December 05, 2020

ALMU | Total webinar – Reduce power costs | Leaderboard | 600×75

Crane Co. Reports Third Quarter 2020 Results

Highlights from Third Quarter 2020 Results: GAAP earnings per diluted share (EPS) of $0.97 compared to $1.19 in the third quarter of 2019. Excluding Special Items, EPS of $1.05 compared to $1.40 in the third quarter of 2019. Raising and narrowing 2020 GAAP EPS guidance range to $3.10-$3.35 from the prior range of $2.65-$3.45. Excluding Special Items, raising and narrowing 2020 EPS guidance range to $3.75-$4.00 from the prior range of $3.30-$4.10. Raising and narrowing 2020 free cash flow guidance range to $230-$260 million from the prior range of $200-$250 million (cash provided by operating activities less capital spending). STAMFORD, Conn.--(BUSINESS WIRE)--Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported third quarter 2020 GAAP earnings per diluted share (EPS) of $0.97, compared to $1.19 in the third quarter of 2019. Excluding Special Items, third quarter 2020 EPS was $1.05, compared to $1.40 in the third quarter of 2019. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.) Third quarter 2020 sales were $735 million, a decline of 5% compared to the third quarter of 2019. The sales decline was comprised of a $104 million, or 13%, decline in core sales, partially offset by a $57 million, or 7%, benefit from acquisitions and $10 million, or 1%, of favorable foreign exchange. The core sales decline was attributable to COVID-19 related macroeconomic factors. Third quarter 2020 operating profit was $85 million compared to $109 million in the third quarter of 2019. Operating profit margin was 11.6% compared to 14.2% in the third quarter of 2019. Excluding Special Items, third quarter 2020 operating profit was $92 million compared to $114 million in the third quarter of 2019. Excluding Special Items, operating profit margin was 12.4% compared to 14.8% in the third quarter of 2019. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.) Max Mitchell, Crane Co. President and Chief Executive Officer stated: “While uncertainty remains elevated, the year has progressed largely as we expected when we reset guidance in April. Our teams continue to execute extremely well in this challenging environment, and we are pleased with our third quarter results which were solid in light of current market conditions. We have further narrowed our guidance range to reflect that we now have only a few months left of the year, and we raised the midpoint of our guidance primarily to reflect operational outperformance year-to-date compared to our expectations, as well as some recent incremental strength at Crane Currency and Engineered Materials. I continue to remain highly confident in the strength and resilience of Crane's portfolio and in our long-term outlook as end markets continue to recover." Cash Flow, Liquidity, and Other Financial Metrics Cash provided from operating activities in the third quarter of 2020 was $132 million compared to $119 million in the third quarter of 2019. Capital expenditures in the third quarter of 2020 were $7 million compared to $15 million in the third quarter of 2019. Third quarter 2020 free cash flow (cash provided by operating activities less capital spending) was $124 million compared to $104 million in the third quarter of 2019. Cash provided from operating activities in the first nine months of 2020 was $208 million compared to $171 million in the first nine months of 2019. Capital expenditures in the first nine months of 2020 were $21 million compared to $51 million in the first nine months of 2019. Free cash flow for the first nine months of 2020 was $188 million compared to $120 million in the first nine months of 2019. The Company held $605 million in cash and short-term investments at September 30, 2020, compared to $394 million at December 31, 2019. Total debt was $1,324 million at September 30, 2020, compared to $991 million at December 31, 2019. As of September 30, 2020, liquidity of approximately $1,018 million was comprised of $605 million in cash and short-term investments, and $413 million available under our revolving credit facility. Third Quarter 2020 Segment Results All comparisons detailed in this section refer to operating results for the third quarter 2020 versus the third quarter 2019. Fluid Handling Third Quarter Change (dollars in millions) 2020 2019 Sales $ 252 $ 276 $ (24 ) (9 %) Operating Profit $ 26 $ 35 $ (10 ) (27 %) Operating Profit, before Special Items* $ 29 $ 38 $ (9 ) (24 %) Profit Margin 10.3 % 12.8 % Profit Margin, before Special Items* 11.4 % 13.8 % *Please see the attached Non-GAAP Financial Measures tables Sales of $252 million decreased $24 million, or 9%, driven by a $42 million, or 15%, decline in core sales, partially offset by a $15 million, or 5%, benefit from an acquisition and $4 million, or 1%, of favorable foreign exchange. Operating profit margin declined to 10.3%, compared to 12.8% last year, primarily reflecting lower volumes, partially offset by productivity and cost reduction measures. Excluding Special Items, operating profit margin declined to 11.4%, compared to 13.8% last year. Fluid Handling order backlog was $305 million at September 30, 2020 which includes $11 million related to the January 2020 I&S