Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported that second quarter 2012 earnings per diluted share increased 26% to $1.07 compared to $0.85 in the second quarter of 2011. Second quarter 2012 results include a $0.31 per share gain associated with divestitures, partially offset by $0.20 per share of repositioning charges associated with productivity actions to improve the profitability of the Company in 2013. Excluding Special Items (divestiture gains and repositioning charges), second quarter 2012 earnings per diluted share increased 13% to $0.96 compared to $0.85 in the second quarter of 2011. (Please see the attached Non-GAAP Financial Measures table for pre-tax, after-tax and earnings per share amounts of Special Items.)
The Company expects to incur additional equipment relocation and personnel costs related to these repositioning actions of approximately $0.06 per share in the second half of 2012. The after-tax net gain from the second quarter divestitures is expected to exceed full year after-tax repositioning costs. Pre-tax savings associated with these actions are expected to approximate $12 million annually beginning in 2013.
Second quarter 2012 sales from continuing operations of $658 million increased $24 million, or 4%, compared to the second quarter of 2011, resulting from a core sales increase of $35 million (6%) and an increase in sales from acquired businesses of $7 million (1%), partially offset by unfavorable foreign currency translation of $18 million (-3%).
Second quarter 2012 operating profit from continuing operations on a GAAP basis (which includes $14.7 million of repositioning charges) decreased 12% to $69.4 million, compared to $78.9 million in the second quarter of 2011. Excluding repositioning charges, second quarter 2012 operating profit from continuing operations increased 7% to $84.1 million, and operating profit margin increased to 12.8%, compared to 12.5% in the second quarter of 2011. (Please see the attached Non-GAAP Financial Measures table.)
“The Company executed well in the second quarter, with continued operating improvement year over year as well as targeted actions to drive further improvements in 2013. Reflecting our confidence in the Company’s future, we are increasing the quarterly dividend by 8%,” said Crane Co. president and chief executive officer Eric C. Fast. “We have narrowed our EPS guidance range and reduced the midpoint by $0.05, reflecting two small divestitures in the second quarter. Our repositioning actions directly address costs in our European Fluid Handling businesses, strengthening our confidence for 2013.”
Divestitures
In June 2012, the Company divested two businesses, positively impacting second quarter 2012 EPS by $0.31. The associated gain of $18.3 million on an after-tax basis is included in the “Gain from Discontinued Operations” section on the accompanying income statement. The divested businesses had profit from operations in the second quarter of 2012 of $1.6 million on an after-tax basis, or $0.03 per share, which is included in the “Profit from Discontinued Operations” section on the accompanying income statement.
- Azonix Corporation was sold to Cooper Industries (NYSE: CBE) on June 19, 2012 for $43.4 million. Azonix designs and manufactures intrinsically safe computer devices for extreme environments and was formerly part of the Controls segment. In the first half of 2012, Azonix had sales and pre-tax profit from operations of $17.1 million and $2.5 million, respectively.
- Certain assets and operations of Crane’s valve service center in Houston, TX were sold to Furmanite Corporation (NYSE: FRM) on June 28, 2012 for $9.3 million. This service center, formerly part of the Fluid Handling segment, had sales and pre-tax profit from operations in the first half of 2012 of $8.4 million and $1.3 million, respectively.
Repositioning Actions
The Company recorded pre-tax repositioning charges of $14.7 million in the second quarter of 2012, or $11.9 million on an after-tax basis. Of these repositioning charges, $11.4 million (on a pre-tax basis) is associated with actions to improve Fluid Handling profitability. The charges, which negatively impacted second quarter 2012 EPS by $0.20, included severance and other costs related to the anticipated transfer of certain manufacturing operations from higher cost to lower cost Company facilities, and other staff reduction actions. The actions include an expected reduction of approximately 200 employees, or about 2% of Crane’s global workforce. Within the European portion of the Fluid Handling segment, the Company expects a reduction of approximately 150employees, or 7% of that workforce.
