shareholders of record as of August 31,
2023.
Additional Information
Crane operated as part of Crane Holdings, Co. for the entire
first quarter of 2023 prior to completion of the separation
transaction on April 3. Crane Holdings, Co. (now renamed Crane NXT,
Co.) results are now reflected as the historical results of Crane,
with the Payment & Merchandising Technologies segment presented
as discontinued operations. Certain current year year-to-date and
prior year quarterly and year-to-date non-GAAP information is not
presented due to this change in reporting methodology.
Conference Call
Crane has scheduled a conference call to discuss the second
quarter financial results on Wednesday, July 26, 2023 at 10:00 A.M.
(Eastern). All interested parties may listen to a live webcast of
the call at www.craneco.com. An archived webcast will also be
available to replay this conference call directly from the
Company’s website under Investors, Events & Presentations.
Slides that accompany the conference call will be available on the
Company’s website.
About Crane Company
Crane Company has delivered innovation and technology-led
solutions for customers since its founding in 1855. Today, Crane is
a leading manufacturer of highly engineered components for
challenging, mission-critical applications focused on the
aerospace, defense, space and process industry end markets. The
Company is comprised of two strategic growth platforms, Aerospace
& Electronics and Process Flow Technologies, as well as the
Engineered Materials segment. Crane has approximately 7,000
employees in the Americas, Europe, the Middle East, Asia and
Australia. For more information, visit www.craneco.com.
Forward-Looking Statements Disclaimer
This press release contains forward-looking statements within
the meaning of the federal securities laws. Forward-looking
statements include all statements that are not historical
statements of fact and those regarding our intent, belief, or
expectations, including, but not limited to: statements regarding
Crane’s portfolio composition and its relationship with Crane NXT,
Co. following the business separation; benefits and synergies of
the separation transaction; strategic and competitive advantages of
Crane; future financing plans and opportunities; and business
strategies, prospects and projected operating and financial
results. We caution investors not to place undue reliance on any
such forward-looking statements.
Words such as “anticipate(s),” “expect(s),” “intend(s),”
“believe(s),” “plan(s),” “may,” “will,” “would,” “could,” “should,”
“seek(s),” and similar expressions, or the negative of these terms,
are intended to identify such forward-looking statements. These
statements are based on management’s current expectations and
beliefs and are subject to a number of risks and uncertainties that
could lead to actual results differing materially from those
projected, forecasted or expected. Although we believe that the
assumptions underlying the forward-looking statements are
reasonable, we can give no assurance that our expectations will be
attained.
Risks and uncertainties that could cause actual results to
differ materially from our expectations include, but are not
limited to: changes in global economic conditions (including
inflationary pressures) and geopolitical risks, including
macroeconomic fluctuations that may harm our business, results of
operation and stock price; the continuing effects from the COVID-19
pandemic on our business and the global and U.S. economies
generally; information systems and technology networks failures and
breaches in data security, theft of personally identifiable and
other information, non-compliance with our contractual or other
legal obligations regarding such information; our ability to source
components and raw materials from suppliers, including disruptions
and delays in our supply chain; demand for our products, which is
variable and subject to factors beyond our control; governmental
regulations and failure to comply with those regulations;
fluctuations in the prices of our components and raw materials;
loss of personnel or being able to hire and retain additional
personnel needed to sustain and grow our business as planned; risks
from environmental liabilities, costs, litigation and violations
that could adversely affect our financial condition, results of
operations, cash flows and reputation; risks associated with
conducting a substantial portion of our business outside the U.S.;
being unable to identify or complete acquisitions, or to
successfully integrate the businesses we acquire, or complete
dispositions; adverse impacts from intangible asset impairment
charges; potential product liability or warranty claims; being
unable to successfully develop and introduce new products, which
would limit our ability to grow and maintain our competitive
position and adversely affect our financial condition, results of
operations and cash flow; significant competition in our markets;
additional tax expenses or exposures that could affect our
financial condition, results of operations and cash flows;
inadequate or ineffective internal controls; specific risks
relating to our reportable segments, including Aerospace &
Electronics, Process Flow Technologies and Engineered Materials;
the ability and willingness of Crane Company and Crane NXT, Co. to
meet and/or perform their obligations under any contractual
arrangements that are entered into among the parties in connection
with the separation transaction and any of their obligations to
indemnify, defend and hold the other party harmless from and
against various claims, litigation and liabilities; and the ability
to achieve some or all the benefits that we expect to achieve from
the separation transaction.
