Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported fourth quarter 2012 earnings from continuing operations of $0.79 per share, compared to a net loss of $2.18 per share in the fourth quarter of 2011. Fourth quarter 2012 results included after-tax charges of $4 million, or $0.07 per share, associated with previously announced repositioning actions, as well as transaction-related costs of $4 million, or $0.07 per share, related to the recently announced acquisition of MEI Conlux Holdings. Fourth quarter 2011 results included an after-tax asbestos provision of $157 million and an after-tax environmental provision of $20 million (totaling $3.05 per share). Excluding these Special Items, fourth quarter 2012 and 2011 earnings per diluted share from continuing operations were $0.92 and $0.86, respectively. The Company noted that adjusted fourth quarter 2012 earnings of $0.92 did not include a previously anticipated $0.05 per share benefit associated with the reinstatement of the R&D tax credit in the United States, as the legislation was not enacted until early January 2013. (Please see the attached Non-GAAP Financial Measures table for pretax, after-tax and earnings per share amounts of Special Items.)
Fourth quarter 2012 sales from continuing operations of $630 million increased $10 million, or 1.6%, compared to the fourth quarter of 2011, resulting entirely from core sales growth. Operating profit from continuing operations in the fourth quarter of 2012 was $76.2 million compared to an operating loss of $194.0 million in the fourth quarter of 2011. Excluding Special Items, fourth quarter 2012 operating profit from continuing operations increased 8.5% to $84.6 million compared to $78.0 million in the fourth quarter of 2011, and operating profit margin increased to 13.4%, compared to 12.6% in the fourth quarter of 2011. (Please see the attached Non-GAAP Financial Measures table.)
Full Year 2012 Results
Total sales from continuing operations in 2012 were $2.58 billion, an increase of 3.1% from $2.5 billion in 2011, resulting from a core sales increase of $105 million (4.2%) and an increase from acquisitions of $12 million (0.5%), partially offset by unfavorable foreign currency translation of $38 million (1.6%).
Operating profit from continuing operations for the full year 2012 was $310.4 million compared to $36.6 million in 2011. Excluding Special Items, 2012 operating profit from continuing operations increased 9% to $334.9 million, compared to $308.5 million in 2011, and operating profit margin increased to 13.0%, compared to 12.3% in 2011.
Full year 2012 earnings per diluted share were $3.72, compared to $0.44 per share in 2011. Excluding Special Items, 2012 earnings per diluted share increased 9% to $3.75, compared to $3.43 per share in 2011. Full year 2012 results did not include the previously anticipated $0.05 per share benefit associated with the reinstatement of the R&D tax credit (Please see the attached Non-GAAP Financial Measures table.) Order backlog was $749 million at December 31, 2012 compared to $778 million at December 31, 2011.
“We are pleased to report record full year EPS of $3.75, excluding Special Items, which is in line with our most recent guidance,” said Crane Co. chief executive officer, Eric C. Fast. “Our adjusted, full year operating margin was 13%, a substantial improvement over 12.3% in 2011. In 2013, we are expecting our third consecutive year of record earnings, with continued operating margin expansion and strong free cash flow. Our 2013 forecast does not include the recently announced acquisition of MEI which, in combination with Crane Payment Solutions, establishes a third large growth platform for Crane.”
Cash Flow and Financial Position
Cash provided by operating activities in the fourth quarter of 2012 was $155.5 million, compared to $84.8 million in the fourth quarter of 2011, including the effect of a $30 million discretionary pension contribution made in December 2011. Free cash flow (cash provided by operating activities less capital spending) for the fourth quarter of 2012 was $146.1 million, compared to $77.8 million in the fourth quarter of 2011. For the full year 2012, cash provided by operating activities was $234.8 million compared to $149.8 million in 2011. Free cash flow for the full year 2012 was $205.4 million, compared to $115.1 million in the prior year. The Company repurchased 1,271,592 shares of its common stock during 2012 at a cost of $50 million. The Company’s cash position was $424 million at December 31, 2012, as compared to $245 million at December 31, 2011. (Please see the Condensed Statement of Cash Flows and Non-GAAP table.)