In addition to the amounts recorded in the second quarter, the Company expects to incur additional pre-tax charges related to these actions in the second half of 2012 of approximately $5 million, or $0.06 per share, associated with equipment relocation and personnel costs primarily in Fluid Handling. Pre-tax savings associated with all of these repositioning actions are expected to approximate $12 million annually for the Company beginning in 2013, of which $10 million relates to Fluid Handling.
Cash Flow and Financial Position
Cash provided by operating activities in the second quarter of 2012 was $58.9 million, compared to $31.4 million in the second quarter of 2011. Cash provided by operating activities in the first half of 2012 was $16.1 million, compared to $15.2 million in the first half of 2011. Free cash flow for the first half of 2012 was $2.3 million, compared to negative $3.1 million in the first half of 2011. (Please see the Condensed Statement of Cash Flows and Non-GAAP table.)
The Company repurchased 772,325 shares of its common stock during the second quarter of 2012 at a cost of $30 million, compared to 421,300 shares in the second quarter of 2011 for $20 million. The Company’s cash position was $252 million at June 30, 2012, as compared to $196 million at March 31, 2012 and $245 million at December 31, 2011.
Updated 2012 Guidance
Sales from continuing operations for 2012 are expected to increase 4-5% driven by a core sales increase of 6-7% and sales related to the WTA acquisition of less than 1%, partially offset by unfavorable foreign exchange of approximately 2% . The revised full year sales guidance reflects strong first half sales growth in Fluid Handling and Aerospace and a stable outlook for the second half. The updated 2012 earnings per share guidance range excluding Special Items is $3.75 - $3.85, a reduction of $0.05 to the midpoint of the previously communicated guidance range ($3.75 - $3.95), primarily reflecting the absence of second half earnings from the divestitures completed in the second quarter. The Company’s 2012 EPS guidance on a GAAP basis is $3.80 - $3.90. The Company reduced its 2012 free cash flow (cash provided by operating activities less capital spending) guidance to $150 - $180 million from $160 - $190 million, reflecting the divestitures and expected cash outflow related to the repositioning actions. The table below shows the original guidance provided in February 2012, the effects of the divestitures (now characterized as discontinued operations), other changes that are primarily related to end market conditions, and the revised guidance for 2012 (excluding repositioning charges).
2012 GUIDANCE UPDATE | ||||||||||||||||||||||||||||||
| 2011 | 2012 | |||||||||||||||||||||||||||||
| Continuing Operations | ||||||||||||||||||||||||||||||
| Excluding | Revised | |||||||||||||||||||||||||||||
| Special | Original | Discont'd | Other | Guidance | ||||||||||||||||||||||||||
| Sales | GAAP | Items* | Guidance | Operations | Changes | *** | ||||||||||||||||||||||||
| Aerospace & Electronics | $ | 678 | $ | 678 | $ | 700 | $ | - | $ | 10 | $ | 710 | ||||||||||||||||||
| Engineered Materials | 220 | 220 | 225 | - | (10 | ) | 215 | |||||||||||||||||||||||
| Merchandising Systems | 374 | 374 | 375 | - | - | 375 | ||||||||||||||||||||||||
| Fluid Handling | 1,140 | 1,140 | 1,220 | (17 | ) | ** | 17 | 1,220 | ||||||||||||||||||||||
| Controls | 88 | 88 | 130 | (35 | ) | ** | - | 95 | ||||||||||||||||||||||
| Total Crane | $ | 2,500 | $ | 2,500 | $ | 2,650 | $ | (52 | ) | $ | 17 | $ | 2,615 | |||||||||||||||||