acquisition, compared to $267 million at December 31, 2019, and compared to $272 million at September 30, 2019. Payment & Merchandising Technologies Third Quarter Change (dollars in millions) 2020 2019 Sales $ 277 $ 249 $ 28 11 % Sales, including acquisition-related deferred revenue* $ 280 $ 249 $ 31 12 % Operating Profit $ 41 $ 35 $ 5 15 % Operating Profit, before Special Items* $ 44 $ 36 $ 8 23 % Profit Margin 14.6 % 14.1 % Profit Margin, before Special Items* 15.8 % 14.5 % *Please see the attached Non-GAAP Financial Measures tables Sales of $277 million increased $28 million, or 11%, driven by a $42 million, or 17%, benefit from an acquisition, and $6 million, or 2%, of favorable foreign exchange, partially offset by a $19 million, or 8%, decline in core sales. Including $2.6 million of acquisition-related deferred revenue, sales in the third quarter of 2020 were $280 million. Operating profit margin increased to 14.6%, from 14.1% last year as productivity and benefits from cost saving measures more than offset the impact of lower volumes. Excluding Special Items, operating profit margin increased to 15.8%, from 14.5% last year. Aerospace & Electronics Third Quarter Change (dollars in millions) 2020 2019 Sales $ 157 $ 197 $ (40 ) (20 %) Operating Profit $ 25 $ 47 $ (23 ) (48 %) Operating Profit, before Special Items* $ 25 $ 48 $ (24 ) (49 %) Profit Margin 15.6 % 23.9 % Profit Margin, before Special Items* 15.6 % 24.4 % *Please see the attached Non-GAAP Financial Measures tables Sales of $157 million decreased $40 million, or 20%, driven by lower core sales. Operating profit margin declined to 15.6%, from 23.9% last year, primarily reflecting lower core volumes, partially offset by strong productivity and the benefit of cost reduction measures. Excluding Special Items, operating profit margin declined to 15.6%, from 24.4% last year. Aerospace & Electronics' order backlog was $498 million at September 30, 2020, compared to a record $567 million at December 31, 2019, and compared to $564 million at September 30, 2019. Engineered Materials Third Quarter Change (dollars in millions) 2020 2019 Sales $ 48 $ 50 $ (2 ) (4 %) Operating Profit $ 9 $ 6 $ 3 53 % Profit Margin 18.6 % 11.8 % Sales decreased $2 million, or 4%, driven primarily by lower sales to the Building Products market, partially offset by stronger sales to Recreational Vehicle customers. Operating profit margin increased to 18.6%, from 11.8% last year, primarily reflecting productivity, the benefit of cost reduction measures, and lower material costs. Updating Full Year Outlook The Company’s current and best estimate of full-year 2020 GAAP EPS is now $3.10-$3.35, compared to the prior range of $2.65-$3.45. Excluding Special Items, the Company's current and best estimate of full-year 2020 EPS is now $3.75-$4.00, compared to the prior range of $3.30-$4.10. We now expect a full-year 2020 core sales decline of approximately 17% to 19%, compared to our prior expectation of a decline in the range of 17% to 21%. Our revised outlook for full-year 2020 free cash flow (cash provided by operating activities less capital spending) is now $230-$260 million compared to our prior outlook for a range of $200-$250 million. (Please see the attached non-GAAP Financial Measures tables.) We note that continued uncertainty regarding the potential impact of the COVID-19 pandemic on demand and operations poses unique and substantial challenges for normal forecasting methodologies, making it difficult to accurately project future financial results. Additional Information Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release. Conference Call Crane Co. has scheduled a conference call to discuss the third quarter financial results on Tuesday, October 27, 2020 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 under Investors, Events & Presentations. Slides that accompany the conference call will be available on the Company’s website. Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane Co. provides products and solutions to customers in the chemicals, oil & gas, power, automated payment solutions, banknote design and production and aerospace & defense markets, along with a wide range of general industrial and consumer related end markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane Co. has approximately 11,000 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com. This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the management’s current beliefs, expectations, plans, assumptions and objectives regarding Crane Co.’s future financial performance and are subject to significant risks and uncertainties. 