Readers should carefully review Crane’s financial statements and
the notes thereto, as well as the section entitled “Risk Factors”
in Item 1A of Crane’s Annual Report on Form 10-K for the year ended
December 31, 2022 and the other documents Crane and its
subsidiaries file from time to time with the SEC. Readers should
also carefully review the “Risk Factors” section of the information
statement filed as an exhibit to Crane’s registration statement on
Form 10. These filings identify and address other important risks
and uncertainties that could cause actual events and results to
differ materially from those contained in the forward-looking
statements.
These forward-looking statements reflect management’s judgment
as of this date, and Crane assumes no (and disclaims any)
obligation to revise or update them to reflect future events or
circumstances.
We make no representations or warranties as to the accuracy of
any projections, statements or information contained in this
document. It is understood and agreed that any such projections,
targets, statements and information are not to be viewed as facts
and are subject to significant business, financial, economic,
operating, competitive and other risks, uncertainties and
contingencies many of which are beyond our control, that no
assurance can be given that any particular financial projections
ranges, or targets will be realized, that actual results may differ
from projected results and that such differences may be material.
While all financial projections, estimates and targets are
necessarily speculative, we believe that the preparation of
prospective financial information involves increasingly higher
levels of uncertainty the further out the projection, estimate or
target extends from the date of preparation. The assumptions and
estimates underlying the projected, expected or target results are
inherently uncertain and are subject to a wide variety of
significant business, economic and competitive risks and
uncertainties that could cause actual results to differ materially
from those contained in the financial projections, estimates and
targets. The inclusion of financial projections, estimates and
targets in this press release should not be regarded as an
indication that we or our representatives, considered or consider
the financial projections, estimates and targets to be a reliable
prediction of future events.
(Financial Tables Follow)
CRANE COMPANY Condensed
Statements of Operations Data
(unaudited, in millions, except
per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net
sales:
Aerospace & Electronics
$
189.2
$
161.5
$
369.3
$
318.6
Process Flow Technologies
263.2
296.0
534.6
607.4
Engineered Materials
57.2
72.8
119.5
143.1
Total net sales
$
509.6
$
530.3
$
1,023.4
$
1,069.1
Operating profit
(loss):
Aerospace & Electronics
$
38.3
$
28.2
$
75.9
$
56.2
Process Flow Technologies
50.6
40.6
113.9
89.6
Engineered Materials
9.8
7.3
21.2
20.2
Corporate
(35.6
)
(32.4
)
(70.4
)
(59.5
)
Total operating profit
$
63.1
$
43.7
$
140.6
$
106.5
Interest income
$
0.8
$
0.6
$
1.7
$
0.9
Interest expense
(5.3
)
(0.8
)
(11.8
)
(1.4
)
Gain on sale of business
—
228.7
—
228.7
Miscellaneous (expense) income, net
(1.3
)
13.0
(1.9
)
16.1
Income from continuing operations before
income taxes
57.3
285.2
128.6
350.8
Provision for income taxes
14.0
78.6
29.4
98.1
Net income from continuing operations
attributable to common shareholders
43.3
206.6
99.2
252.7
Income from discontinued operations, net
of tax
2.3
51.6
52.1
110.5
Net income attributable to common
shareholders
$
45.6
$
258.2
$
151.3
$
363.2
Earnings per diluted share from continuing
operations
$
0.75
$
3.63
$
1.73
$
4.40
Earnings per diluted share from
discontinued operations
0.04
0.91
0.91
1.92
Earnings per diluted share
$
0.79
$
4.54
$
2.64
$
6.32
Average diluted shares outstanding
57.4
56.9
57.4
57.5
Average basic shares outstanding
56.7
56.1
56.6
56.7
Supplemental
data:
Cost of sales
$
308.5
$
352.8
$
615.4
$
699.9
Selling, general & administrative
138.0
133.8
267.4
262.7
Transaction related expenses (a)
19.2
19.6
32.2
25.6
Repositioning related charges, net (a)
1.7
1.3
1.9
3.1
Depreciation and amortization (a)
9.8
12.3
19.6
20.9
Stock-based compensation expense (a)
8.4
5.1
14.0
10.4
(a) Amounts included within Cost of sales
and/or Selling, general & administrative costs.