Operating Profit | ||||||||||||||||||||||||||||||
| Aerospace & Electronics | $ | 146 | $ | 146 | $ | 155 | $ | - | $ | 3 | $ | 158 | ||||||||||||||||||
| Engineered Materials | 30 | 30 | 32 | - | (3 | ) | 29 | |||||||||||||||||||||||
| Merchandising Systems | 30 | 30 | 35 | - | 2 | 37 | ||||||||||||||||||||||||
| Fluid Handling | 150 | 150 | 175 | (3 | ) | ** | (7 | ) | 165 | |||||||||||||||||||||
| Controls | 11 | 11 | 16 | (5 | ) | ** | 3 | 14 | ||||||||||||||||||||||
| Corporate | (330 | ) | (58 | ) | (63 | ) | - | - | (63 | ) | ||||||||||||||||||||
| Total Crane | $ | 37 | $ | 309 | $ | 350 | $ | (8 | ) | $ | (2 | ) | $ | 340 | ||||||||||||||||
Operating Profit Margin | ||||||||||||||||||||||||||||||
| Aerospace & Electronics | 21.5 | % | 21.5 | % | 22.1 | % | 22.3 | % | ||||||||||||||||||||||
| Engineered Materials | 13.5 | % | 13.5 | % | 14.2 | % | 13.5 | % | ||||||||||||||||||||||
| Merchandising Systems | 8.1 | % | 8.1 | % | 9.3 | % | 9.9 | % | ||||||||||||||||||||||
| Fluid Handling | 13.1 | % | 13.1 | % | 14.3 | % | 13.5 | % | ||||||||||||||||||||||
| Controls | 12.7 | % | 12.7 | % | 12.3 | % | 14.9 | % | ||||||||||||||||||||||
| Total Crane | 1.5 | % | 12.3 | % | 13.2 | % | 13.0 | % | ||||||||||||||||||||||
| * Excludes an asbestos charge of $242 million and an environmental charge of $30 million. |
| ** The full year impact of the discontinued operations was calculated by annualizing the first half 2012 sales and operating profit of the two businesses divested in June 2012. |
| *** Excludes repositioning charges. |
Segment Results
All comparisons detailed in this section refer to continuing operations for the second quarter 2012 versus the second quarter 2011.
| Aerospace & Electronics | |||||||||||
| Second Quarter | Change | ||||||||||
| (dollars in millions) | 2012 | 2011 | |||||||||
| Sales | $178.6 | $171.5 | $7.1 | 4% | |||||||
| Operating Profit | $38.9 | $37.2 | $1.8 | 5% | |||||||
| Profit Margin | 21.8% | 21.7% | |||||||||
Second quarter 2012 sales increased $7.1 million, or 4%, reflecting a $6.8 million (7%) improvement in Aerospace Group sales and a slight increase of $0.3 million in Electronics Group revenue. The Aerospace Group sales increase reflected higher OEM and aftermarket shipments and an increase in both commercial and military sales. Segment operating profit of $38.9 million increased by $1.8 million, or 5%, reflecting the Aerospace sales growth, and operating margin improved slightly to 21.8%.
Aerospace & Electronics order backlog was $423 million at June 30, 2012, as compared to $438 million at March 31, 2012 and $411 million at December 31, 2011.
| Engineered Materials | |||||||||||
| Second Quarter | Change | ||||||||||
| (dollars in millions) | 2012 | 2011 | |||||||||
| Sales | $54.5 | $60.1 | ($5.6) | (9%) | |||||||
| Operating Profit | $5.5 | $9.1 | ($3.6) | (39%) | |||||||
| Operating Profit, before Special Items* | $6.6 | $9.1 | ($2.5) | (28%) | |||||||
| Profit Margin | 10.2% | 15.2% | |||||||||
| Profit Margin, before Special Items* | 12.1% | 15.2% | |||||||||
| * Repositioning charges primarily associated with the anticipated closure of a manufacturing facility. |
Segment sales of $54.5 million declined 9% compared to the second quarter of 2011, as a result of lower demand from transportation and, to a lesser extent, building products customers. Sales to recreational vehicle customers were approximately equal to the prior year. Operating profit before Special Items decreased 28%, primarily reflecting deleverage of the lower sales and higher raw material costs.