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, including risks and uncertainties related to the ongoing COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those expressed or implied in these forward-looking statements. Such factors also include, among others: uncertainties regarding the extent and duration of the impact of the COVID-19 pandemic on many aspects of our business, operations and financial performance; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices; the financial condition of our customers and suppliers; economic, social and political instability, currency fluctuation and other risks of doing business outside of the United States; competitive pressures, including the need for technology improvement, successful new product development and introduction and any inability to pass increased costs of raw materials to customers; our ability to value and successfully integrate acquisitions, to realize synergies and opportunities for growth and innovation, and to attract and retain highly qualified personnel and key management; a reduction in congressional appropriations that affect defense spending and our ability to predict the timing and award of substantial contracts in our banknote business; adverse effects on our business and results of operations, as a whole, as a result of increases in asbestos claims or the cost of defending and settling such claims; adverse effects as a result of environmental remediation activities, costs, liabilities and related claims; investment performance of our pension plan assets and fluctuations in interest rates, which may affect the amount and timing of future pension plan contributions; and other risks noted in reports that we file with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent reports filed with the Securities and Exchange Commission. Crane Co. does not undertake any obligation to update or revise any forward-looking statements. (Financial Tables Follow) CRANE CO. Income Statement Data (in millions, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net sales: Fluid Handling $ 252.3 $ 276.1 $ 748.2 $ 840.4 Payment & Merchandising Technologies 277.2 248.9 822.1 843.7 Aerospace & Electronics 157.0 197.2 507.3 596.3 Engineered Materials 48.3 50.1 132.9 165.2 Total net sales 734.8 772.3 2,210.5 2,445.6 Operating profit (loss): Fluid Handling 25.9 35.4 74.1 106.8 Payment & Merchandising Technologies 40.5 35.1 68.9 124.8 Aerospace & Electronics 24.5 47.2 87.8 141.4 Engineered Materials 9.0 5.9 17.7 22.8 Corporate (15.0 ) (14.3 ) (44.5 ) (50.0 ) Total operating profit 84.9 109.3 204.0 345.8 Interest income 0.6 0.6 1.3 1.9 Interest expense (14.4 ) (11.7 ) (41.3 ) (35.0 ) Miscellaneous, net 4.3 (4.5 ) 10.6 3.9 Income before income taxes 75.4 93.7 174.6 316.6 Provision for income taxes 18.8 21.1 40.4 70.5 Net income before allocation to noncontrolling interests 56.6 72.6 134.2 246.1 Less: Noncontrolling interest in subsidiaries' earnings — 0.1 — 0.2 Net income attributable to common shareholders $ 56.6 $ 72.5 $ 134.2 $ 245.9 Share data: Earnings per diluted share $0.97 $1.19 $2.28 $4.05 Average diluted shares outstanding 58.5 60.8 58.9 60.8 Average basic shares outstanding 58.1 60.0 58.4 59.9 Supplemental data: Cost of sales $ 480.0 $ 494.4 $ 1,445.3 $ 1,557.4 Selling, general & administrative 169.9 168.6 561.2 542.4 Acquisition-related and integration charges 1 2.7 0.2 10.3 3.7 Repositioning related charges, net 1, 2 1.4 4.5 26.5 16.2 Depreciation and amortization 1 32.4 27.9 95.3 84.2 Stock-based compensation expense 1 5.7 5.6 16.2 16.8 1 Amounts included within cost of sales and/or selling, general & administrative costs. 2 Repositioning related charges in 2020 primarily consist of COVID-19 related severance and, to a lesser extent, acquisition-related repositioning and facility consolidation. Totals may not sum due to rounding CRANE CO. Condensed Balance Sheets (in millions) September 30, 2020 December 31, 2019 Assets Current assets Cash and cash equivalents $ 544.6 $ 393.9 Accounts receivable, net 439.5 555.1 Current insurance receivable - asbestos 14.1 14.1 Inventories, net 456.0 457.3 Other current assets 167.9 79.5 Total current assets 1,622.1 1,499.9 Property, plant and equipment, net 595.6 616.3 Long-term insurance receivable - asbestos 74.5 83.6 Other assets 741.0 751.5 Goodwill 1,589.8 1,472.4 Total assets $ 4,623.0 $ 4,423.7 Liabilities and equity Current liabilities Short-term borrowings $ 481.4 $ 149.4 Accounts payable 225.8 311.1 Current asbestos liability 65.0 65.0 Accrued liabilities 361.7 378.2 Income taxes 9.2 13.0 Total current liabilities 1,143.1 916.7 Long-term debt 842.7 842.0 Long-term deferred tax liability 54.4 55.8 Long-term asbestos liability 614.2 646.6 Other liabilities 459.5 486.3 Total equity 1,509.1 1,476.3 Total liabilities and equity $ 4,623.0 $ 4,423.7 Totals may not sum due to rounding CRANE CO. Condensed Statements of Cash Flows (in millions) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Operating activities: Net income attributable to common shareholders $ 56.6 $ 72.5 $ 134.2 $ 245.9 Noncontrolling interest in subsidiaries' earnings — 0.1 — 0.2 Net income before allocations to noncontrolling interests 56.6 72.6 134.2 246.1 Loss on deconsolidation of joint venture — — — 1.2 Unrealized loss on marketable securities — 3.1 — — Realized gain on marketable securities — (1.1 ) — (1.1 ) Depreciation and amortization 32.4 27.9 95.3 84.2 Stock-based compensation expense 5.7 5.6 16.2 16.8 Defined benefit plans and postretirement (credit) cost (1.8 ) 3.6 (4.5 ) (0.4 ) Deferred income taxes — 8.0 7.5 18.8 Cash provided by (used for) operating working capital 45.9 14.3 (8.2 ) (157.1 ) Defined benefit plans and postretirement contributions (0.8 ) (0.9 ) (3.1 ) (6.0 ) Environmental payments, net of reimbursements 0.8 (2.5 ) (2.9 ) (6.5 ) Other (2.8 ) (1.0 ) (2.7 ) 4.0 Subtotal 136.0 129.6 231.8 200.0 Asbestos related payments, net of insurance recoveries (4.5 ) (11.1 ) (23.7 ) (29.0 ) Total