Crane Co. Reports Fourth Quarter Results; Posts Record EPS in 2012; Provides Updated 2013 EPS Guidance of $4.10 - $4.30
STAMFORD, Conn.--(BUSINESS WIRE)--
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.
Crane Co. Richard E. Koch, 203-363-7352 Director, Investor
Relations and Corporate Communications www.craneco.com
Press Release $CR Crane Co.
STAMFORD, Conn.--(BUSINESS WIRE)-- 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 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
* 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
* 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
* 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 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.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Miscellaneous - Net
2,810*
Supplemental Data:
CRANE CO.
Condensed Balance Sheets
(in thousands)
ASSETS
Total Current Assets
LIABILITIES AND EQUITY
Total Current Liabilities
CRANE CO.
Condensed Statements of Cash Flows
(in thousands)
Operating Activities:
*
Investing Activities:
Financing Activities:
Effect of exchange rate on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
* Includes a $30 million discretionary pension contribution.
** 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.
INCOME ITEMS
Special Items impacting Operating Profit (Loss) from Continuing Operations:
Special Items impacting Net Income (Loss) Attributable to Common Shareholders:
Environmental Provision - Net of Tax (c)
915
58,818
CASH FLOW ITEMS
Cash Provided from Operating Activities before Asbestos - Related Payments
Certain non-GAAP measures have been provided to facilitate comparison with the prior year.
Crane Co.
Richard E. Koch, 203-363-7352
Director, Investor Relations
and Corporate Communications
www.craneco.com
Source: Crane Co.