Repositioning Actions
In the second quarter of 2012, the Company initiated repositioning actions relating to the transfer of certain manufacturing operations from higher cost to lower cost Company facilities, principally in response to weak European economic conditions. Following aggregate pre-tax charges of $16.1 million through the third quarter, as planned, the Company incurred additional pre-tax costs of $4.5 million, or $0.07 per share, during the fourth quarter (total pre-tax charges of $20.6 million, or $0.29 per share, during 2012). These repositioning actions, which are substantially complete, are expected to generate $12 million in savings in 2013, of which $10 million relates to Fluid Handling.
Segment Results
All comparisons detailed in this section refer to continuing operations for the fourth quarter 2012 versus the fourth quarter 2011. The commentary refers to the results before Special Items.
Aerospace & Electronics
| Fourth Quarter | Change | |||||||||||
| (dollars in millions) | 2012 | 2011 | ||||||||||
| Sales | $176.1 | $172.0 | $4.1 | 2% | ||||||||
| Operating Profit | $39.2 | $38.8 | $0.4 | 1% | ||||||||
| Profit Margin | 22.3% | 22.6% | ||||||||||
Fourth quarter 2012 sales increased $4.1 million, or 2%, reflecting a $3.1 million increase (3%) in Aerospace Group sales and an increase of $1.0 million (2%) in Electronics Group revenue. The Aerospace sales growth reflected higher OEM and aftermarket activity. Segment operating profit increased by 1% and margins remained strong at 22.3%, driven by the impact of the higher sales and lower engineering expense in the Aerospace Group, partially offset by lower profits in the Electronics Group.
Aerospace & Electronics order backlog was $378 million at December 31, 2012 compared to $393 million at September 30, 2012 and $411 million at December 31, 2011.
Engineered Materials
| Fourth Quarter | Change | |||||||||||
| (dollars in millions) | 2012 | 2011 | ||||||||||
| Sales | $46.9 | $45.0 | $1.9 | 4% | ||||||||
| Operating Profit | $3.3 | $4.6 | ($1.2) | -27% | ||||||||
| Operating Profit, before Special Items* | $4.7 | $4.6 | $0.1 | 2% | ||||||||
| Profit Margin | 7.1% | 10.1% | ||||||||||
| Profit Margin, before Special Items | 10.0% | 10.1% | ||||||||||
* Excludes $1.3 million of repositioning charges in Q4 '12 related to the closure of a manufacturing facility.
Segment sales of $46.9 million were 4% higher than the fourth quarter of 2011, reflecting higher sales to recreational vehicle manufacturers. Operating profit increased 2% and margins were generally flat, reflecting the impact of the higher sales, offset by higher raw material costs.
Merchandising Systems
| Fourth Quarter | Change | |||||||||||
| (dollars in millions) | 2012 | 2011 | ||||||||||
| Sales | $94.2 | $86.2 | $8.0 | 9% | ||||||||
| Operating Profit | $10.4 | $7.7 | $2.7 | 36% | ||||||||
| Operating Profit, before Special Items* | $11.8 | $7.7 | $4.1 | 53% | ||||||||
| Profit Margin | 11.1% | 8.9% | ||||||||||
| Profit Margin, before Special Items | 12.6% | 8.9% | ||||||||||
* Excludes $1.4 million of repositioning charges in Q4 '12 related to facility exit costs.
Merchandising Systems sales of $94.2 million increased $8.0 million, or 9%, reflecting strong sales growth in both Payment Solutions and Vending Solutions. Operating profit and margins increased, reflecting the impact of the higher sales and productivity gains in both businesses.
Fluid Handling
| Fourth Quarter | Change | |||||||||||
| (dollars in millions) | 2012 | 2011 | ||||||||||
| Sales | $291.9 | $294.4 | ($2.5) | -1% | ||||||||
| Operating Profit | $39.2 | $38.3 | $0.9 | 2% | ||||||||
| Operating Profit, before Special Items* | $40.6 | $38.3 | $2.3 | 6% | ||||||||
| Profit Margin | 13.4% | 13.0% | ||||||||||
| Profit Margin, before Special Items | 13.9% | 13.0% | ||||||||||
* Excludes $1.4 million of repositioning charges in Q4 '12 related to transferring production to lower cost Company facilities.