provided by operating activities 131.5 118.5 208.1 171.0 Investing activities: Proceeds from (payments for) acquisitions, net of cash acquired 3.1 — (169.2 ) — Proceeds from disposition of capital assets 1.2 0.4 3.9 1.3 Capital expenditures (7.1 ) (14.8 ) (20.6 ) (50.9 ) Impact of deconsolidation of joint venture — — — (0.2 ) Purchase of marketable securities (60.0 ) — (60.0 ) (8.8 ) Proceeds from sale of marketable securities — 9.9 — 9.9 Total used for investing activities (62.8 ) (4.5 ) (245.9 ) (48.7 ) Financing activities: Dividends paid (25.0 ) (23.4 ) (75.4 ) (70.1 ) Reacquisition of shares on open market — — (70.0 ) — Stock options exercised, net of shares reacquired 3.5 1.4 4.2 2.6 Debt issuance costs — — (1.3 ) — Repayment of long-term debt — (1.7 ) — (4.5 ) Proceeds from issuance of long-term debt — — — 3.0 Proceeds from issuance of commercial paper with maturities greater than 90 days — — 251.3 — Repayments of commercial paper with maturities greater than 90 days (92.1 ) — (188.6 ) — Net repayments of commercial paper with maturities of 90 days or less (14.0 ) — (76.8 ) — Proceeds from revolving credit facility — — 77.2 — Repayments from revolving credit facility — — (77.2 ) — Proceeds from term loan — — 343.9 — Total (used for) provided by financing activities (127.6 ) (23.7 ) 187.3 (69.0 ) Effect of exchange rate on cash and cash equivalents 11.4 (8.5 ) 1.2 (7.9 ) (Decrease) increase in cash and cash equivalents (47.5 ) 81.8 150.7 45.4 Cash and cash equivalents at beginning of period 592.1 307.0 393.9 343.4 Cash and cash equivalents at end of period $ 544.6 $ 388.8 $ 544.6 $ 388.8 Totals may not sum due to rounding CRANE CO. Order Backlog (in millions) September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 Fluid Handling $ 304.8 1 $ 298.6 1 $ 293.4 1 $ 267.0 $ 272.1 Payment & Merchandising Technologies 270.1 2 285.5 2 326.3 2 311.4 2 291.8 Aerospace & Electronics 498.1 505.7 547.5 567.4 564.3 Engineered Materials 11.1 10.1 10.8 9.4 10.1 Total backlog $ 1,084.1 $ 1,099.9 $ 1,178.0 $ 1,155.2 $ 1,138.3 1 Includes $11 million, $11 million and $12 million as of September 30, 2020 June 30, 2020 and March 31, 2020, respectively, of backlog pertaining to the I&S business acquired in January 2020 2 Includes $40 million, $46 million, $43 million and $44 million as of September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, of backlog pertaining to the Cummins Allison business acquired in December 2019. Totals may not sum due to rounding CRANE CO. Non-GAAP Financial Measures (in millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, Percent Change 2020 2019 2020 2019 Three Months Nine Months INCOME ITEMS Net sales - GAAP $ 734.8 $ 772.3 $ 2,210.5 $ 2,445.6 (4.9 )% (9.6 )% Acquisition-related deferred revenue 1 2.6 — 7.7 — Net sales before special items $ 737.4 $ 772.3 $ 2,218.2 $ 2,445.6 (4.5 )% (9.3 )% Operating profit - GAAP 84.9 109.3 204.0 345.8 (22.3 )% (41.0 )% Percentage of sales 11.6 % 14.2 % 9.2 % 14.1 % Special items impacting operating profit: Acquisition-related deferred revenue 1 2.6 — 7.7 — Acquisition-related and integration charges 2.7 0.2 10.3 3.7 Repositioning related charges, net of gain on property sale 2 1.4 4.5 26.5 16.2 Operating profit before special items $ 91.6 $ 114.0 $ 248.5 $ 365.7 (19.6 )% (32.0 )% Percentage of sales 12.4 % 14.8 % 11.2 % 15.0 % Net income attributable to common shareholders - GAAP $ 56.6 $ 72.5 $ 134.2 $ 245.9 (21.9 )% (45.4 )% Per diluted share $ 0.97 $ 1.19 $ 2.28 $ 4.05 (18.5 )% (43.7 )% Special items impacting net income attributable to common shareholders: Acquisition-related deferred revenue - net of tax 1 1.9 — 5.7 — Per diluted share $ 0.03 $ 0.10 Acquisition-related and integration charges - net of tax 2.1 0.1 7.9 2.6 Per diluted share $ 0.04 $ 0.00 $ 0.13 0.04 Repositioning related charges, net of gain on property sale - net of tax 2 1.0 6.2 19.9 16.6 Per diluted share $ 0.02 $ 0.10 $ 0.34 $ 0.27 Unrealized gain on marketable securities - net of tax — 2.5 — — Per diluted share $ 0.04 Realized gain on marketable securities - net of tax — (0.8 ) — (0.8 ) Per diluted share $ (0.01 ) $ 0.00 Impact of non-cash pension cost adjustment - net of tax — 4.5 — 4.5 Per diluted share $ 0.07 $ 0.07 Deconsolidation of joint venture - net of tax — — — 0.8 Per diluted share $ 0.01 Net income attributable to common shareholders before special items $ 61.6 $ 85.0 $ 167.7 $ 269.6 (27.5 )% (37.8 )% Per diluted share $ 1.05 $ 1.40 $ 2.85 $ 4.44 (24.7 )% (35.9 )% Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Special items impacting provision for income taxes: Provision for income taxes - GAAP $ 18.8 $ 21.1 $ 40.4 $ 70.5 Tax effect of acquisition-related deferred revenue 1 0.7 — 2.0 — Tax effect of acquisition-related and integration charges 0.6 0.1 2.4 1.1 Tax effect of repositioning related charges 2 0.4 (1.7 ) 6.6 1.4 Tax effect of unrealized loss on marketable securities — 0.7 — (0.7 ) Tax effect of realized gain on marketable securities — (0.3 ) — — Tax effect of deconsolidation of joint venture — — — 0.4 Tax effect of impact of non-cash pension cost adjustment — 1.3 — — Provision for income taxes before special items $ 20.5 $ 21.2 $ 51.4 $ 72.7 Contacts Jason D. Feldman Vice President, Investor Relations 203-363-7329 www.craneco.com Read full story here