The Company’s repositioning actions include the anticipated closure of a small manufacturing facility in England, which had total sales of $8 million in 2011. The Company expects to supply selected European customers from plants located in the United States. Repositioning charges of $1.1 million on a pre-tax basis were recorded in the second quarter of 2012. In addition to the amounts recorded in the second quarter, the Company expects to incur additional pre-tax charges related to these actions in the second half of 2012 of approximately $2 million. Pre-tax savings associated with these actions are expected to approximate $1 million annually beginning in 2013.
| Merchandising Systems | |||||||||||
| Second Quarter | Change | ||||||||||
| (dollars in millions) | 2012 | 2011 | |||||||||
| Sales | $97.6 | $94.0 | $3.6 | 4% | |||||||
| Operating Profit | $9.1 | $7.1 | $2.0 | 28% | |||||||
| Operating Profit, before Special Items* | $11.4 | $7.1 | $4.3 | 60% | |||||||
| Profit Margin | 9.3% | 7.6% | |||||||||
| Profit Margin, before Special Items* | 11.7% | 7.6% | |||||||||
| * Repositioning charges associated with optimizing manufacturing operations and an anticipated facility sale. |
Merchandising Systems sales of $97.6 million increased $3.6 million, or 4%, reflecting higher sales in Vending and, to a lesser extent, Payment Solutions. Operating profit before Special Items increased $4.3 million, reflecting strong margin improvement in both Vending and Payment Solutions.
As part of the Company’s repositioning actions, management plans to consolidate the manufacturing of certain products and optimize engineering resources in the Payment Solutions portion of the segment. In addition, a charge was recorded in connection with the anticipated sale of a property in St. Louis, Missouri related to the previous plant consolidation in South Carolina. Repositioning charges of $2.3 million on a pre-tax basis were recorded in the second quarter of 2012. Pre-tax savings associated with these actions are expected to approximate $1 million annually beginning in 2013.
| Fluid Handling | |||||||||||
| Second Quarter | Change | ||||||||||
| (dollars in millions) | 2012 | 2011 | |||||||||
| Sales | $302.3 | $286.1 | $16.2 | 6% | |||||||
| Operating Profit | $26.8 | $36.9 | ($10.0) | (27%) | |||||||
| Operating Profit, before Special Items* | $38.2 | $36.9 | $1.3 | 4% | |||||||
| Profit Margin | 8.9% | 12.9% | |||||||||
| Profit Margin, before Special Items* | 12.6% | 12.9% | |||||||||
| * Repositioning charges primarily associated with transferring production to lower cost Company facilities. |
Second quarter 2012 sales increased $16 million, or 6%, including a core sales increase of $23 million (8%), $7 million from the acquisition of WTA (3%), and unfavorable foreign currency translation of $14 million (-5%). Before Special Items, operating profit increased to $38.2 million while operating margin declined slightly to 12.6%.
Backlog was $335 million at June 30, 2012, compared to $338 million at March 31, 2012 and $314 million at December 31, 2011. The decline in backlog from March 31, 2012 to June 30, 2012 was due to changes in foreign currency translation rates and the divestiture of the Houston valve service center, which together negatively impacted backlog by $9 million.
The Company’s repositioning actions are primarily focused on its European Fluid Handling operations, to reduce costs through headcount reductions and process improvements, principally at its Krombach operations in Kreuztal, Germany. In addition, as part of a continuing cost reduction strategy, certain manufacturing operations will be transferred from facilities in Germany to Company facilities in lower cost regions.
Repositioning charges of $11.4 million on a pre-tax basis were recorded in the second quarter of 2012. In addition to the amounts recorded in the second quarter, the Company expects to incur additional pre-tax charges related to these actions in the second half of 2012 of approximately $3 million. Pre-tax savings associated with these actions are expected to approximate $10 million annually beginning in 2013.
| Controls | |||||||||||
| Second Quarter | Change | ||||||||||
| (dollars in millions) | 2012 | 2011 | |||||||||
| Sales | $24.7 | $21.4 | $3.3 | 15% | |||||||
| Operating Profit | $3.8 | $2.7 | $1.1 | 40% | |||||||
Profit Margin | 15.3% | 12.7% | |||||||||
Second quarter 2012 sales of $24.7 million increased 15%, primarily reflecting continued improvement in industrial, transportation and upstream oil and gas related demand. Operating profit increased 40%, reflecting effective leverage of the higher sales volume.
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 second quarter financial results on Tuesday, July 24, 2012 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, 2011 and subsequent reports filed with the Securities and Exchange Commission.