Fourth quarter 2012 sales declined $2.5 million, or 1%, driven primarily by weaker European end markets. Segment operating margin improved to 13.9%, reflecting improved execution, productivity gains and solid cost management. Fluid Handling order backlog was $327 million at December 31, 2012, compared to $331 million at September 30, 2012 and $314 million at December 31, 2011.
Controls
| Fourth Quarter | Change | |||||||||||
| (dollars in millions) | 2012 | 2011 | ||||||||||
| Sales | $20.8 | $22.2 | ($1.4) | -6% | ||||||||
| Operating Profit | $2.3 | $2.3 | ($0.0) | -2% | ||||||||
| Profit Margin | 11.1% | 10.5% | ||||||||||
Fourth quarter 2012 sales of $20.8 million decreased 6% compared to the fourth quarter of 2011, reflecting slightly weaker industrial demand. Operating profit was flat, as deleverage on the lower sales was offset by productivity gains.
Updated 2013 Guidance
The Company revised its preliminary 2013 guidance which was provided on December 20, 2012. The updated guidance reflects lower pension expense associated with the curtailment of the Company’s U.S. defined benefit pension plan, as well as a slightly reduced outlook for 2013 core sales growth of between 1% and 3% (excluding acquisition and foreign exchange impacts). Earnings per share in 2013 are now estimated to be in a range of $4.10 to $4.30, representing an increase of 11%-16% over 2012 earnings per diluted share of $3.70 (before Special Items and on a continuing operations basis, which excludes profits from discontinued operations of $0.05 per share in 2012). The 2013 guidance does not include potential impacts from the pending acquisition of MEI. Excluding inventory step-up and one-time transaction and integration costs, the Company expects MEI to be accretive to earnings within the first year of acquisition by approximately $.25 per share, including $.05 in synergies. The Company expects 2013 free cash flow (cash provided by operating activities less capital spending) to be in the range of $190 - $220 million, including the effect of asbestos related cash flows.
Segment-specific sales and operating profit guidance will be provided at the Company’s Investor Day conference on February 27, 2013.
Please see 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 fourth quarter financial results on Tuesday, January 29, 2013 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. Investor Day
The Company will hold its annual Investor Day conference on Wednesday, February 27, in New York City from 8:30 am to noon and will be available on the web at www.craneco.com.
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 | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net Sales: | ||||||||||||||||
| Aerospace & Electronics | $ | 176,081 | $ | 171,973 | $ | 701,208 | $ | 677,663 | ||||||||
| Engineered Materials | 46,900 | 45,037 | 216,503 | 220,071 | ||||||||||||
| Merchandising Systems | 94,160 | 86,204 | 371,901 | 373,907 | ||||||||||||
| Fluid Handling | 291,884 | 294,386 | 1,195,501 | 1,140,315 | ||||||||||||
| Controls | 20,763 | 22,204 | 93,955 | 88,413 | ||||||||||||
| Total Net Sales | $ | 629,788 | $ | 619,804 | $ | 2,579,068 | $ | 2,500,369 | ||||||||
| Operating Profit (Loss) from Continuing Operations: | ||||||||||||||||
| Aerospace & Electronics | $ | 39,181 | $ | 38,785 | $ | 156,015 | $ | 145,624 | ||||||||
| Engineered Materials | 3,344 | 4,562 | 24,522 | 29,754 | ||||||||||||
| Merchandising Systems | 10,447 | 7,705 | 33,771 | 30,337 | ||||||||||||
| Fluid Handling | 39,247 | 38,329 | 148,167 | 149,803 | ||||||||||||
| Controls | 2,300 | 2,336 | 12,813 | 11,228 | ||||||||||||