Highlights from Third Quarter 2020 Results:

  • GAAP earnings per diluted share (EPS) of $0.97 compared to $1.19 in the third quarter of 2019.
  • Excluding Special Items, EPS of $1.05 compared to $1.40 in the third quarter of 2019.
  • Raising and narrowing 2020 GAAP EPS guidance range to $3.10-$3.35 from the prior range of $2.65-$3.45.
  • Excluding Special Items, raising and narrowing 2020 EPS guidance range to $3.75-$4.00 from the prior range of $3.30-$4.10.
  • Raising and narrowing 2020 free cash flow guidance range to $230-$260 million from the prior range of $200-$250 million (cash provided by operating activities less capital spending).

STAMFORD, Conn.–(BUSINESS WIRE)–Crane Co. (NYSE: CR), a diversified manufacturer of highly engineered industrial products, reported third quarter 2020 GAAP earnings per diluted share (EPS) of $0.97, compared to $1.19 in the third quarter of 2019. Excluding Special Items, third quarter 2020 EPS was $1.05, compared to $1.40 in the third quarter of 2019. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.)

Third quarter 2020 sales were $735 million, a decline of 5% compared to the third quarter of 2019. The sales decline was comprised of a $104 million, or 13%, decline in core sales, partially offset by a $57 million, or 7%, benefit from acquisitions and $10 million, or 1%, of favorable foreign exchange. The core sales decline was attributable to COVID-19 related macroeconomic factors.

Third quarter 2020 operating profit was $85 million compared to $109 million in the third quarter of 2019. Operating profit margin was 11.6% compared to 14.2% in the third quarter of 2019. Excluding Special Items, third quarter 2020 operating profit was $92 million compared to $114 million in the third quarter of 2019. Excluding Special Items, operating profit margin was 12.4% compared to 14.8% in the third quarter of 2019. (Please see the attached Non-GAAP Financial Measures tables for a detailed reconciliation of reported results to adjusted measures.)

Max Mitchell, Crane Co. President and Chief Executive Officer stated: “While uncertainty remains elevated, the year has progressed largely as we expected when we reset guidance in April. Our teams continue to execute extremely well in this challenging environment, and we are pleased with our third quarter results which were solid in light of current market conditions. We have further narrowed our guidance range to reflect that we now have only a few months left of the year, and we raised the midpoint of our guidance primarily to reflect operational outperformance year-to-date compared to our expectations, as well as some recent incremental strength at Crane Currency and Engineered Materials. I continue to remain highly confident in the strength and resilience of Crane's portfolio and in our long-term outlook as end markets continue to recover."

Cash Flow, Liquidity, and Other Financial Metrics

Cash provided from operating activities in the third quarter of 2020 was $132 million compared to $119 million in the third quarter of 2019. Capital expenditures in the third quarter of 2020 were $7 million compared to $15 million in the third quarter of 2019. Third quarter 2020 free cash flow (cash provided by operating activities less capital spending) was $124 million compared to $104 million in the third quarter of 2019.

Cash provided from operating activities in the first nine months of 2020 was $208 million compared to $171 million in the first nine months of 2019. Capital expenditures in the first nine months of 2020 were $21 million compared to $51 million in the first nine months of 2019. Free cash flow for the first nine months of 2020 was $188 million compared to $120 million in the first nine months of 2019.

The Company held $605 million in cash and short-term investments at September 30, 2020, compared to $394 million at December 31, 2019. Total debt was $1,324 million at September 30, 2020, compared to $991 million at December 31, 2019. As of September 30, 2020, liquidity of approximately $1,018 million was comprised of $605 million in cash and short-term investments, and $413 million available under our revolving credit facility.

Third Quarter 2020 Segment Results

All comparisons detailed in this section refer to operating results for the third quarter 2020 versus the third quarter 2019.

Fluid Handling

Third Quarter

Change

(dollars in millions)

2020

2019

Sales

$

252

$

276

$

(24

)

(9

%)

Operating Profit

$

26

$

35

$

(10

)

(27

%)

Operating Profit, before Special Items*

$

29

$

38

$

(9

)

(24

%)

Profit Margin

10.3

%

12.8

%

Profit Margin, before Special Items*

11.4

%

13.8

%

*Please see the attached Non-GAAP Financial Measures tables

Sales of $252 million decreased $24 million, or 9%, driven by a $42 million, or 15%, decline in core sales, partially offset by a $15 million, or 5%, benefit from an acquisition and $4 million, or 1%, of favorable foreign exchange. Operating profit margin declined to 10.3%, compared to 12.8% last year, primarily reflecting lower volumes, partially offset by productivity and cost reduction measures. Excluding Special Items, operating profit margin declined to 11.4%, compared to 13.8% last year. Fluid Handling order backlog was $305 million at September 30, 2020 which includes $11 million related to the January 2020 I&S acquisition, compared to $267 million at December 31, 2019, and compared to $272 million at September 30, 2019.

Payment & Merchandising Technologies

Third Quarter

Change

(dollars in millions)

2020

2019

Sales

$

277

$

249

$

28

11

%

Sales, including acquisition-related deferred revenue*

$

280

$

249

$

31

12

%

Operating Profit

$

41

$

35

$

5

15

%

Operating Profit, before Special Items*

$

44

$

36

$

8

23

%

Profit Margin

14.6

%

14.1

%

Profit Margin, before Special Items*

15.8

%

14.5

%

*Please see the attached Non-GAAP Financial Measures tables

Sales of $277 million increased $28 million, or 11%, driven by a $42 million, or 17%, benefit from an acquisition, and $6 million, or 2%, of favorable foreign exchange, partially offset by a $19 million, or 8%, decline in core sales. Including $2.6 million of acquisition-related deferred revenue, sales in the third quarter of 2020 were $280 million. Operating profit margin increased to 14.6%, from 14.1% last year as productivity and benefits from cost saving measures more than offset the impact of lower volumes. Excluding Special Items, operating profit margin increased to 15.8%, from 14.5% last year.