CRANE COMPANY Condensed
Balance Sheets
(unaudited, in millions)
June 30, 2023
December 31,
2022
Assets
Current assets
Cash and cash equivalents
$
218.9
$
427.0
Accounts receivable, net
299.7
269.7
Inventories, net
360.8
294.2
Other current assets
154.4
135.1
Current assets of discontinued
operations
—
625.9
Total current assets
1,033.8
1,751.9
Property, plant and equipment, net
254.2
248.3
Other assets
196.8
195.6
Goodwill
694.3
690.9
Long-term assets of discontinued
operations
—
1,504.9
Total assets
$
2,179.1
$
4,391.6
Liabilities and Equity
Current liabilities
Short-term borrowings
$
—
$
399.6
Accounts payable
158.8
179.2
Accrued liabilities
231.2
260.5
Income taxes
11.1
34.2
Current liabilities of discontinued
operations
—
614.7
Total current liabilities
401.1
1,488.2
Long-term debt
262.3
—
Long-term deferred tax liability
53.3
55.3
Other liabilities
224.8
217.2
Long-term liabilities of discontinued
operations
—
726.9
Total equity
1,237.6
1,904.0
Total liabilities and Equity
$
2,179.1
$
4,391.6
CRANE COMPANY Condensed
Statements of Cash Flows
(unaudited, in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Operating activities:
Net income
$
43.3
$
206.6
$
99.2
$
252.7
Gain on sale of business
—
(228.7
)
—
(228.7
)
Depreciation and amortization
9.8
12.3
19.6
20.9
Stock-based compensation expense
8.4
5.1
14.0
10.4
Defined benefit plans and postretirement
cost (credit)
1.9
(3.4
)
4.8
(5.5
)
Deferred income taxes
(5.3
)
36.5
(3.7
)
44.2
Cash used for operating working
capital
1.3
26.4
(183.3
)
(117.5
)
Defined benefit plans and postretirement
contributions
(5.4
)
(5.5
)
(5.7
)
(6.2
)
Environmental payments, net of
reimbursements
(0.6
)
(3.7
)
(1.9
)
(5.0
)
Asbestos related payments, net of
insurance recoveries
—
(15.9
)
—
(23.4
)
Other
(1.0
)
10.2
4.0
12.8
Total provided by (used for) operating
activities from continuing operations
52.4
39.9
(53.0
)
(45.3
)
Investing activities:
Capital expenditures, net
(12.1
)
(7.0
)
(20.8
)
(17.5
)
Proceeds from sale of business
—
314.3
—
314.3
Total (used for) provided by investing
activities from continuing operations
(12.1
)
307.3
(20.8
)
296.8
Financing activities:
Dividends paid
(10.2
)
(26.4
)
(36.8
)
(53.1
)
Reacquisition of shares on open market
—
(27.9
)
—
(203.7
)
Stock options exercised, net of shares
reacquired
0.8
1.1
13.7
1.8
Debt issuance costs
(3.4
)
—
(7.5
)
—
Net proceeds (repayments) from issuance of
commercial paper with maturities of 90 days or less
—
15.4
—
119.4
Proceeds from term loan
300.0
—
650.0
—
Repayment of term loan
(36.9
)
—
(436.9
)
—
Distribution of Crane NXT, Co.
(578.1
)
—
(578.1
)
—
Total used for financing activities from
continuing and discontinued operations
(327.8
)
(37.8
)
(395.6
)
(135.6
)
Discontinued operations:
Total provided by operating activities
—
64.4
34.6
94.3
Total used for investing activities
—
(5.1
)
(4.1
)
(7.6
)
Increase in cash and cash equivalents from
discontinued operations
—
59.3
30.5
86.7
Effect of exchange rate on cash and cash
equivalents
(3.8
)
(25.3
)
0.2
(30.6
)
(Decrease) increase in cash and cash
equivalents
(291.3
)
343.4
(438.7
)
172.0
Cash and cash equivalents at beginning of
period
510.2
307.2
657.6
478.6
Cash and cash equivalents at end of
period
218.9
650.6
218.9
650.6
Less: Cash and cash equivalents of
discontinued operations
—
128.5
—
128.5
Cash and cash equivalents of continuing
operations at end of period
$
218.9
$
522.1
$
218.9
$
522.1
CRANE COMPANY Order
Backlog
(unaudited, in millions)
June 30,
March 31,
December 31,
September 30,
June 30,
2023
2023
2022
2022
2022
Aerospace & Electronics
$
675.1
$
644.8
$
613.1
$
591.6
$
534.4
Process Flow Technologies
352.9
363.0
368.8
353.7
348.6
Engineered Materials
14.5
16.8
16.2
18.5
22.0
Total backlog
$
1,042.5
$
1,024.6
$
998.1
$
963.8
$
905.0
CRANE COMPANY Non-GAAP
Financial Measures
(unaudited, in millions, except
per share data)
Three Months Ended June
30,
2023
2022
% Change
$
Per Share
$
(on $)
Net sales (GAAP)
$
509.6
$
530.3
(4
)%
Adjusted Operating Profit and Adjusted
Operating Profit Margin
Operating profit (GAAP)
$
63.1
$
43.7
44
%
Operating profit margin (GAAP)