| Corporate | (18,336 | ) | (13,748 | ) | (64,847 | ) | (58,201 | ) | ||||||||
| Asbestos Provision | - | (241,647 | ) | - | (241,647 | ) | ||||||||||
| Environmental Provision | - | (30,327 | ) | - | (30,327 | ) | ||||||||||
| Total Operating Profit (Loss) from Continuing Operations | 76,183 | (194,005 | ) | 310,441 | 36,571 | |||||||||||
| Interest Income | 587 | 514 | 1,879 | 1,635 | ||||||||||||
| Interest Expense | (6,717 | ) | (6,730 | ) | (26,831 | ) | (26,255 | ) | ||||||||
Miscellaneous - Net | (180 | ) | (452 | ) | (884 | ) | 2,810* | |||||||||
| Income (Loss) from Continuing Operations Before Income Taxes | 69,873 | (200,673 | ) | 284,605 | 14,761 | |||||||||||
| Provision for Income Taxes | 23,901 | (74,991 | ) | 88,416 | (8,055 | ) | ||||||||||
| Income (Loss) from Continuing Operations | 45,972 | (125,682 | ) | 196,189 | 22,816 | |||||||||||
| Profit from Discontinued Operations attributable to common shareholders (a) | - | 1,350 | 3,777 | 5,693 | ||||||||||||
| Gain from Sales of Discontinued Operations attributable to common shareholders (b) | - | - | 29,445 | - | ||||||||||||
| Profit from Discontinued Operations attributable to common shareholders, net of tax (a) | - | 878 | 2,456 | 3,700 | ||||||||||||
| Gain from Sales of Discontinued Operations attributable to common shareholders, net of tax (b) | - | - | 19,176 | - | ||||||||||||
| Gain / Profit from Discontinued Operations, net of tax | - | 878 | 21,632 | 3,700 | ||||||||||||
| Net income (loss) before allocation to noncontrolling interests | 45,971 | (124,805 | ) | 217,821 | 26,516 | |||||||||||
| Less: Noncontrolling interest in subsidiaries' earnings | 327 | 324 | 828 | 201 | ||||||||||||
| Net income (loss) attributable to common shareholders | $ | 45,644 | $ | (125,129 | ) | $ | 216,993 | $ | 26,315 | |||||||
| Share Data: | ||||||||||||||||
| Earnings (Loss) per share from Continuing Operations | $ | 0.79 | $ | (2.18 | ) | $ | 3.35 | $ | 0.38 | |||||||
| Earnings per share from Discontinued Operations | - | 0.02 | 0.37 | 0.06 | ||||||||||||
| Earnings (Loss) per Diluted Share | $ | 0.79 | $ | (2.16 | ) | $ | 3.72 | $ | 0.44 | |||||||
| Average Diluted Shares Outstanding | 57,783 | 57,903 | 58,293 | 59,204 | ||||||||||||
| Average Basic Shares Outstanding | 57,008 | 57,903 | 57,443 | 58,120 | ||||||||||||
Supplemental Data: | ||||||||||||||||
| Cost of Sales | $ | 417,569 | $ | 417,950 | $ | 1,708,240 | $ | 1,653,238 | ||||||||
| Asbestos Provision | 241,647 | 241,647 | ||||||||||||||
| Environmental Provision | 30,327 | 30,327 | ||||||||||||||
| Selling, General & Administrative | 131,505 | 123,885 | 539,755 | 538,586 | ||||||||||||
| Repositioning Charges | 4,531 | - | 20,632 | - | ||||||||||||
| Depreciation and Amortization ** | 14,141 | 15,735 | 57,263 | 62,943 | ||||||||||||
| Stock-Based Compensation Expense | 4,459 | 3,840 | 17,319 | 14,972 | ||||||||||||
| * 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) Amounts represent the operating profit, and after-tax profit, from the Houston Service Center and Azonix Corporation businesses divested in June 2012. |
| (b) Amounts represent the pre-tax and after-tax gains from the June 2012 sales of both the Houston Service Center and the Azonix Corporation. |
CRANE CO. | ||||||
Condensed Balance Sheets | ||||||
(in thousands) | ||||||
| December 31, | December 31, | |||||
| 2012 | 2011 | |||||
ASSETS | ||||||
| Current Assets | ||||||
| Cash and Cash Equivalents | $ | 423,947 | $ | 245,089 | ||
| Accounts Receivable, net | 333,330 | 349,250 | ||||
| Current Insurance Receivable - Asbestos | 33,722 | 16,345 | ||||
| Inventories, net | 352,725 | 360,689 | ||||
| Other Current Assets | 36,797 | 60,859 | ||||