Aerospace & Electronics

Third Quarter

Change

(dollars in millions)

2020

2019

Sales

$

157

$

197

$

(40

)

(20

%)

Operating Profit

$

25

$

47

$

(23

)

(48

%)

Operating Profit, before Special Items*

$

25

$

48

$

(24

)

(49

%)

Profit Margin

15.6

%

23.9

%

Profit Margin, before Special Items*

15.6

%

24.4

%

*Please see the attached Non-GAAP Financial Measures tables

Sales of $157 million decreased $40 million, or 20%, driven by lower core sales. Operating profit margin declined to 15.6%, from 23.9% last year, primarily reflecting lower core volumes, partially offset by strong productivity and the benefit of cost reduction measures. Excluding Special Items, operating profit margin declined to 15.6%, from 24.4% last year. Aerospace & Electronics' order backlog was $498 million at September 30, 2020, compared to a record $567 million at December 31, 2019, and compared to $564 million at September 30, 2019.

Engineered Materials

Third Quarter

Change

(dollars in millions)

2020

2019

Sales

$

48

$

50

$

(2

)

(4

%)

Operating Profit

$

9

$

6

$

3

53

%

Profit Margin

18.6

%

11.8

%

Sales decreased $2 million, or 4%, driven primarily by lower sales to the Building Products market, partially offset by stronger sales to Recreational Vehicle customers. Operating profit margin increased to 18.6%, from 11.8% last year, primarily reflecting productivity, the benefit of cost reduction measures, and lower material costs.

Updating Full Year Outlook

The Company’s current and best estimate of full-year 2020 GAAP EPS is now $3.10-$3.35, compared to the prior range of $2.65-$3.45. Excluding Special Items, the Company's current and best estimate of full-year 2020 EPS is now $3.75-$4.00, compared to the prior range of $3.30-$4.10. We now expect a full-year 2020 core sales decline of approximately 17% to 19%, compared to our prior expectation of a decline in the range of 17% to 21%. Our revised outlook for full-year 2020 free cash flow (cash provided by operating activities less capital spending) is now $230-$260 million compared to our prior outlook for a range of $200-$250 million. (Please see the attached non-GAAP Financial Measures tables.)

We note that continued uncertainty regarding the potential impact of the COVID-19 pandemic on demand and operations poses unique and substantial challenges for normal forecasting methodologies, making it difficult to accurately project future financial results.

Additional Information

Additional information with respect to the Company’s asbestos liability and related accounting provisions and cash requirements is set forth in the Current Report on Form 8-K filed with a copy of this press release.

Conference Call

Crane Co. has scheduled a conference call to discuss the third quarter financial results on Tuesday, October 27, 2020 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 under Investors, Events & Presentations. Slides that accompany the conference call will be available on the Company’s website.

Crane Co. is a diversified manufacturer of highly engineered industrial products. Founded in 1855, Crane Co. provides products and solutions to customers in the chemicals, oil & gas, power, automated payment solutions, banknote design and production and aerospace & defense markets, along with a wide range of general industrial and consumer related end markets. The Company has four business segments: Fluid Handling, Payment & Merchandising Technologies, Aerospace & Electronics and Engineered Materials. Crane Co. has approximately 11,000 employees in the Americas, Europe, the Middle East, Asia and Australia. Crane Co. is traded on the New York Stock Exchange (NYSE:CR). For more information, visit www.craneco.com.

This press release may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the management’s current beliefs, expectations, plans, assumptions and objectives regarding Crane Co.’s future financial performance and are subject to significant risks and uncertainties. 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, including risks and uncertainties related to the ongoing COVID-19 pandemic, that could cause actual results or outcomes to differ materially from those expressed or implied in these forward-looking statements. Such factors also include, among others: uncertainties regarding the extent and duration of the impact of the COVID-19 pandemic on many aspects of our business, operations and financial performance; changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices; the financial condition of our customers and suppliers; economic, social and political instability, currency fluctuation and other risks of doing business outside of the United States; competitive pressures, including the need for technology improvement, successful new product development and introduction and any inability to pass increased costs of raw materials to customers; our ability to value and successfully integrate acquisitions, to realize synergies and opportunities for growth and innovation, and to attract and retain highly qualified personnel and key management; a reduction in congressional appropriations that affect defense spending and our ability to predict the timing and award of substantial contracts in our banknote business; adverse effects on our business and results of operations, as a whole, as a result of increases in asbestos claims or the cost of defending and settling such claims; adverse effects as a result of environmental remediation activities, costs, liabilities and related claims; investment performance of our pension plan assets and fluctuations in interest rates, which may affect the amount and timing of future pension plan contributions; and other risks noted in reports that we file with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent reports filed with the Securities and Exchange Commission. Crane Co. does not undertake any obligation to update or revise any forward-looking statements.

(Financial Tables Follow)

CRANE CO.