CRANE CO. | |||||||||||||||||
| Income Statement Data | |||||||||||||||||
| (in thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Net Sales: | |||||||||||||||||
| Aerospace & Electronics | $ | 178,591 | $ | 171,538 | $ | 353,759 | $ | 333,474 | |||||||||
| Engineered Materials | 54,487 | 60,101 | 112,647 | 121,933 | |||||||||||||
| Merchandising Systems | 97,577 | 94,010 | 185,252 | 188,888 | |||||||||||||
| Fluid Handling | 302,318 | 286,141 | 600,537 | 546,811 | |||||||||||||
| Controls | 24,713 | 21,399 | 51,104 | 42,372 | |||||||||||||
| Total Net Sales | $ | 657,686 | $ | 633,189 | $ | 1,303,299 | $ | 1,233,478 | |||||||||
| Operating Profit (Loss) from Continuing Operations: | |||||||||||||||||
| Aerospace & Electronics | $ | 38,931 | $ | 37,157 | $ | 77,001 | $ | 71,199 | |||||||||
| Engineered Materials | 5,543 | 9,130 | 13,952 | 19,273 | |||||||||||||
| Merchandising Systems | 9,115 | 7,114 | 13,828 | 11,787 | |||||||||||||
| Fluid Handling | 26,836 | 36,856 | 66,028 | 71,605 | |||||||||||||
| Controls | 3,784 | 2,712 | 7,669 | 5,103 | |||||||||||||
| Corporate | (14,832 | ) | (14,118 | ) | (30,804 | ) | (28,680 | ) | |||||||||
| Total Operating Profit from Continuing Operations | 69,377 | 78,851 | 147,674 | 150,287 | |||||||||||||
| Interest Income | 454 | 389 | 849 | 679 | |||||||||||||
| Interest Expense | (6,785 | ) | (6,429 | ) | (13,496 | ) | (13,051 | ) | |||||||||
| Miscellaneous- Net | (351 | ) | (290 | ) | (698 | ) | 3,335 | * | |||||||||
| Income from Continuing Operations Before Income Taxes | 62,695 | 72,521 | 134,329 | 141,250 | |||||||||||||
| Provision for Income Taxes | 19,857 | 22,694 | 40,518 | 43,971 | |||||||||||||
| Income from Continuing Operations | 42,838 | 49,827 | 93,811 | 97,279 | |||||||||||||
| Profit from Discontinued Operations attributable to common shareholders | 2,513 | 1,092 | 3,777 | 2,516 | |||||||||||||
| Gain from Sales of Discontinued Operations attributable to common shareholders | 28,060 | - | 28,060 | - | |||||||||||||
| Profit from Discontinued Operations attributable to common shareholders, net of tax | 1,633 | 710 | 2,456 | 1,636 | |||||||||||||
| Gain from Sales of Discontinued Operations attributable to common shareholders, net of tax | 18,276 | - | 18,276 | - | |||||||||||||
| Gain / Profit from Discontinued Operations, net of tax | 19,909 | 710 | 20,732 | 1,636 | |||||||||||||
| Net income before allocation to noncontrolling interests | 62,747 | 50,537 | 114,543 | 98,915 | |||||||||||||
| Less: Noncontrolling interest in subsidiaries' earnings | 185 | 100 | 319 | 11 | |||||||||||||
| Net income attributable to common shareholders | $ | 62,562 | $ | 50,437 | $ | 114,224 | $ | 98,904 | |||||||||
| Share Data: | |||||||||||||||||
| Earnings per share from Continuing Operations | $ | 0.73 | $ | 0.84 | $ | 1.59 | $ | 1.64 | |||||||||
| Earnings per share from Discontinued Operations | 0.34 | 0.01 | 0.35 | 0.03 | |||||||||||||
| Earnings per Diluted Share (a) | $ | 1.07 | $ | 0.85 | $ | 1.95 | $ | 1.66 | |||||||||
| Average Diluted Shares Outstanding | 58,614 | 59,348 | 58,704 | 59,457 | |||||||||||||
| Average Basic Shares Outstanding | 57,762 | 58,173 | 57,787 | 58,259 | |||||||||||||
Supplemental Data: | |||||||||||||||||
| Cost of Sales | $ | 436,095 | $ | 415,985 | $ | 865,717 | $ | 806,764 | |||||||||