Total Current Assets | 1,180,521 | 1,032,232 | ||||
| Property, Plant and Equipment, net | 268,283 | 284,146 | ||||
| Long-Term Insurance Receivable - Asbestos | 171,752 | 208,952 | ||||
| Other Assets | 455,530 | 497,377 | ||||
| Goodwill | 813,792 | 820,824 | ||||
| Total Assets | $ | 2,889,878 | $ | 2,843,531 | ||
LIABILITIES AND EQUITY | ||||||
| Current Liabilities | ||||||
| Notes Payable and Current Maturities of Long-Term Debt | $ | 1,123 | $ | 1,112 | ||
| Accounts Payable | 182,731 | 194,158 | ||||
| Current Asbestos Liability | 91,670 | 100,943 | ||||
| Accrued Liabilities | 220,678 | 226,717 | ||||
| Income Taxes | 15,686 | 10,165 | ||||
Total Current Liabilities | 511,888 | 533,095 | ||||
| Long-Term Debt | 399,092 | 398,914 | ||||
| Long-Term Deferred Tax Liability | 36,853 | 41,668 | ||||
| Long-Term Asbestos Liability | 704,195 | 792,701 | ||||
| Other Liabilities | 310,474 | 255,097 | ||||
| Total Equity | 927,376 | 822,056 | ||||
| Total Liabilities and Equity | $ | 2,889,878 | $ | 2,843,531 | ||
CRANE CO. | ||||||||||||||||
Condensed Statements of Cash Flows | ||||||||||||||||
(in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating Activities: | ||||||||||||||||
| Net income attributable to common shareholders | $ | 45,644 | $ | (125,129 | ) | $ | 216,993 | $ | 26,315 | |||||||
| Noncontrolling interest in subsidiaries' earnings | 327 | 324 | 828 | 201 | ||||||||||||
| Net income before allocations to noncontrolling interests | 45,971 | (124,805 | ) | 217,821 | 26,516 | |||||||||||
| Asbestos Provision | - | 241,647 | - | 241,647 | ||||||||||||
| Environmental charge | - | 30,327 | - | 30,327 | ||||||||||||
| Gain on divestiture | - | - | (29,445 | ) | (4,258 | ) | ||||||||||
| Restructuring - Non Cash | 1,078 | - | 3,855 | - | ||||||||||||
| Depreciation and amortization | 14,141 | 15,735 | 57,263 | 62,943 | ||||||||||||
| Stock-based compensation expense | 4,459 | 3,840 | 17,319 | 14,972 | ||||||||||||
| Defined benefit plans and postretirement expense | 5,321 | 1,959 | 20,090 | 6,770 | ||||||||||||
| Deferred income taxes | 30,583 | (66,574 | ) | 55,000 | (43,923 | ) | ||||||||||
| Cash provided by (used for) operating working capital | 81,146 | 34,957 | 1,824 | (41,955 | ) | |||||||||||
| Defined benefit plans and postretirement contributions | (1,041 | ) | (31,059 | ) | * | (5,504 | ) | (48,113 | ) | |||||||
| Environmental payments, net of reimbursements | (2,115 | ) | (799 | ) | (13,371 | ) | (9,534 | ) | ||||||||
| Other | (6,134 | ) | (366 | ) | (12,139 | ) | (6,303 | ) | ||||||||
| Subtotal | 173,409 | 104,862 | 312,713 | 229,089 | ||||||||||||
| Asbestos related payments, net of insurance recoveries | (17,906 | ) | (20,044 | ) | (77,957 | ) | (79,277 | ) | ||||||||
| Total provided by operating activities | 155,503 | 84,818 | 234,756 | 149,812 | ||||||||||||
Investing Activities: | ||||||||||||||||
| Capital expenditures | (9,364 | ) | (7,034 | ) | (29,308 | ) | (34,737 | ) | ||||||||
| Proceeds from disposition of capital assets | 4,184 | 73 | 6,438 | 4,793 | ||||||||||||
| Payment for acquisition, net of cash acquired | - | (996 | ) | - | (36,590 | ) | ||||||||||
| Proceeds from divestiture | 480 | - | 54,079 | 1,000 | ||||||||||||
| Total provided by (used for) investing activities | (4,700 | ) | (7,957 | ) | 31,209 | (65,534 | ) | |||||||||
Financing Activities: | ||||||||||||||||
| Dividends paid | (15,976 | ) | (15,035 | ) | (61,974 | ) | (56,992 | ) | ||||||||
| Reacquisition of shares on open market | - | (30,000 | ) | (49,991 | ) | (79,999 | ) | |||||||||
| Stock options exercised - net of shares reacquired | 4,630 | 3,295 | 13,056 | 23,232 | ||||||||||||