Income Statement Data

(in millions, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net sales:

Fluid Handling

$

252.3

$

276.1

$

748.2

$

840.4

Payment & Merchandising Technologies

277.2

248.9

822.1

843.7

Aerospace & Electronics

157.0

197.2

507.3

596.3

Engineered Materials

48.3

50.1

132.9

165.2

Total net sales

734.8

772.3

2,210.5

2,445.6

Operating profit (loss):

Fluid Handling

25.9

35.4

74.1

106.8

Payment & Merchandising Technologies

40.5

35.1

68.9

124.8

Aerospace & Electronics

24.5

47.2

87.8

141.4

Engineered Materials

9.0

5.9

17.7

22.8

Corporate

(15.0

)

(14.3

)

(44.5

)

(50.0

)

Total operating profit

84.9

109.3

204.0

345.8

Interest income

0.6

0.6

1.3

1.9

Interest expense

(14.4

)

(11.7

)

(41.3

)

(35.0

)

Miscellaneous, net

4.3

(4.5

)

10.6

3.9

Income before income taxes

75.4

93.7

174.6

316.6

Provision for income taxes

18.8

21.1

40.4

70.5

Net income before allocation to noncontrolling interests

56.6

72.6

134.2

246.1

Less: Noncontrolling interest in subsidiaries' earnings

0.1

0.2

Net income attributable to common shareholders

$

56.6

$

72.5

$

134.2

$

245.9

Share data:

Earnings per diluted share

$0.97

$1.19

$2.28

$4.05

Average diluted shares outstanding

58.5

60.8

58.9

60.8

Average basic shares outstanding

58.1

60.0

58.4

59.9

Supplemental data:

Cost of sales

$

480.0

$

494.4

$

1,445.3

$

1,557.4

Selling, general & administrative

169.9

168.6

561.2

542.4

Acquisition-related and integration charges 1

2.7

0.2

10.3

3.7

Repositioning related charges, net 1, 2

1.4

4.5

26.5

16.2

Depreciation and amortization 1

32.4

27.9

95.3

84.2

Stock-based compensation expense 1

5.7

5.6

16.2

16.8

1 Amounts included within cost of sales and/or selling, general & administrative costs.

2 Repositioning related charges in 2020 primarily consist of COVID-19 related severance and, to a lesser extent, acquisition-related repositioning and facility consolidation.

Totals may not sum due to rounding

CRANE CO.

Condensed Balance Sheets

(in millions)

September 30,

2020

December 31,

2019

Assets

Current assets

Cash and cash equivalents

$

544.6

$

393.9

Accounts receivable, net

439.5

555.1

Current insurance receivable – asbestos

14.1

14.1

Inventories, net

456.0

457.3

Other current assets

167.9

79.5

Total current assets

1,622.1

1,499.9

Property, plant and equipment, net

595.6

616.3

Long-term insurance receivable – asbestos

74.5

83.6

Other assets

741.0

751.5

Goodwill

1,589.8

1,472.4

Total assets

$

4,623.0

$

4,423.7

Liabilities and equity

Current liabilities

Short-term borrowings

$

481.4

$

149.4

Accounts payable

225.8

311.1

Current asbestos liability

65.0

65.0

Accrued liabilities

361.7

378.2

Income taxes

9.2

13.0

Total current liabilities

1,143.1

916.7

Long-term debt

842.7

842.0

Long-term deferred tax liability

54.4

55.8

Long-term asbestos liability

614.2

646.6

Other liabilities

459.5

486.3

Total equity

1,509.1

1,476.3

Total liabilities and equity

$

4,623.0

$

4,423.7

Totals may not sum due to rounding

CRANE CO.

Condensed Statements of Cash Flows

(in millions)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2020

2019

2020

2019

Operating activities:

Net income attributable to common shareholders

$

56.6

$

72.5

$

134.2

$

245.9

Noncontrolling interest in subsidiaries' earnings

0.1

0.2

Net income before allocations to noncontrolling interests

56.6

72.6

134.2

246.1

Loss on deconsolidation of joint venture

1.2

Unrealized loss on marketable securities

3.1

Realized gain on marketable securities

(1.1

)

(1.1

)

Depreciation and amortization

32.4

27.9

95.3

84.2

Stock-based compensation expense

5.7

5.6

16.2

16.8

Defined benefit plans and postretirement (credit) cost

(1.8

)

3.6

(4.5

)

(0.4

)

Deferred income taxes

8.0

7.5

18.8

Cash provided by (used for) operating working capital

45.9

14.3

(8.2

)

(157.1

)

Defined benefit plans and postretirement contributions

(0.8

)

(0.9

)

(3.1

)

(6.0

)

Environmental payments, net of reimbursements

0.8

(2.5

)

(2.9

)

(6.5

)

Other

(2.8

)

(1.0

)

(2.7

)

4.0

Subtotal

136.0

129.6

231.8

200.0

Asbestos related payments, net of insurance recoveries

(4.5

)

(11.1

)

(23.7

)

(29.0

)

Total provided by operating activities

131.5

118.5

208.1

171.0

Investing activities:

Proceeds from (payments for) acquisitions, net of cash acquired

3.1

(169.2

)

Proceeds from disposition of capital assets

1.2

0.4

3.9

1.3

Capital expenditures

(7.1

)

(14.8

)

(20.6

)

(50.9

)

Impact of deconsolidation of joint venture

(0.2

)

Purchase of marketable securities

(60.0

)

(60.0

)

(8.8

)

Proceeds from sale of marketable securities

9.9

9.9

Total used for investing activities

(62.8

)

(4.5

)

(245.9

)

(48.7

)

Financing activities:

Dividends paid

(25.0

)

(23.4

)

(75.4

)

(70.1

)

Reacquisition of shares on open market

(70.0

)

Stock options exercised, net of shares reacquired

3.5

1.4

4.2

2.6

Debt issuance costs

(1.3

)

Repayment of long-term debt

(1.7

)

(4.5

)

Proceeds from issuance of long-term debt

3.0

Proceeds from issuance of commercial paper with maturities greater than 90 days

251.3

Repayments of commercial paper with maturities greater than 90 days

(92.1

)

(188.6

)

Net repayments of commercial paper with maturities of 90 days or less

(14.0

)

(76.8

)

Proceeds from revolving credit facility

77.2

Repayments from revolving credit facility

(77.2

)

Proceeds from term loan

343.9

Total (used for) provided by financing activities

(127.6

)

(23.7

)

187.3

(69.0

)

Effect of exchange rate on cash and cash equivalents

11.4

(8.5

)

1.2

(7.9

)

(Decrease) increase in cash and cash equivalents

(47.5

)

81.8

150.7

45.4

Cash and cash equivalents at beginning of period

592.1

307.0

393.9

343.4

Cash and cash equivalents at end of period

$

544.6

$

388.8

$

544.6

$

388.8

Totals may not sum due to rounding

CRANE CO.