12.4
%
8.2
%
Special items impacting operating
profit:
Transaction related expenses(a)
19.2
19.6
Repositioning related charges, net
1.7
1.3
Adjusted operating profit (Non-GAAP)
$
84.0
$
64.6
30
%
Adjusted operating profit margin
(Non-GAAP)
16.5
%
12.2
%
Adjusted Net Income and Adjusted Net
Income per Share
Net income from continuing operations
attributable to common shareholders (GAAP)
$
43.3
$
0.75
Transaction related expenses(a)
19.2
0.33
Repositioning related charges, net
1.7
0.03
Impact of pension non-service costs
1.5
0.03
Tax effect of the Non-GAAP adjustments
(2.3
)
(0.04
)
Adjusted net income (Non-GAAP)
$
63.4
$
1.10
Adjusted EBITDA and Adjusted EBITDA
Margin
Net income (GAAP)
$
43.3
Net income margin (GAAP)
8.5
%
Adjustments to net income:
Interest expense, net
4.5
Income tax expense
14.0
Depreciation
8.0
Amortization
1.8
Miscellaneous expense, net
1.3
Repositioning related charges, net
1.7
Transaction related expenses(a)
19.2
Adjusted EBITDA (Non-GAAP)
$
93.8
Adjusted EBITDA Margin (Non-GAAP)
18.4
%
(a) Represents transaction‑related
expenses primarily associated with the separation.
CRANE COMPANY Non-GAAP
Financial Measures by Segment
(unaudited, in millions)
Three Months Ended June 30,
2023
Aerospace &
Electronics
Process Flow
Technologies
Engineered Materials
Corporate
Total Company
Net sales
$
189.2
$
263.2
$
57.2
$
—
$
509.6
Operating profit (GAAP)
$
38.3
$
50.6
$
9.8
$
(35.6
)
$
63.1
Operating profit margin (GAAP)
20.2
%
19.2
%
17.1
%
12.4
%
Special items impacting operating
profit:
Transaction related expenses(a)
—
—
—
19.2
19.2
Repositioning related charges, net
—
2.0
(0.3
)
—
1.7
Adjusted operating profit
$
38.3
$
52.6
$
9.5
$
(16.4
)
$
84.0
Adjusted operating profit margin
20.2
%
20.0
%
16.6
%
16.5
%
Three Months Ended June 30,
2022
Net sales
$
161.5
$
296.0
$
72.8
$
—
$
530.3
Operating profit (GAAP)
$
28.2
$
40.6
$
7.3
$
(32.4
)
$
43.7
Operating profit margin (GAAP)
17.5
%
13.7
%
10.0
%
8.2
%
Special items impacting operating
profit:
Transaction related expenses(a)
—
4.2
3.5
11.9
19.6
Repositioning related charges, net
—
1.3
—
—
1.3
Adjusted operating profit
$
28.2
$
46.1
$
10.8
$
(20.5
)
$
64.6
Adjusted operating profit margin
17.5
%
15.6
%
14.8
%
12.2
%
(a) Represents transaction‑related
expenses primarily associated with the separation.
Totals may not sum due to rounding
CRANE COMPANY Adjusted Free
Cash Flow
(unaudited, in millions, except
per share data)
Three Months Ended June
30,
Cash Flow Items
2023
Cash provided by operating activities from
continuing operations
$
52.4
Less: Capital expenditures
(12.1
)
Free cash flow
$
40.3
Adjustments:
Transaction-related expenses(a)
$
19.2
Adjusted free cash flow
$
59.5
(a) Represents transaction-related
expenses primarily associated with the separation.
Crane Company reports its financial results in accordance with
U.S. generally accepted accounting principles (“GAAP”). This press
release includes certain non-GAAP financial measures, including
adjusted operating profit, adjusted operating margin, adjusted EPS,
Free Cash Flow and Adjusted Free Cash Flow, that are not prepared
in accordance with GAAP. These non-GAAP measures are an addition,
and not a substitute for or superior to, measures of financial
performance prepared in accordance with GAAP and should not be
considered as an alternative to operating income, net income or any
other performance measures derived in accordance with GAAP. We
believe that these non-GAAP measures of financial results
(including on a forward-looking or projected basis) provide useful
supplemental information to investors about Crane Company. Our
management uses certain forward looking non-GAAP measures to
evaluate projected financial and operating results. However, there
are a number of limitations related to the use of these non-GAAP
measures and their nearest GAAP equivalents. For example, other
companies may calculate non-GAAP measures differently or may use
other measures to calculate their financial performance, and
therefore our non-GAAP measures may not be directly comparable to
similarly titled measures of other companies.