| Excess tax benefit from stock-based compensation | 370 | 391 | 3,603 | 6,097 | ||||||||||||
| Change in short-term debt | - | 333 | - | (1,003 | ) | |||||||||||
| Total used for financing activities | (10,976 | ) | (41,016 | ) | (95,306 | ) | (108,665 | ) | ||||||||
Effect of exchange rate on cash and cash equivalents | 3,584 | (1,939 | ) | 8,199 | (3,465 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | 143,411 | 33,906 | 178,858 | (27,852 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 280,536 | 211,183 | 245,089 | 272,941 | ||||||||||||
Cash and cash equivalents at end of period | $ | 423,947 | $ | 245,089 | $ | 423,947 | $ | 245,089 | ||||||||
* Includes a $30 million discretionary pension contribution. | ||||||||||||||||
| CRANE CO. | ||||||||||||||||
| Order Backlog | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
| 2012 | 2012 | 2012 | 2012 | 2011 | ||||||||||||
| Aerospace & Electronics | $ | 378,152 | $ | 392,862 | $ | 423,282 | $ | 437,822 | $ | 410,794 | ||||||
| Engineered Materials | 12,689 | 11,357 | 13,884 | 11,129 | 11,110 | |||||||||||
| Merchandising Systems | 14,686 | 19,957 | 23,587 | 30,033 | 15,212 | |||||||||||
| Fluid Handling | 326,863 | 330,824 | 334,696 | 337,538 | * | 313,715 | * | |||||||||
| Controls | 16,507 | 17,296 | 16,187 | 29,770 | ** | 27,120 | ** | |||||||||
| Total Backlog | $ | 748,897 | $ | 772,296 | $ | 811,636 | $ | 846,292 | $ | 777,951 | ||||||
| * Includes Order Backlog of $2.9 million at March 31, 2012 and $1.9 million at December 31, 2011 pertaining to a business divested in June 2012. |
** Includes Order Backlog of $11.3 million at March 31, 2012 and $9.6 million at December 31, 2011 pertaining to a business divested in June 2012. |
| CRANE CO. | ||||||||||||||||||||||
| Non-GAAP Financial Measures | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | Percent Change | Percent Change | |||||||||||||||||||
| December 31, | December 31, | December 31, 2012 | December 31, 2012 | |||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | Three Months | Twelve Months | |||||||||||||||||
INCOME ITEMS | ||||||||||||||||||||||
| Net Sales | $ | 629,788 | $ | 619,804 | $ | 2,579,068 | $ | 2,500,369 | 1.6 | % | 3.1 | % | ||||||||||
| Operating Profit (Loss) from Continuing Operations | 76,183 | (194,005 | ) | 310,441 | 36,571 | N/A | 748.9 | % | ||||||||||||||
| Percentage of Sales | 12.1 | % | -31.3 | % | 12.0 | % | 1.5 | % | ||||||||||||||
Special Items impacting Operating Profit (Loss) from Continuing Operations: | ||||||||||||||||||||||
| Repositioning Charges (a) | 4,531 | 20,632 | ||||||||||||||||||||
| Asbestos Provision - Pre-Tax (b) | 241,647 | 241,647 | ||||||||||||||||||||
| Environmental Provision - Pre-Tax (c) | 30,327 | 30,327 | ||||||||||||||||||||
| Non-deductible Acquisition Transaction Costs (d) | 3,874 | 3,874 | ||||||||||||||||||||
| Operating Profit from Continuing Operations before Special Items | $ | 84,588 | $ | 77,969 | $ | 334,947 | $ | 308,545 | 8.5 | % | 8.6 | % | ||||||||||
| Percentage of Sales | 13.4 | % | 12.6 | % | 13.0 | % | 12.3 | % | ||||||||||||||
| Net Income (Loss) Attributable to Common Shareholders | $ | 45,644 | $ | (125,129 | ) | $ | 216,993 | $ | 26,315 | |||||||||||||
| Per Diluted Share | $ | 0.79 | $ | (2.16 | ) | $ | 3.72 | $ | 0.44 | N/A | 737.5 | % | ||||||||||
Special Items impacting Net Income (Loss) Attributable to Common Shareholders: | ||||||||||||||||||||||
| Repositioning Charges - Net of Tax (a) | 3,896 | 16,724 | ||||||||||||||||||||
| Per Share | $ | 0.07 | $ | 0.29 | ||||||||||||||||||
| Asbestos Provision - Net of Tax (b) | 157,071 | 157,071 | ||||||||||||||||||||