Order Backlog

(in millions)

September 30,

2020

June 30,

2020

March 31,

2020

December 31,

2019

September 30,

2019

Fluid Handling

$

304.8

1

$

298.6

1

$

293.4

1

$

267.0

$

272.1

Payment & Merchandising Technologies

270.1

2

285.5

2

326.3

2

311.4

2

291.8

Aerospace & Electronics

498.1

505.7

547.5

567.4

564.3

Engineered Materials

11.1

10.1

10.8

9.4

10.1

Total backlog

$

1,084.1

$

1,099.9

$

1,178.0

$

1,155.2

$

1,138.3

1 Includes $11 million, $11 million and $12 million as of September 30, 2020 June 30, 2020 and March 31, 2020, respectively, of backlog pertaining to the I&S business acquired in January 2020

2 Includes $40 million, $46 million, $43 million and $44 million as of September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, of backlog pertaining to the Cummins Allison business acquired in December 2019.

Totals may not sum due to rounding

CRANE CO.

Non-GAAP Financial Measures

(in millions, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Percent Change

2020

2019

2020

2019

Three

Months

Nine

Months

INCOME ITEMS

Net sales – GAAP

$

734.8

$

772.3

$

2,210.5

$

2,445.6

(4.9

)%

(9.6

)%

Acquisition-related deferred revenue 1

2.6

7.7

Net sales before special items

$

737.4

$

772.3

$

2,218.2

$

2,445.6

(4.5

)%

(9.3

)%

Operating profit – GAAP

84.9

109.3

204.0

345.8

(22.3

)%

(41.0

)%

Percentage of sales

11.6

%

14.2

%

9.2

%

14.1

%

Special items impacting operating profit:

Acquisition-related deferred revenue 1

2.6

7.7

Acquisition-related and integration charges

2.7

0.2

10.3

3.7

Repositioning related charges, net of gain on property sale 2

1.4

4.5

26.5

16.2

Operating profit before special items

$

91.6

$

114.0

$

248.5

$

365.7

(19.6

)%

(32.0

)%

Percentage of sales

12.4

%

14.8

%

11.2

%

15.0

%

Net income attributable to common shareholders – GAAP

$

56.6

$

72.5

$

134.2

$

245.9

(21.9

)%

(45.4

)%

Per diluted share

$

0.97

$

1.19

$

2.28

$

4.05

(18.5

)%

(43.7

)%

Special items impacting net income attributable to common shareholders:

Acquisition-related deferred revenue – net of tax 1

1.9

5.7

Per diluted share

$

0.03

$

0.10

Acquisition-related and integration charges – net of tax

2.1

0.1

7.9

2.6

Per diluted share

$

0.04

$

0.00

$

0.13

0.04

Repositioning related charges, net of gain on property sale – net of tax 2

1.0

6.2

19.9

16.6

Per diluted share

$

0.02

$

0.10

$

0.34

$

0.27

Unrealized gain on marketable securities – net of tax

2.5

Per diluted share

$

0.04

Realized gain on marketable securities – net of tax

(0.8

)

(0.8

)

Per diluted share

$

(0.01

)

$

0.00

Impact of non-cash pension cost adjustment – net of tax

4.5

4.5

Per diluted share

$

0.07

$

0.07

Deconsolidation of joint venture – net of tax

0.8

Per diluted share

$

0.01

Net income attributable to common shareholders before special items

$

61.6

$

85.0

$

167.7

$

269.6

(27.5

)%

(37.8

)%

Per diluted share

$

1.05

$

1.40

$

2.85

$

4.44

(24.7

)%

(35.9

)%

Three Months Ended

September 30,

Nine Months Ended

September 30,

2020

2019

2020

2019

Special items impacting provision for income taxes:

Provision for income taxes – GAAP

$

18.8

$

21.1

$

40.4

$

70.5

Tax effect of acquisition-related deferred revenue 1

0.7

2.0

Tax effect of acquisition-related and integration charges

0.6

0.1

2.4

1.1

Tax effect of repositioning related charges 2

0.4

(1.7

)

6.6

1.4

Tax effect of unrealized loss on marketable securities

0.7

(0.7

)

Tax effect of realized gain on marketable securities

(0.3

)

Tax effect of deconsolidation of joint venture

0.4

Tax effect of impact of non-cash pension cost adjustment

1.3

Provision for income taxes before special items

$

20.5

$

21.2

$

51.4

$

72.7

Contacts

Jason D. Feldman

Vice President, Investor Relations

203-363-7329

www.craneco.com

Read full story here

< Previous

Power Integrations Demonstrates Continued Industry Leadership as InnoSwitch IC Sales Surpass One Billion Units

LG Chem Responds to Delay in ITC Ruling on Trade Secret Case