| Selling, General & Administrative | 137,467 | 138,353 | 275,161 | 276,427 | |||||||||||||
| Repositioning Charges | 14,747 | - | 14,747 | - | |||||||||||||
| Depreciation and Amortization ** | 15,274 | 15,853 | 29,948 | 31,627 | |||||||||||||
| Stock-Based Compensation Expense | 4,451 | 3,771 | 8,458 | 7,274 | |||||||||||||
| * 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. |
| (a) Earnings per share amounts may not add due to rounding |
| CRANE CO. | |||||||||
| Condensed Balance Sheets | |||||||||
| (in thousands) | |||||||||
June 30, | December 31, | ||||||||
| 2012 | 2011 | ||||||||
| ASSETS | |||||||||
| Current Assets | |||||||||
| Cash and Cash Equivalents | $ | 252,299 | $ | 245,089 | |||||
| Accounts Receivable, net | 416,116 | 349,250 | |||||||
| Current Insurance Receivable - Asbestos | 16,345 | 16,345 | |||||||
| Inventories, net | 363,933 | 360,689 | |||||||
| Other Current Assets | 65,358 | 60,859 | |||||||
| Total Current Assets | 1,114,051 | 1,032,232 | |||||||
| Property, Plant and Equipment, net | 273,640 | 284,146 | |||||||
| Long-Term Insurance Receivable - Asbestos | 202,107 | 208,952 | |||||||
| Other Assets | 465,560 | 497,377 | |||||||
| Goodwill | 806,170 | 820,824 | |||||||
| Total Assets | $ | 2,861,528 | $ | 2,843,531 | |||||
| LIABILITIES AND EQUITY | |||||||||
| Current Liabilities | |||||||||
| Notes Payable and Current Maturities of Long-Term Debt | $ | 1,102 | $ | 1,112 | |||||
| Accounts Payable | 180,809 | 194,158 | |||||||
| Current Asbestos Liability | 100,943 | 100,943 | |||||||
| Accrued Liabilities | 209,680 | 226,717 | |||||||
| Income Taxes | 27,407 | 10,165 | |||||||
| Total Current Liabilities | 519,941 | 533,095 | |||||||
| Long-Term Debt | 399,003 | 398,914 | |||||||
| Long-Term Deferred Tax Liability | 41,546 | 41,668 | |||||||
| Long-Term Asbestos Liability | 746,640 | 792,701 | |||||||
| Other Liabilities | 249,895 | 255,097 | |||||||
| Total Equity | 904,503 | 822,056 | |||||||
| Total Liabilities and Equity | $ | 2,861,528 | $ | 2,843,531 | |||||
| CRANE CO. | ||||||||||||||||
| Condensed Statements of Cash Flows | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating Activities: | ||||||||||||||||
| Net income attributable to common shareholders | $ | 62,562 | $ | 50,437 | $ | 114,224 | $ | 98,904 | ||||||||
| Noncontrolling interest in subsidiaries' earnings | 185 | 100 | 319 | 11 | ||||||||||||
| Net income before allocations to noncontrolling interests | 62,747 | 50,537 | 114,543 | 98,915 | ||||||||||||
| Gain on divestiture | (28,060 | ) | - | (28,060 | ) | (4,258 | ) | |||||||||
| Restructuring - Non Cash | 2,761 | 2,761 | ||||||||||||||
| Depreciation and amortization | 15,274 | 15,853 | 29,948 | 31,627 | ||||||||||||
| Stock-based compensation expense | 4,451 | 3,771 | 8,458 | 7,274 | ||||||||||||
| Defined benefit plans and postretirement expense | 4,982 | 843 | 9,973 | 3,592 | ||||||||||||
| Deferred income taxes | 7,199 | 6,627 | 15,743 | 13,520 | ||||||||||||
| Cash provided by (used for) operating working capital | 12,889 | (18,141 | ) | (90,614 | ) | (85,391 | ) | |||||||||
| Defined benefit plans and postretirement contributions | (1,638 | ) | (5,579 | ) | (2,821 | ) | (10,358 | ) | ||||||||
| Environmental payments, net of reimbursements | (4,724 | ) | (1,541 | ) | (7,303 | ) | (6,134 | ) | ||||||||