Reconciliations of certain forward-looking and projected
non-GAAP measures for post-separation Crane Company, including
Adjusted EPS, and Adjusted segment margin to the closest
corresponding GAAP measure are not available without unreasonable
efforts due to the high variability, complexity and low visibility
with respect to the charges excluded from these non-GAAP measures,
which could have a potentially significant impact on our future
GAAP results. For Crane Company, these forward looking and
projected non-GAAP measures are calculated as follows:
- "Adjusted operating margin" is calculated as adjusted operating
profit divided by sales. Adjusted operating profit is calculated as
operating profit before Special Items which include transaction
related expenses such as professional fees, and incremental costs
related to the separation; and repositioning related charges. We
believe that non-GAAP financial measures that exclude these items
provide investors with an alternative metric that can assist in
predicting future earnings and profitability that are complementary
to GAAP metrics.
- "Adjusted EPS" is calculated as adjusted net income divided by
diluted shares. Adjusted net income is calculated as net income
adjusted for Special Items which include transaction related
expenses such as professional fees, and incremental costs related
to the separation; repositioning related charges; and, the impact
of pension non-service costs. We believe that non-GAAP financial
measures adjusted for these items provide investors with an
alternative metric that can assist in predicting future earnings
and profitability that are complementary to GAAP metrics.
We believe that each of the following non-GAAP measures provides
useful information to investors regarding the Company’s financial
conditions and operations:
- "Adjusted Operating Profit" and "Adjusted Operating Margin" add
back to Operating Profit items which are outside of our core
performance, some of which may or may not be non-recurring, and
which we believe may complicate the interpretation of the Company’s
underlying earnings and operational performance. These items
include income and expense such as: transaction related expenses
and repositioning related (gains) charges. These items are not
incurred in all periods, the size of these items is difficult to
predict, and none of these items are indicative of the operations
of the underlying businesses. We believe that non-GAAP financial
measures that exclude these items provide investors with an
alternative metric that can assist in predicting future earnings
and profitability that are complementary to GAAP metrics.
- "Adjusted Net Income" and "Adjusted EPS" exclude items which
are outside of our core performance, some of which may or may not
be non-recurring, and which we believe may complicate the
presentation of the Company’s underlying earnings and operational
performance. These measures include income and expense items that
impacted Operating Profit such as: transaction related expenses and
repositioning related (gains) charges. Additionally, these non-GAAP
financial measures exclude income and expense items that impacted
Net Income and Earnings per Diluted Share such as: the impact of
pension non-service costs. These items are not incurred in all
periods, the size of these items is difficult to predict, and none
of these items are indicative of the operations of the underlying
businesses. We believe that non-GAAP financial measures that
exclude these items provide investors with an alternative metric
that can assist in predicting future earnings and profitability
that are complementary to GAAP metrics.
- "Adjusted EBITDA" adds back to net income: net interest
expense, income tax expense, depreciation and amortization,
miscellaneous expense, net, and Special Items including transaction
related expenses. "Adjusted EBITDA Margin" is calculated as
adjusted EBITDA divided by net sales. We believe that adjusted
EBITDA and adjusted EBITDA margin provide investors with an
alternative metric that may be a meaningful indicator of our
performance and provides useful information to investors regarding
our financial conditions and results of operations that is
complementary to GAAP metrics.
- “Free Cash Flow” and “Adjusted Free Cash Flow” provide
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. Free Cash Flow is calculated as cash
provided by operating activities less capital spending. Adjusted
Free Cash Flow is calculated as Free Cash Flow adjusted for certain
cash items which we believe may complicate the interpretation of
the Company’s underlying free cash flow performance such as certain
transaction related cash flow items related to the separation
transaction. These items are not incurred in all periods, the size
of these items is difficult to predict, and none of these items are
indicative of the operations of the underlying businesses. We
believe that non-GAAP financial measures that exclude these items
provide investors with an alternative metric that can assist in
predicting future cash flows that are complementary to GAAP
metrics.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725722261/en/
Jason D. Feldman Vice President, Treasury & Investor
Relations 203-363-7329 www.craneco.com
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