| Per Share | $ | 2.71 | $ | 2.65 | ||||||||||||||||||
Environmental Provision - Net of Tax (c) | 19,713 | 19,713 | ||||||||||||||||||||
| Per Share | $ | 0.34 | 0.33 | |||||||||||||||||||
| Non-deductible Acquisition Transaction Costs (d) | 3,874 | 3,874 | ||||||||||||||||||||
| Per Share | $ | 0.07 | $ | 0.07 | ||||||||||||||||||
| Gain on Divestitures - Net of Tax (e) | (19,176 | ) | ||||||||||||||||||||
| Per Share | $ | (0.33 | ) | |||||||||||||||||||
| Net Income Attributable To Common Shareholders Before Special Items | $ | 53,414 | $ | 51,654 | $ | 218,416 | $ | 203,098 | 3.4 | % | 7.5 | % | ||||||||||
| Per Diluted Share | $ | 0.92 | $ | 0.88 | $ | 3.75 | $ | 3.43 | 5.3 | % | 9.2 | % | ||||||||||
| Profit from Discontinued Operations attributable to common shareholders, net of tax (f) | - | (878 | ) | (2,456 | ) | (3,700 | ) | |||||||||||||||
| Per Share | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.06 | ) | |||||||||||||
| Net Income Attributable To Common Shareholders Before Special Items from Continuing Operations | $ | 53,414 | $ | 50,776 | $ | 215,960 | $ | 199,398 | ||||||||||||||
| Per Diluted Share | $ | 0.92 | $ | 0.86 | $ | 3.70 | $ | 3.37 | 7.1 | % | 10.0 | % | ||||||||||
| In the three months ended December 31, 2011, Average Shares Outstanding excluding the effect of diluted stock options were used to compute the per share amounts since this period was in a loss position. Had Net Income Attributable To Common Shareholders been reported for this period, Average Shares Outstanding would have included the effect of diluted stock options when computing per share amounts (see chart below). |
| Average Basic Shares Outstanding | 57,903 | ||||
| Effect of Diluted Stock Options | 915 | ||||
| Average Shares Outstanding including the effect of Stock Options | 58,818 | ||||
| (a) The Company incurred repositioning charges in the second quarter, third quarter and fourth 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, staff reduction actions and a pension curtailment charge. |
| (b) During the three months ended December 31, 2011, the Company recorded an Asbestos Provision. |
| (c) During the three months ended December 31, 2011, the Company recorded a charge related to an increase in the Company's expected liability at its Goodyear, AZ Superfund Site. |
| (d) During the three months ended December 31, 2012, the Company recorded non-deductible transaction costs associated with the potential acquisition of MEI. |
| (e) In June 2012, the Company divested of a business within the Fluid Handling segment (Houston Service Center) and a business within the Controls segment (Azonix Corporation). 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. In September 2012, the Company recorded a favorable price adjustment associated with the Azonix Corporation divestiture. |
| (f) Amounts represent the after-tax profit from the Houston Service Center and Azonix Corporation businesses divested in June 2012. |
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
CASH FLOW ITEMS | |||||||||||||||||
Cash Provided from Operating Activities before Asbestos - Related Payments | $ | 173,409 | $ | 104,862 | $ | 312,713 | $ | 229,089 | |||||||||
| Asbestos Related Payments, Net of Insurance Recoveries | (17,906 | ) | (20,044 | ) | (77,957 | ) | (79,277 | ) | |||||||||
| Cash Provided from Operating Activities | 155,503 | 84,818 | 234,756 | 149,812 | |||||||||||||
| Less: Capital Expenditures | (9,364 | ) | (7,034 | ) | (29,308 | ) | (34,737 | ) | |||||||||
| Free Cash Flow | $ | 146,139 | $ | 77,784 | $ | 205,448 | $ | 115,075 | |||||||||
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