| Other | 4,010 | 1,895 | 2,691 | 2,037 | ||||||||||||
| Subtotal | 79,891 | 54,265 | 55,319 | 50,824 | ||||||||||||
| Asbestos related payments, net of insurance recoveries | (20,982 | ) | (22,896 | ) | (39,217 | ) | (35,621 | ) | ||||||||
| Total provided by operating activities | 58,909 | 31,369 | 16,102 | 15,203 | ||||||||||||
Investing Activities: | ||||||||||||||||
| Capital expenditures | (6,615 | ) | (10,144 | ) | (13,780 | ) | (18,282 | ) | ||||||||
| Proceeds from disposition of capital assets | 1,686 | (23 | ) | 1,858 | 4,530 | |||||||||||
| Payment for acquisition, net of cash acquired | - | - | - | - | ||||||||||||
| Proceeds from divestiture | 52,665 | - | 52,665 | 1,000 | ||||||||||||
| Total used for investing activities | 47,736 | (10,167 | ) | 40,743 | (12,752 | ) | ||||||||||
Financing Activities: | ||||||||||||||||
| Dividends paid | (14,985 | ) | (13,385 | ) | (30,075 | ) | (26,859 | ) | ||||||||
| Reacquisition of shares on open market | (29,991 | ) | (20,000 | ) | (29,991 | ) | (49,999 | ) | ||||||||
| Stock options exercised - net of shares reacquired | - | 4,472 | 8,426 | 17,024 | ||||||||||||
| Excess tax benefit from stock-based compensation | 331 | 1,407 | 3,278 | 5,359 | ||||||||||||
| Change in short-term debt | 318 | (454 | ) | - | (530 | ) | ||||||||||
| Total used for financing activities | (44,327 | ) | (27,960 | ) | (48,362 | ) | (55,005 | ) | ||||||||
Effect of exchange rate on cash and cash equivalents | (5,879 | ) | 4,961 | (1,273 | ) | 10,978 | ||||||||||
Increase (decrease) in cash and cash equivalents | 56,439 | (1,797 | ) | 7,210 | (41,576 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 195,860 | 233,162 | 245,089 | 272,941 | ||||||||||||
Cash and cash equivalents at end of period | $ | 252,299 | $ | 231,365 | $ | 252,299 | $ | 231,365 | ||||||||
| CRANE CO. | ||||||||||||||||
| Order Backlog | ||||||||||||||||
| (in thousands) | ||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
| 2012 | 2012 | 2011 | 2011 | 2011 | ||||||||||||
| Aerospace & Electronics | $ | 423,282 | $ | 437,822 | $ | 410,794 | $ | 409,284 | $ | 431,799 | ||||||
| Engineered Materials | 13,884 | 11,129 | 11,110 | 9,879 | 13,087 | |||||||||||
| Merchandising Systems | 23,587 | 30,033 | 15,212 | 20,929 | 26,898 | |||||||||||
| Fluid Handling | 334,696 | * | 337,538 | * | 313,715 | * | 328,757 | * | 323,045 | |||||||
| Controls | 16,187 | 29,770 | ** | 27,120 | ** | 32,145 | ** | 30,323 | ** | |||||||
| Total Backlog | $ | 811,636 | $ | 846,292 | $ | 777,951 | $ | 800,994 | $ | 825,152 | ||||||
| * Includes Order Backlog of $6.3 million at June 30, 2012, $7.5 million at March 31, 2012, $7.1 million at December 31, 2011 and $5.4 million at September 30, 2011 pertaining to the 2011 acquisition of WTA and $2.9 million at March 31, 2012, $1.9 million at December 31, 2011, September 30, 2011 and June 30, 2011 pertaining to a business divested in June 2012. |
** Includes Order Backlog of $11.3 million at March 31, 2012, $9.6 million at December 31, 2011, $11.8 million at September 30, 2011 and $12.4 million at June 30, 2011 pertaining to a business divested in June 2012. |
| CRANE CO. | ||||||||||||||||||||||
| Non-GAAP Financial Measures | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Percent Change | Percent Change | |||||||||||||||||||
| June 30, | June 30, | June 30, 2012 | June 30, 2012 | |||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | Three Months | Six Months | |||||||||||||||||
INCOME ITEMS | ||||||||||||||||||||||
| Net Sales | $ | 657,686 | $ | 633,189 | $ | 1,303,299 | $ | 1,233,478 | 3.9 | % | 5.7 | % | ||||||||||
| Operating Profit from Continuing Operations | 69,377 | 78,851 | 147,674 | 150,287 | -12.0 | % | -1.7 | % | ||||||||||||||
| Percentage of Sales | 10.5 | % | 12.5 | % | 11.3 | % | 12.2 | % | ||||||||||||||
Special Items impacting Operating Profit from Continuing Operations: | ||||||||||||||||||||||
| Repositioning Charges (a) | 14,747 | 14,747 | ||||||||||||||||||||
| Operating Profit from Continuing Operations before Special Items | $ | 84,124 | $ | 78,851 | $ | 162,422 | $ | 150,287 | 6.7 | % | 8.1 | % | ||||||||||
| Percentage of Sales | 12.8 | % | 12.5 | % | 12.5 | % | 12.2 | % | ||||||||||||||
| Net Income Attributable to Common Shareholders | $ | 62,562 | $ | 50,437 | $ | 114,224 | $ | 98,904 | ||||||||||||||
| Per Share | $ | 1.07 | $ | 0.85 | $ | 1.95 | $ | 1.66 | 25.6 | % | 17.0 | % | ||||||||||
Special Items impacting Net Income Attributable to Common Shareholders: | ||||||||||||||||||||||
| Repositioning Charges - Net of Tax (a) | 11,880 | 11,880 | ||||||||||||||||||||
| Per Share | $ | 0.20 | $ | 0.20 | ||||||||||||||||||
| Gain on Divestitures - Net of Tax (b) | (18,276 | ) | (18,276 | ) | ||||||||||||||||||
| Per Share | $ | (0.31 | ) | $ | (0.31 | ) | ||||||||||||||||
| Net Income Attributable To Common Shareholders Before Special Items | $ | 56,166 | $ | 50,437 | $ | 107,828 | $ | 98,904 | 11.4 | % | 9.0 | % | ||||||||||
| Per Basic Share | $ | 0.97 | $ | 0.87 | $ | 1.87 | $ | 1.70 | ||||||||||||||
| Per Diluted Share | $ | 0.96 | $ | 0.85 | $ | 1.84 | $ | 1.66 | 12.8 | % | 10.4 | % | ||||||||||
| (a) The Company incurred repositioning charges in the second quarter of 2012, associated with productivity actions. The charges included severance and impairment costs related to the shutdown of certain facilities, the transfer of certain manufacturing operations, and staff reduction actions. | |
| (b) In June 2012, the Company divested of a business within the Fluid Handling segment and a business within the Controls segment. The associated gains were included in the “Gain from Sale of Discontinued Operations attributable to common shareholders, net of tax" section on the accompanying Income Statement Data. | |
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
CASH FLOW ITEMS | ||||||||||||||||||
| Cash Provided from Operating Activities | ||||||||||||||||||
| before Asbestos - Related Payments | $ | 79,891 | $ | 54,265 | $ | 55,319 | $ | 50,824 | ||||||||||
| Asbestos Related Payments, Net of Insurance Recoveries | (20,982 | ) | (22,896 | ) | (39,217 | ) | (35,621 | ) | ||||||||||
| Cash Provided from Operating Activities | 58,909 | 31,369 | 16,102 | 15,203 | ||||||||||||||
| Less: Capital Expenditures | (6,615 | ) | (10,144 | ) | (13,780 | ) | (18,282 | ) | ||||||||||
| Free Cash Flow | $ | 52,294 | $ | 21,225 | $ | 2,322 | $ | (3,079 | ) | |||||||||
| 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. |
| 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. |
Contacts:
Richard E. Koch, 203-363-7352
Director, Investor
Relations and Corporate Communications
www.craneco.com
